Suppose you were hired by a pension system with 10,000 participants. They have an average retirement age of 65 and an average life span of 90 years, with an average 30 years of service. The amount of the pension is dependent upon the number of years of service and the final salary. This varies greatly by plan participant. The average working employee is currently age 50. Payments (income to the fund) come in monthly while employees are working, and are paid monthly (expenses to the fund) upon retirement with no inflation adjustment. Assume 6% long term annual return on equities, 3% on debt, and 1% on money market accounts. What sort of debt vs. equity asset mix would be appropriate? What sort of return would you expect given your mix over the life of a typical employee? Carefully state your assumptions. What questions would you want to investigate before answering these questions? Suppose you were hired by a pension system with 10,000 participants. They have an average retirement age of 65 and an average life span of 90 years, with an average 30 years of service. The amount of the pension is dependent upon the number of years of service and the final salary. This varies greatly by plan participant. The average working employee is currently age 50. Payments (income to the fund) come in monthly while employees are working, and are paid monthly (expenses to the fund) upon retirement with no inflation adjustment. Assume 6% long term annual return on equities, 3% on debt, and 1% on money market accounts. What sort of debt vs. equity asset mix would be appropriate? What sort of return would you expect given your mix over the life of a typical employee? Carefully state your assumptions. What questions would you want to investigate before answering these questions