The effect of the recent financial crisis on defined benefit pension funds’ asset allocation

What is the effect of the recent financial crisis on DB pension funds’ asset allocation? That is the central research question of this thesis. In the current harsh financial times, a large amount of pension funds struggle to meet their liabilities, leaving younger generations in uncertainty about their pensions. Most defined benefit pension funds are underfunded, having fewer assets than what is promised, despite the fact that the valuation of these liabilities is often severely underestimated. (Novy-Marx & Rauh, 2011). Apart from being confronted with financial crises, pension funds have been under tightening regulation, a maturing participant base, decreasing treasury yields and increasing demands for transparency and accountability (Andonov et al., 2012).