2013 Exam. Q7 Part A. Why Vermillion's pension plan has lower shortfall risk relative to Shire's.

[veryjasper]

One of the answer form the answer keys says:
Vermillion’s smaller asset/liability risk mismatch contributes to a lower shortfall risk relative to Shire, all else equal.
I have no idea how to tell that Vermillion’s asset liability risk mismatch is smaller than Shire’s. Any helps please?

 

[jeffsick]

Because vermillion had a larger allocation to fixed income which has a high correlation with the pension liability and would reduce shortfall risk. That is the risk that the plan would have a funding shortfall

 

[Gersonides]

For part ii., would higher service costs contribute to higher shortfall risks? This was my answer but it was not the guideline answer.