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Products October 28, 2010
MetLife Whitepaper Focuses on Partial Risk Transfer Approach
October 28, 2010 (PLANSPONSOR.com) - A new paper by MetLife entitled "Topics in Pension Risk Management: The Role of Partial Risk Transfer in a Dynamic Asset Allocation Strategy" discusses Dynamic Asset Allocation (DAA) strategies within DB plans.
Reported by PLANSPONSOR staff
The paper outlines the key features of three major approaches to investment management and risk reduction:
- traditional asset allocation,
- Liability-Driven Investing, and
- Partial Risk Transfer.
When plan sponsors consider such a strategy, they also may want to consider the tactical use of annuities—a Partial Risk Transfer—as an intrinsic part of the strategy, according to the report.
Dynamic Asset Allocation refers to a planned, phased transition to a less return-driven, more liability-driven asset allocation as a DB plan’s funded status improves. This is typically accomplished by moving to a “long” (highly interest rate sensitive) bond portfolio, which roughly links the values of the assets and liabilities.
For more information, contact Charles Blair, Vice President, Retirement & Benefit Funding, MetLife, at (903) 469-3956.