Undoubtedly, the pension systems are in a crisis. Corporations, governments and regulators need to adopt new approaches before individuals are left alone with their pension and healthcare planning. An increasing dependency ratio (ratio of pensioners versus workers) has forced governments to decrease their retirement benefits; while at the same time corporate pension schemes have disappointed with their low returns (not to speak about their deficits) due to their current financial planning. The perceived view of experts is that regulators and pension fund trustees need to identify the pension schemes funding difficulties and take corrective actions quickly. From an asset management side the investment strategy needs to protect a plan’s surplus in
downward market conditions.

Mulvey et al. propose an integrated pension trust and corporate planning system; enterprise-wide risk management, which is a generalisation of the LDI/ALM framework. The pension plan can be closely linked to the economic path of the sponsoring company as well as the sponsoring company can be closely linked with the overall economy.

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