A Retirement Plan Based on Fixed Accumulation and Variable Accrual

M. Khorasanee and Ho Ng

North American Actuarial Journal, 2000, vol. 4, issue 1, 63-76

Abstract: We propose a new type of retirement plan, aimed at achieving a compromise between stability in cost for the plan sponsor and guaranteed accumulation for the participants. The behavior of the plan is compared with that of a money purchase plan for both deterministic and stochastic investment scenarios. The proposed plan is shown to provide more stable and predictable benefits than a money purchase plan. Obstacles to the establishment of such a plan, from the perspective of U.S. pensions legislation, are considered.

Date: 2000
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DOI: 10.1080/10920277.2000.10595877

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