Pick a Number, Any Number; Valuing Pensions  

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Jenis: Article from Bulletin/Magazine
Dalam koleksi: The Economist (http://search.proquest.com/) vol. 399 no. 8728 (Apr. 2011), page 14-15.
Topik: Pensions; Employee; Payments; Government; Equities

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Perpustakaan Pusat (Semanggi) Nomor Panggil: EE29.65 Non-tandon: 1 (dapat dipinjam: 0) Tandon: tidak ada

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How Should a pensions promise be valued? Clearly, it is not as simple as comparing the benefits paid with contributions received each year. Offering a pension to an employee today will involve payments decades into the future. Those future payments have to be discounted at some chosen rate to calculate the current value of a pension scheme's liabilities and to allow the employer to select the right contribution rate. In the late 20th century the actuaries who advised pension funds thought a high rate was appropriate. Pensions are a long-term liability, so the employer can take a long-term view, buying equities and riding out the vicissitudes of the market. This will earn a higher return (the so-called equity-risk premium) than can be got from government bonds or cash. The contribution rate can be set to reflect this higher expected return.

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