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Rebalance (Pensions) meaning

What does Rebalance (Pensions) mean?
In pensions practice, rebalancing means adjusting a scheme’s investments so they realign with the target asset allocation or benchmark set by the trustees’ investment strategy (for example, buying or selling assets, or redirecting cashflows) when market movements have caused drift. It is not a defined statutory term; it is a common investment expression used across UK and Irish pensions law and practice. Rebalancing supports trustees’ fiduciary duties and the prudent person/diversification requirements under the Pensions Act 1995 and the Occupational Pension Schemes (Investment) Regulations 2005 (UK), and under the Pensions Act 1990 and IORP II regime (Ireland). It is typically addressed in the Statement of Investment Principles (UK) or SIPP (Ireland) and implemented through manager mandates and rebalancing policies (often using periodic reviews or tolerance bands). For defined benefit schemes, rebalancing helps manage funding and risk (including maintaining growth/hedging allocations). For defined contribution schemes, it maintains the intended risk profile of default and lifestyle strategies. Key governance points include decision-making and delegation, monitoring against the benchmark, liquidity and transaction costs, timing and transition management, and any constraints for illiquid or private market holdings. Usage and legal context are broadly consistent across England & Wales, Scotland, Northern Ireland and Ireland.
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