City Research Online

Abstract

We establish 16 good practice principles for modelling defined contribution pension plans. These principles cover the following issues: model specification and calibration; modelling quantifiable uncertainty; modelling member choices; modelling member characteristics, such as occupation and gender; modelling plan charges; modelling longevity risk; modelling the postretirement period; integrating the pre- and post-retirement periods; modelling additional sources of income, such as the state pension and equity release; modelling extraneous factors, such as unemployment risk, activity rates, taxes and welfare entitlements; scenario analysis and stress testing; periodic updating of the model and changing assumptions; and overall fitness for purpose.

Publication Type:	Article
Additional Information:	This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
Publisher Keywords:	defined contribution pension plans; PensionMetrics methodology; OECD Roadmap for the Good Design of Defined Contribution Pension Plans; EIOPA Good Practices on Information Provision for DC Schemes: Enabling Occupational DC Scheme Members to Plan for Retirement
Subjects:	G Geography. Anthropology. Recreation > GF Human ecology. Anthropogeography H Social Sciences > HD Industries. Land use. Labor H Social Sciences > HN Social history and conditions. Social problems. Social reform
Departments:	Bayes Business School > Finance

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