Periodic and ongoing re-optimizations of Liability-Centric Solutions created using stochastic optimizations are very important in order to reflect emerging pension plan’s experiences and changing capital market conditions.
Rerun Frequency Ann-Quart-Mon
Typical frequency of Glidepath re-optimization is once every year, but sometimes re-optimization is done more frequently, such as quarterly or even monthly, when market conditions change substantially or when clients’ objectives evolve to the point that a new or updated solution is needed.
Annual Capital Market Assumptions
Capital Market Assumptions used for ALM Study and stochastic optimization are typically updated annually and it is important to re-optimize Glidepath as soon as Capital Market Assumptions change, whether it is annually or more frequently if CMA are updated quarterly, monthly or on an ad hoc basis.
Annual Actuarial Valuations
Pension plan actuarial valuations are done annually and it is important to update Glidepath as soon as actuarial data changes, whether it is annually or more frequently if actuarial valuations are re-run for other reasons, such as re-measurements due to amendments, lump sum payouts, demographic changes, etc.
ALM Study
Updates
ALM Study is also completely re-run at the same time Glidepath is re-optimized, whether it is annually or more frequently, since stochastic optimization is a natural extension of ALM Studies as stochastic optimization is fundamentally based on many ALM Study runs.