Description: A framework for pension risk management: diagnose pension risk factors, decide factors to address, utilize risk management toolkit, select strategy, monitor strategy

Description: Investment Fallacies: The Fallacy of the Fed Model

Description: Behavioral Finance proposes that psychological and social factors influence financial and economic decisions, causing people to make decisions other than those predicted by conventional economics and which may not be optimal for them. This article strives to help defined benefit (DB) plan actuaries understand how concepts from behavioral finance may provide insight into the actions of the sponsors of defined benefit plans. We specifically explore how behavioral finance concepts may affect sponsors’ decisions regarding their plan’s preferred funding level and risk profile. Our hope is that actuaries can assist their clients in becoming aware of how these concepts may be affecting the quality of the sponsors’ decision-making process.

Description: The Pension Section is pleased to make available the results of a two-part research effort exploring embedded options in pension plans. The Part I report includes a catalogue of embedded options in pension plans and the results of a related survey of pension practitioners. In the Part II report, the authors value three embedded guarantees in cash balance plans using option pricing fair valuation principles.

Description: Explains theoretical and empirical shortcomings of asset allocation rules that compare the earnings yield on stocks to the nominal yields on Treasuries.

Description: Technological innovations are disrupting traditional business models, improving products, and enhancing the user experience.