Following its arrival on the corporate DB scene around 2008, the concept of de-risking glide paths spread remarkably quickly. Although pension plans are often seen as conservative and slow to adopt new ideas, de-risking glide paths were widely embraced almost immediately.

We have reached the point where most frozen pension plans have adopted a de-risking glide path, and it is those who have not done so that find themselves in the minority.

This paper discusses:

  • A brief history of glide paths
  • Why (and when) de-risking glide paths makes sense
  • Asymmetric surplus risk
  • Design considerations

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