v5 - p 377 The question provides a scenario where Duane Rogers expects UK inflation to increase signifiantly over the next three years. Q2a - asks - should the IPS be revised to account for the change in the inflation forecast? If Duane Rodgers expects the three year inflation in the UK to increase significantly, wouldn’t you expect there be a potential revision to the pension scheme’s IPS? Its significant and over more than 1 year - this is potentially a material change in the market, isnt it? The book says no (IPS depends on risk tollerance, time horizon, etc), short time frame) ?.. p A26… My Takeaway - the market could collapse but as long as nothing changes in the Investors situation, then dont revise IPS… that doesnt make sense to me. THe chapter is about the Monitoring of Investors Circumstances, the market, the portfolio. THey all kind of intereact.
^Unless its a HUGE significant change then the IPS should be left alone. If say Inflation was expeced to be 20% then ok that is different, but just increase significantly doesn’t do much to negate a IPS revision.
I guess its all relative - what is significant vs HUGE?! -
I’d tell ya but your better off asking CSKs wife OHHHH sorry CSK had to go there to get you back
I think here 3 years is the driving factor. Unless it’s a long term (and significant) change in market conditions there’s no need to change the IPS. However, not sure what CFAI thinks is long term in this context.