“Revise the investment policy statement of the pension plan to take into account a change in the [3 year] forecast for inflation in the U.K.” True or false?

false - that is tactical change and not necessary to revise IPS

Yes. But I forgot to add that the forecast is for next 3 years.

i would still say no, do not change IPS - but very uncertain…haha

You’re right. IPS won’t be affected by the economic forecastngs.

Yes, economic forecasting won’t affect IPS…if they forecast is for long term, may ask to revise SAA…

This is a pretty normal question on this topic, but the CFAI will probably throw one of these at us:

Assuming there is a change in an asset class that will cause the returns and volatility of the asset class to be lower in the future, should the strategic asset allocation be altered?

True or false?

permanent - change IPS - rework the SAA.

Temporary - use the TAA


i’d say yes

the whole asset class is changing so expected returns and volatility will be changing as well -

this will throw a wrench in all of your previous expectations and could/will lead the investor to be exposed to too much/little risk and possibility of not meeting return requirements