Frozen pension plans question

CFA Level III
#1

Hi everyone,

If a pension plan is frozen, do you use only nominal bonds (if no comment about inflation indexation is made)?

Behavioral finance book says forzen plans = nominal + real, but another reading contradicts and says only nominal.

If nothing is said about inflation indexing, safe to assume only nominal bonds would mimic the liability?

Thanks everyone.

#2

I’d go for nom bonds if nothing is said about inflation-indexed liabilitiies so I’d assume there are not inflation-indexed.

No wage earning growth, so bravely I’d say only Nom bonds.