Hostname: page-component-cd9895bd7-hc48f Total loading time: 0 Render date: 2024-12-28T13:48:19.136Z Has data issue: false hasContentIssue false
  • English
  • Français

Funding Defined Benefit Pension Schemes

Published online by Cambridge University Press:  10 June 2011

C. A. Cowling ,
T. J. Gordon  and
C. A. Speed
C. A. Cowling
Affiliation:
Mercer Human Resource Consulting, Clarence House, Clarence Street, Manchester M2 4DW, U.K., Tel: +44(0)161-832-5688, Fax: +44(0)161-837-6594, Email: charles.cowling@mercer.com
T. J. Gordon
Affiliation:
Hewitt Bacon & Woodrow, Colmore Gate, 2 Colmore Row, Birmingham B3 2QD, U.K., Tel: +44(0)121-262-5000, Fax: +44(0)1372-845-082, Email: tim.gordon@hewitt.com
C. A. Speed
Affiliation:
Hewitt Bacon & Woodrow, Prospect House, Abbey View, St. Albans AL1 2QU, U.K., Tel: +44(0)1727-888-677, Fax: +44(0)1727-814-343, Email: cliff.speed@hewitt.com
Get access Rights & Permissions [Opens in a new window]

Abstract

This paper puts the case for the Actuarial Profession revising and tightening its standards on actuarial funding advice in relation to United Kingdom occupational pension schemes. We critique current actuarial practice and advocate principles for measuring solvency and providing funding advice. In particular, we advocate that funding targets should be clearly and unambiguously related to scheme solvency. The paper also covers optimal investment strategy, treatment of the ‘company covenant’ when giving funding advice and governance issues relating to pension schemes.

Keywords

ActuarialPensionsFundingRiskSolvencyValuation
Type
Sessional meetings: papers and abstracts of discussions
Information
British Actuarial Journal , Volume 11 , Issue 1 , 01 April 2005 , pp. 63 - 97
Copyright
Copyright © Institute and Faculty of Actuaries 2005

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Bader, L.N. (2004). Pension deficits: an unnecessary evil. Financial Analysts Journal, 60(3), 15–21.Google Scholar
Black, F. (1980). The tax consequences of long-run pension policy. Financial Analysts Journal, 36, 21–28.CrossRefGoogle Scholar
Coronado, J.L. & Sharpe, S.A. (2003). Did pension plan accounting contribute to a stock market bubble? Brookings Papers on Economic Activity. Edited by Brainard, William C. and Perry, George L.. Washington, DC: The Brookings Institution.Google Scholar
Exley, C.J. & Armitage, S. (2000). Personal tax and the cost of equity. Paper presented to the Joint Institute and Faculty of Actuaries Investment Conference, June 2000. www.gemstudy.comGoogle Scholar
Exley, C.J., Mehta, S.J.B. & Smith, A.D. (1997). The financial theory of defined benefit pension schemes. British Actuarial Journal, 3, 835–966.CrossRefGoogle Scholar
McLeish, D.J.D. & Stewart, C.M. (1987). Objectives and methods of funding defined benefit pension schemes. Journal of the Institute of Actuaries, 114, 338–424.CrossRefGoogle Scholar
Meulbroek, L.K. (2000). The efficiency of equity-linked compensation: understanding the full cost of awarding executive stock options. Harvard Business School Working Paper No. 00-056. http://ssrn.com/abstract=215530CrossRefGoogle Scholar
Speed, C.A. et al. (2003). The relationship between pension scheme assets and liabilities. Paper presented to the Staple Inn Actuarial Society.Google Scholar
Tepper, I. (1981). Taxation and corporate pension policy. Journal of Finance. 36, 1–13.CrossRefGoogle Scholar
Thornton, P.N. & Wilson, A.F. (1992). A realistic approach to pension funding. Journal of the Institute of Actuaries, 119, 229–312.CrossRefGoogle Scholar