Pension fund investments and the valuation of liabilities under conditional indexation
Academic Paper
27 november 2008
This paper reviews the investment policy of collective pension plans. We focus on funds with a collective Defined Contribution character. We suggest two reasons to invest in equities: the lack of a well-developed market in index-linked bonds, and deliberate exposure to equity returns to collect the equity risk premium. Furthermore, this paper assesses the value of limited or conditional indexation options found in many plans.