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📉 '''Glide path''' refers, within the insurance and retirement-products industry, to a predetermined trajectory along which an investment allocation, [[Definition:Reserve | reserve]] position, funding ratio, or risk exposure is systematically adjusted over time toward a defined target state. The concept is most commonly encountered in [[Definition:Life insurance | life insurance]] and [[Definition:Pension | pension]]-related products — particularly [[Definition:Target-date fund | target-date funds]] offered inside [[Definition:Group retirement plan | group retirement plans]] — where the asset mix gradually shifts from growth-oriented investments toward more conservative, income-generating holdings as a participant approaches retirement. However, the term has been adopted more broadly in insurance capital management and regulatory contexts to describe any structured, time-dependent transition in risk posture or financial positioning.

⚙️ A glide path is typically expressed as a schedule or formula specifying portfolio allocations (or other quantitative parameters) at defined intervals. In a target-date fund sold through an insurer's retirement or annuity platform, the glide path might prescribe an equity allocation of 80% for participants thirty years from retirement, declining to 30% at the retirement date and continuing to de-risk into the distribution phase — a design feature that insurers and [[Definition:Asset manager | asset managers]] calibrate using [[Definition:Actuarial modeling | actuarial modeling]], [[Definition:Longevity risk | longevity risk]] assumptions, and capital market expectations. Outside of retirement products, insurers use glide-path frameworks in [[Definition:Asset-liability management (ALM) | asset-liability management]]: for example, a [[Definition:Run-off | run-off]] insurer may adopt an investment glide path that progressively shortens portfolio duration as its [[Definition:Claims reserve | claims reserves]] are paid down, or a newly licensed insurer may agree with its regulator on a [[Definition:Solvency | solvency]] capital glide path that phases in full compliance with [[Definition:Risk-based capital (RBC) | risk-based capital]] requirements over several years. Under the European [[Definition:Solvency II | Solvency II]] regime, transitional measures effectively created regulatory glide paths allowing insurers to adjust their technical provisions and capital positions gradually following the framework's 2016 implementation.

💡 Getting the glide path right carries material consequences for both policyholders and insurers. For retirement-product participants, an overly aggressive glide path exposes them to sharp drawdowns near retirement — so-called "sequence-of-returns risk" — while an excessively conservative path may produce insufficient accumulation. Insurers offering [[Definition:Guaranteed benefit | guaranteed benefits]] within variable annuity or unit-linked products must align their hedging and reserve strategies with the embedded glide path to avoid mismatches that could generate [[Definition:Solvency | solvency]] strain. Regulators in markets like the U.S., Japan, and the EU increasingly scrutinize glide-path design in retirement products as part of [[Definition:Conduct risk | conduct risk]] oversight, ensuring that the trajectory reflects realistic assumptions and is communicated transparently. For insurance investment teams and chief risk officers, the glide path is a fundamental planning tool — translating long-horizon strategic intent into a disciplined, time-bound operational framework that connects [[Definition:Investment policy | investment policy]], [[Definition:Liability management | liability management]], and regulatory compliance.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Asset-liability management (ALM)]]
* [[Definition:Target-date fund]]
* [[Definition:Group retirement plan]]
* [[Definition:Solvency II]]
* [[Definition:Longevity risk]]
* [[Definition:Risk-based capital (RBC)]]
{{Div col end}}

Definition:Glide path - Revision history

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