Investment Decisions and Demographics — How Misestimation of Longevity Impacts Investment Outcomes

Pension plan assets are ultimately used to pay participants’ benefits as they fall due. Knowing when and for how long benefits will be paid is central in deciding how to invest those assets. Understanding how long different pension plan participants will live is essential when setting liability targets to drive investment decisions. In this webinar, we consider how the potential for blunt pension plan decision-metrics, which do not capture the true demographic diversity of the pension plan, can lead to poor investment decisions. This applies to both plan sponsors whose strategy is to target termination through a series of annuity purchases, and those seeking to hibernate the plan using liability-driven investing to insulate the sponsor’s profit and loss from valuation swings.