Can anyone help with the below?
DB plans funding status
In book 5, page 11 of the Kaplan material, it says that a higher funding status for a DB pension plan increases the liquidity requirements. The argument is that a higher funding status will lead the sponsor to reduce contributions. I find this counter intuitive. I would assume that a higher funding status reduces the contributions for the sponsor as long as the surplus can be maintained.
Endowment donations and risk ability
One of the CFAI examples says that new donations to an endowment do not increase the risk ability as spending (liquidity) is based on AUM. New donations increase AUM and therefore the spending rate is constant and the dollar amount increases. This implicitly assumes that new donations are directly invested and are not (partially) used to cover the spending needs. On the contrary, Kaplan (p.19 on book 5) says that fundraising from donors reduces the spending rate, implying that new donations are partly or fully used to fund spending (rather the being directly invested).
What are your thoughts on the above? How would you treat a similar question on the exam?