From Prof Zvi Bodie and Mr John Ralfe.

Sir, The Pension Benefit Guaranty Corporation, an agency of the US federal government which protects the pensions of 44m Americans in defined benefit pension plans, has just announced a shift in its strategic asset allocation from 15-25 per cent equities to 55 per cent equities (report, February 19). This reverses the policy adopted in 2004, which saw a significant move from equities to duration-matched bonds. Does the move back to equities make sense for the PBGC?