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The Affect of a Dynamic De-Risking Strategy on Defined Benefit Pension Scheme Funding Levels

Donoghue, John (2020) The Affect of a Dynamic De-Risking Strategy on Defined Benefit Pension Scheme Funding Levels. Masters thesis, Dublin, National College of Ireland.

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Demographic changes, and aging populations specifically, will provide a challenge to the continued provision of state pensions in developed countries. Private pensions are going to become more important in providing a good standard of living for the current working age population. Defined benefit pension schemes remain a significant component of the pension landscape in both the UK and Ireland. Over one third of the current workforce that are members of occupational pensions are in defined benefit schemes. This paper will look at how defined benefit pension schemes impact stakeholders and are structured. The ability of a defined benefit pension scheme to meet its future liabilities is measured by the schemes funding level. Under funded schemes represent a risk to both the sponsor employers and scheme members. Different strategies are used to try improve and maintain funding levels. Dynamic de-risking strategies, whereby the portfolio of scheme assets is systematically de risked as funding level triggers are reached, is being used by a significant number of schemes. This dissertation tests the affect that a dynamic de-risking strategy has on scheme funding levels. While the scheme funding levels did increase over the test period, the test did not evidence a significant affect. The analysis of the test data provided a number of insights into dynamic de-risking strategies, markets and the evolution of the defined benefit pension scheme universe over the last five years that are worthy of discussion.

Item Type: Thesis (Masters)
Subjects: H Social Sciences > HG Finance
H Social Sciences > HG Finance > Investment
Divisions: School of Business > Master of Science in Finance
Depositing User: Dan English
Date Deposited: 15 Feb 2021 13:48
Last Modified: 15 Feb 2021 13:48

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