This chapter examines the policy implications of managing a defined benefit (DB) plan as a separate entity or as an entity integrated into the sponsoring organization. It shows how the pension liability affects investment policy and how different views on the nature of the labor market lead to different investment policies. In general, the management of DB pension plans should be integrated with the management of the sponsoring organization since the two are closely entwined. However, this will depend on the best interests of plan beneficiaries.
Keywords: defined benefit plans, pension plans, investment policy, pension funds, pension liability