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Projecting Pension Outcomes at Retirement - Towards an Industry Reporting Standard

Kees De Vaan and Daniele Fano
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Kees De Vaan: Syntrus Achmea
Daniele Fano: Tor Vergata University

Bankers, Markets & Investors, 2015, issue 134, 71-86

Abstract: We propose a method for projecting pension benefits, deriving from DC pension plans and other funded products, at retirement. Projections highlight how the current choice of asset allocation impacts on future potential retirement outcomes. The latter are compared with a money-back benchmark so as to clarify the trade-off between risk and return. After the initial projections, the pension plan revises its forecasts of retirement benefits on a yearly basis as a function of its own realized returns. Previous shorter-term projections are also compared to shorter-term ex-post performance. This simple method is a step towards an industry-reporting standard that responds to regulators’ quest for helping investors monitoring the risk of their future pension.

Keywords: Pension Fund; Financial Education; Performance Evaluation; Long -term Asset Allocation (search for similar items in EconPapers)
JEL-codes: G23 D14 G11 (search for similar items in EconPapers)
Date: 2015
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