Probably I am missing something or I am too deep into material now… but aren’t these two answer actually saying the same thing?
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The realized returns on the portfolio may not equal the expected return. While expected return is stable, realized returns can be volatile. As the Plan is fully funded (but no longer in a surplus situation), the Plan could experience shortfall between assets and the present value of liabilities if realized returns are less than the expected return.
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The company is partially funding debt-like liabilities with equities. While equities may have higher return potential than debt assets, equities exhibit higher market risk.
I mean number 2) is saying same thing as 1) just in another way… both have to do with equity volatility