How do households reallocate assets when faced with a large permanent income shock? We examine the asset allocation effect of a retroactive pension cut in Taiwan that specifically affected retired civil servants. Following the reform, these retirees increased their stock-to-wealth ratios by 11.0% and their stock holdings by 6.54%. Their active adjustment increased by 4.65% on average and was concentrated in the first two post-reform years. This response is consistent with a break-even motive under reference-dependent utility rather than conventional Merton-style portfolio choice. We also find larger point estimates among households with more dependent children and greater pre-reform financial resources. Retired civil servants also reallocated toward stocks with higher past realized risk premiums and increased selling activity primarily among positions with gains.