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Projecting Pension Outcomes at Retirement - Towards an Industry Reporting Standard

Author

Listed:
  • Kees De Vaan

    (Syntrus Achmea)

  • Daniele Fano

    (Tor Vergata University)

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.

Suggested Citation

  • Kees De Vaan & Daniele Fano, 2015. "Projecting Pension Outcomes at Retirement - Towards an Industry Reporting Standard," Bankers, Markets & Investors, ESKA Publishing, issue 134, pages 71-86, January-F.
    • Handle: RePEc:rbq:journl:i:134:p:71-86
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    More about this item

    Keywords

    Pension Fund; Financial Education; Performance Evaluation; Long -term Asset Allocation;
    All these keywords.

    JEL classification:

    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions

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