Description: Many retirement actuaries have experience developing, implementing, and monitoring Liability Driven Investing (LDI) strategies for plan sponsors. These strategies typically involve modifying a plan’s investment strategy to remove a significant portion of the investment and interest rate risk now or at some point in the future when specific triggers are met. The tactics often involve the use of fixed income assets to cash flow and/or duration match the liabilities. In the spirit of helping actuaries expand their roles in an evolving defined contribution world, this article explores the application of LDI and derisking strategies within defined contribution and individual retirement accounts. The economic theory behind this approach is called the lifecycle hypothesis, or lifecycle finance. The benefits of the lifecycle finance method are that it provides a safe approach to save for retirement and a secure source of floor income during retirement. Similar to pension plans, each individual has his or her own idiosyncratic needs, wants, and risks that should be considered. Actuaries are uniquely situated to help defined contribution plan sponsors, individuals, and even themselves implement the lifecycle finance approach by developing and distributing tools and methods that focus on income (rather than wealth), LDI strategies, and personalization.

Description: Lifetime pension pools convert a lump sum into lifelong income, periodically adjusting benefit payouts based on mortality and investment experience. Volatility-targeting strategies can enhance benefit stability by dynamically adjusting the investment portfolio’s exposure to risky assets in the context of these pools, demonstrating superior performance compared to traditional static asset allocation methods.

Description: 10 Considerations for DB Pension Plans in Light of the Coronavirus Crisis of 2020. The article discusses the following topics: ERISA funded status & benefit restrictions; cash contributions & tax deductibility; PBGC premiums; Pension Accounting Expense; Commencing Benefits After Normal Retirement Age; Bringing Back Former Participants; Actuarial Assumptions; Asset Allocation and Re-Risking; De-Risking Expectations and Future Funding Relief