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The assetmix is the same for the three variants, so total risk to be distributed is the same for the three variants.
Changes in the assetmix of the pension fund will be overruled by the risk-bearing stakeholders.
In general, the higher the expected return of the assetmix and thus the higher next-year expected funding ratio, the larger the mismatch risk.
We compare four alternatives regarding the assetmix.
For each of the three variants, the assetmix is composed of 50 % stocks and 50 % bonds.
Although the assetmix may be chosen strategically to include assets that show correlation with wage growth, a non-hedgeable residual wage risk remains.
The assetmix of savings (between bonds and equities) can be adjusted each period.
The assetmix is decisive to the riskiness of the fund, i. e. the size of mismatch risk on the balance sheet.
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