Question

22. Which of the following statements about pensions over time is (are) TRUE?

I. The return requirement and discount rate for plan assets have both been decreasing

II. In terms to total AUM, the popularity of DB plans have been declining relative to DC plans

III. Allocation to alternative investments has been increasing

A. I

B. II

C. I, III

D. II, III

E. All of the statements

(Please explain answer or show work)

Answer 1

D 2 & 3 are correct.

2. The percentage of workers covered by a traditional defined benefit (DB) pension plan that pays a lifetime annuity, often based on years of service and final salary, has been steadily declining over the past 25 years.

3. Alternatives are not simply growing – they are becoming part of the investment management mainstream.

A survey by Towers Watson found that alternative asset allocations increased to an average of 19% of portfolios collectively