The conventional approach to pension asset management and asset allocation in retirement assumes that one pool of invested pension assets should be regarded as a single portfolio (although possibly with multiple investment managers) having a single level of risk tolerance and acting as an offset to a single pool of pension liabilities. However, the estimated magnitude of the pension liabilities is something less than precise and establishing investment objectives to meet such an uncertain target is not easy. Some corporations have met this problem by making distinctions among the liabilities and offsetting each pool of liabilities with a separate portfolio with appropriate risk and return objectives. (more…)

A company may terminate an employee benefit plan. However, a plan qualified for favorable tax treatment under the Internal Revenue Code must provide that, in effect, each affected participant becomes fully vested in his accrued benefit at the time of termination. ERISA also provides that, for defined benefit plans, the Pension Benefit Guaranty Corporation (PBGC) must be notified. (more…)

The lower age boundary defining “older worker” seems to depend on the context. Much of the retirement literature uses age 65 and older to define this category, a choice that reflects the salience of age 65 in previously enforced policies of mandatory retirement and entitlement for full Social Security benefits, as well as the general usage of the 18-to-64 age range in defining the “prime age” workforce. Within this context, “older worker” referred to someone whose continued attachment to the labor force ran counter to the normative pattern of retirement; by working beyond the “normal” retirement age of 65, these workers were considered categorically different from those who eschewed the option of “early” retirement. (more…)

There is a huge debate if management of pension plan should be separated or integrated with the organization that sponsoring them. In some of popular pension funds, they were run separately from sponsoring organization. In other some pension funds in the market, it is still managed as if a part of the sponsor. (more…)

Pension investment policy is one decisive point in planning and implementing a successful pensions plans. This area should need thoughtfulness due to its vast responsibility factors: the consequences of investment performance results may adverse pension investment goal. Hence, it should not be delegated to external third party consultants or money managers. Pension boards, top managements, shareholders, taxpayers and nonetheless employees, should pay a vital role in monitoring and reviewing pension investment policy. In the first place, there should be policy which will communicate the objectives of the pension plan policy scope and objectives to those all parties involved. The policy should have several key elements and aimed in funding pension liability for Defined Contribution Plans and Defined Benefit Plans. (more…)