Without financial stability, it would be difficult for sponsors to develop and confidently fulfill a pension promise. Pricing in a well-functioning market is critical to assessing and managing risk with confidence. To understand why, let me give you a macroeconomic perspective of the recent financial crisis. The financial crisis had pervasive adverse financial and economic impacts.
Financial markets and institutions came under severe stress and economic activity slowed sharply as the Great Recession took hold. Pension funds experienced large losses as asset prices plunged. Central banks responded by aggressively reducing interest rates and providing extraordinary liquidity in an effort to restore financial market functioning and support economic activity.