Sensitivity analysis of retirement funds benefits long-term cost and comparison of the parameters that define funds' operation

Abstract

Pension funds can be defined on the base of their economic function in funded pension and pay as you go systems. Another approach classifies the pension schemes in those of defined ben¬efits and those of defined contributions. The considered principles for the cost calculation of a pension scheme are invariables for the time period that a study covers. Such factors are the real earnings growth, the inflation, the return of investments, the mortality tables, the fund’s consti¬tutive provisions and the unemployment. The fact that the above factors considered as invariables is not a forecast but simply a hypothesis, which necessarily replaces a sensitivity anal¬ysis of their hypothetical long-term service cost. Pension funds comparisons in national and in¬ternational level make a useful source of information for the insured people. Useful indicators for such comparisons mainly are the indicator of pension wealth, the index of redistributions and the weighted average pension value.