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Recreating Sustainable RetirementResilience, Solvency, and Tail Risk$
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Olivia S. Mitchell, Raimond Maurer, and P.Brett Hammond

Print publication date: 2014

Print ISBN-13: 9780198719243

Published to Oxford Scholarship Online: December 2014

DOI: 10.1093/acprof:oso/9780198719243.001.0001

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PRINTED FROM OXFORD SCHOLARSHIP ONLINE (oxford.universitypressscholarship.com). (c) Copyright Oxford University Press, 2020. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in OSO for personal use. date: 03 December 2020

The Funding Debate:

The Funding Debate:

Optimizing Pension Risk within a Corporate Risk Budget

(p.273) Chapter 13 The Funding Debate:
Recreating Sustainable Retirement

Geoff Bauer

Gordon Fletcher

Julien Halfon

Stacy Scapino

Oxford University Press

Defined benefit pension risk management has traditionally focused on achieving a balance between the risks associated with the liabilities and the expected returns on investments. This approach does not capture the fact that a pension plan is an aspect of running an overall business and must compete for capital against alternative investments the corporation can make. Pension funding strategies should be assessed against other corporate cash uses and strategies, such as investment in productive capacity, research and development initiatives, share or debt buybacks, or potential acquisitions. Considering pension funding relative to potential corporate actions allows a company to optimize the use of available cash resources and balance alternative strategies.

Keywords:   Corporate finance, pension funding, asset-liability management, corporate governance, pension strategy

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