Description: This paper reviews the life cycle of a typical pension plan, examines the issues relating to its funding, and proposes a new funding approach that tries to balance the various concerns. From The Future of Pension Plan Funding and Disclosure Monograph, M-RS05-1.

Description: This paper presents a history of traditional topics like actuarial cost methods and assumptions, the history of past inquiries into the dynamic and stochastic nature of pension costs, and the perceptions and concerns of pension actuaries of the past. From The Future of Pension Plan Funding and Disclosure Monograph, M-RS05-1.

Description: Abstract: A common approach to estimating the total amount of savings required to fund retirement is to first apply a generic “replacement rate” to pre-retirement income, such as 80%, to get the desired retirement income need. That need is then assumed to increase annually at the rate of inflation for the duration of retirement, which is generally assumed to be some fixed period, such as 30 years. Using government data along with a fairly simple market and mortality model, we explore these assumptions to more accurately estimate the true cost of retirement.

Description: A common approach to estimating the total amount of savings required to fund retirement is to first apply a generic “replacement rate” to pre-retirement income, such as 80%, to get the desired retirement income need. That need is then assumed to increase annually at the rate of inflation for the duration of retirement, which is generally assumed to be some fixed period, such as 30 years. Using government data along with a fairly simple market and mortality model, we explore these assumptions to more accurately estimate the true cost of retirement

Description: Part 1 proposes solutions to the first of three flaws of the current financial model to obtaining the fair value of the public sector employer’s pension benefit liability.

Description: Exploration of sources of volatility in retiree health valuations, noting how volatility arises and might be mitigated, with discussion of valuation parameters more problematic for retiree health benefits than for pensions. Three significant influences on retiree health valuation volatility are covered-- changes in benefit level, fluctuations in cost level, and alterations in eligibility for, or duration of, benefit – and attention focused on the last two. Specific conclusions result in recommendations, which are supported by practical examples contrasting volatile measurement results with those likely from the recommended practices. Theoretical discussion includes health claim variation, health trend usage, financial economics, option pricing, discount rates, and deterministic vs. stochastic modeling.

Description: Part 5 addresses various purposes for measuring a public sector pension liability and which measures have the most practical usefulness.

Description: Paper discusses transition considerations if bond-based discount rates are used for funding public pension plans.

Description: Part 4 presents an alternate approach to obtaining the fair value of the public sector employer’s pension benefit liability.

Description: The methods of pension funding are generally understood, but references in the actuarial literature are rather sparse. This paper attempt, in some measure, to get at least the fundamentals of pension funding into the actuarial literature. From Society of Actuaries 50th Anniversary Monograph, M-AV99-1.