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Meeting defined benefit pension obligations: measurement, risk and flight paths

Published online by Cambridge University Press:  28 November 2012

J. Hatchett ,
M. Hurd  and
I. Clacher
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Abstract

The UK defined benefit pension scheme landscape has changed dramatically over the last few decades. During this period of change, conflicting views regarding the measurement of both assets and liabilities has made communication challenging. In turn, this has led to an under appreciation of risk and often suboptimal decision making. This paper seeks to draw together a variety of contrasting views to provide a coherent framework for stakeholders to meet pension scheme obligations over time.

The proposed framework encourages agreement between both scheme sponsors and trustees towards a common target through a well articulated plan or “flight path”. In addition, the proposed flight path structure provides a common basis underpinning the measurement of both pension obligations and the risks inherent in any plan to meet those obligations.

Keywords

UK defined benefit pension schemecommunicationriskframeworkscheme sponsorsscheme trusteesmeasurementobligations.
Type
Sessional meetings: papers and abstracts of discussions
Information
British Actuarial Journal , Volume 18 , Issue 2 , July 2013 , pp. 271 - 307
Copyright
Copyright © Institute and Faculty of Actuaries 2012 

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