Pricing Pension Promises Appropriately

Over the last 20 years there has been a seismic shift in the private sector away from the provision of defined benefit plans to defined contribution plans. The primary (although not only) reason for the shift has been the accounting standards requirement to measure the liability using spot market yields on high quality corporate bonds. This effectively led to both volatile balance sheets and a fundamental mispricing of the pension liability. In today’s webinar we will show why this is the case and how a more equity based measurement of a pension liability should be used that would lead to lower balance sheet volatility and a more appropriate pricing of the pension promise.