Early Warning to Insolvency in the Pension Fund: The French Case
The financial equilibrium of pension funds relies on the appropriate computation of retirement benefits, taking account of future payments and discount rates. Short-term errors in the commitment for retirement benefits, ill-suited investment in the stock market, or improper mixture with pay-as-you-g...
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| Format: | Article |
| Language: | English |
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MDPI AG
2013-01-01
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| Series: | Risks |
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| Online Access: | http://www.mdpi.com/2227-9091/1/1/1 |
| _version_ | 1818821008822370304 |
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| author | Noël Bonneuil |
| author_facet | Noël Bonneuil |
| author_sort | Noël Bonneuil |
| collection | DOAJ |
| description | The financial equilibrium of pension funds relies on the appropriate computation of retirement benefits, taking account of future payments and discount rates. Short-term errors in the commitment for retirement benefits, ill-suited investment in the stock market, or improper mixture with pay-as-you-go payments have long-term consequences and may lead the pension fund to insolvency. The differential equation governing the current assets shows the respective weights associated with the error on the interest rate, the error on the extra bonus, and the error made in forecasting mortality. These weights are estimated through simulations. A short follow-up is sufficient to estimate the three errors. A threshold for the extra interest rate to be earned on the financial market is given to counter-balance the extra bonus when mortality is forecast correctly. |
| first_indexed | 2024-12-18T23:01:22Z |
| format | Article |
| id | doaj.art-2c6011f5f9ed40338da0687ac620c075 |
| institution | Directory Open Access Journal |
| issn | 2227-9091 |
| language | English |
| last_indexed | 2024-12-18T23:01:22Z |
| publishDate | 2013-01-01 |
| publisher | MDPI AG |
| record_format | Article |
| series | Risks |
| spelling | doaj.art-2c6011f5f9ed40338da0687ac620c0752022-12-21T20:48:34ZengMDPI AGRisks2227-90912013-01-011111310.3390/risks1010001Early Warning to Insolvency in the Pension Fund: The French CaseNoël BonneuilThe financial equilibrium of pension funds relies on the appropriate computation of retirement benefits, taking account of future payments and discount rates. Short-term errors in the commitment for retirement benefits, ill-suited investment in the stock market, or improper mixture with pay-as-you-go payments have long-term consequences and may lead the pension fund to insolvency. The differential equation governing the current assets shows the respective weights associated with the error on the interest rate, the error on the extra bonus, and the error made in forecasting mortality. These weights are estimated through simulations. A short follow-up is sufficient to estimate the three errors. A threshold for the extra interest rate to be earned on the financial market is given to counter-balance the extra bonus when mortality is forecast correctly.http://www.mdpi.com/2227-9091/1/1/1pension fundingretirement benefitscontrol differential equationmisestimation of mortality |
| spellingShingle | Noël Bonneuil Early Warning to Insolvency in the Pension Fund: The French Case Risks pension funding retirement benefits control differential equation misestimation of mortality |
| title | Early Warning to Insolvency in the Pension Fund: The French Case |
| title_full | Early Warning to Insolvency in the Pension Fund: The French Case |
| title_fullStr | Early Warning to Insolvency in the Pension Fund: The French Case |
| title_full_unstemmed | Early Warning to Insolvency in the Pension Fund: The French Case |
| title_short | Early Warning to Insolvency in the Pension Fund: The French Case |
| title_sort | early warning to insolvency in the pension fund the french case |
| topic | pension funding retirement benefits control differential equation misestimation of mortality |
| url | http://www.mdpi.com/2227-9091/1/1/1 |
| work_keys_str_mv | AT noelbonneuil earlywarningtoinsolvencyinthepensionfundthefrenchcase |