IPS institutionals

so let me get this straight… if there is anything straight in these IPS… when we talk about DB pensions or foundations, do we refer to both willingness and ability if we assess the overall tolerance? i saw a case in 2002 where they also considered willingness for a foundation, but I’ve also seen situations where DB pensions where only considered for their ability.

so vague for both CFAI and Swcheser upon IPS. i think i will take the recent CFAI mock exam as the right one.

so the right one is assess both willingness and ability? or should we only consider will. based on existance of specific statements in text

i did the 2002 and only based it on ability not willingness and was SHOCKED at the answer. and it scares me that it was a real CFAI test…

I haven’t seen the exam that you’re referring to but were there any explicit statements regarding the plan sponsor’s desire to get the plan to a funded status/regain profitability through the plan/reduce risk of the firm through the plan? If so, that would represent willingness.

Note from Schweser with regards to a Pension Plan question: “Exam questions do not normally ask for willingness to tolerate risk for an institutional investor.”

Agree with Dwight - for institutions, the decision making process should be very objective, so ability is the primary factor.

The should be willing to take at least the amount of risk that funds their liabilities. They have that duty to their beneficiaries. Foundation I could maybe see as they don’t have a contractual liability (besides potential spending requirement).