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Glide Path Design

Guiding Principles

  • Key objective is to introduce a framework to guide the de-risking process
  • Main driver should be funded status. As funding status goes up, the upside generally gets more limited and risk should be reduced
  • Start from the end state and fill in a simple path to get there. Seek adequate return for current and end state to help achieve plan objectives
  • May consider introducing additional variables that indicate the relative attractiveness of Return-Seeking Assets (RSA) relative to Liability-Hedging Assets (LHA) for more tactical allocations
  • Try to keep it simple

EXAMPLE   STRUCTURE

Funded Status

LHA Allocation

70%

35%

80%

50%

90%

65%

100%

80%