Managing Pension Risk Through Dynamic Investment Policy

In this three-part series, we provide a comprehensive overview of dynamic investment policies (dynamic IPs) for defined benefit plans. Part One covers the events that have contributed to the rise of dynamic investment policies, and Part Two reviews the basic mechanics of a dynamic investment policy. And finally, Part Three offers some additional practical considerations for plan sponsors.

Recent capital market experience has shown that a plan's financial position can change dramatically in a matter of months, weeks, or even days. If given the opportunity, most plan sponsors would have elected to de-risk their plans during the 2003–07 equity bull market following the 2000–02 pension crisis. Now, the industry is in the middle of another pension crisis, and we strongly believe that companies need to manage their pension plans using a dynamic investment policy approach.

A dynamic investment policy provides plan sponsors with a solution that is beneficial during short-term market volatility and supports long-term goals and objectives.

Dynamic Investment Policy Series - Part 1: The Catalysts for Change

Dynamic Investment Policy Series - Part 2: The Framework of a Dynamic Investment Policy

Dynamic Investment Policy Series - Part 3: Practical Considerations for Dynamic Investment Policy Implementation