For how long will defined benefit liabilities continue to grow?

Santiago Caballero

Research Reports from Watson Wyatt Worldwide

Abstract: Many pensions’ markets are experiencing a transition from Defined Benefit (DB) to Defined Contribution (DC) schemes, with most of the former being closed, frozen or wound up. Against this backdrop this paper aims to calculate the DB market’s future growth, but approaching the problem from the liabilities’ side. We develop a general model whereby we can project DB liabilities based on the expected future trends in longevity, membership dynamics and salary growth. We then can deduce the expected future evolution of DB liabilities, which if tied to assets, may be seen as an approach to predict the pension asset management market in the future.

Pages: 15
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