Dynamic asset allocation

Guaranteed defined contribution pension schemes are faced with the tough challenge of maximising pensions while remaining solvent at all times. Aggressive investment strategies can be counter productive and destabilise fund operation, so a balance must be struck between operational stability and investment return

Introduction

For defined-contribution (DC) pension schemes which combine a minimal return guarantee with a bonus option - sometimes denoted with-profits pension schemes - the objective of the company is to generate excess returns while staying funded at all times.

Excess returns are not necessarily to the immediate benefit of clients, though, since surplus can be kept within the fund as a collective surplus. It is when a bonus is first declared that funds are actually made available to clients