On the investment strategies in occupational pension plans

Demographic changes increase the necessity to base pension system more and on second third pillars, namely occupational private plans; this paper deals with Target Date Funds (TDFs), which are a typical investment opportunity for planners. TDFs usually identified decreasing fraction of wealth invested in equity (a so-called glide path) as retirement comes closer, i.e. is riskily younger saver is. We investigate whether actually optimal presence non-tradable income risk stochastic volatility environment. The planning procedure formulated optimization problem. find it (random) contributions that induce path exhibiting structure, both constant Moreover, initial contribution made account strongly influence risky assets. aversion an individual mainly determines shape path, while ratio influences steepness path.