Blogging Employee Benefits

October 10, 2006

Which Way the Pension Fund’s Equity Benchmark?

Filed under: Investment, Pensions — Fuguerre @ 6:56 am

The UK’s Pension Protection Fund, which covers insolvent UK pension funds, has published a Statement of Investment Principles that includes a 20% benchmark for equity investment. PPF’s restriction of equity investment echoes that of the PBGC during recent years, reflecting the goal of minimizing mismatch between assets and liabilities for the fixed annuities under trusteed pension plans.

Should on-going pension plans sponsored by companies, governmental employers, and other sponsors follow the pension insurers’ lead? The Administration, which has characterized currently prevalent pension fund investment policies as “hazardous,” presumably hopes so, although one supposes the hope is that such hazardous investments would then be bought up by individual retirement account holders enlightened by new investment education/marketing programs freed from fiduciary liability claims.

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