Challenges for the UK pension system: the case for a pensions review All assumptions are reviewed with the Board of Actuaries. It may be a single rate, it may vary by age or service, or it may vary over future years. Additionally, interest rates have hit all-time lows, diminishing expectations for returns on fixed-income investments, such as bonds. Ifthecurrent assumed rate of return is below the mid-pointin the range, half of the excess gains will be used to lower the assumption. Compound frequency. NewRetirement Planner Assumptions | NewRetirement Help Center The actuary should take into account the following when applicable: Depending on the purpose of the measurement, the actuary may determine that it is appropriate to adjust the economic assumptions to provide for adverse deviation or reflect plan provisions that are difficult to measure. If the actuary takes into account the investment policy in selecting an investment return assumption, the actuary should consider reflecting whether the current investment policy is expected to change during the measurement period. 3 0 obj The distinction between the pension liability discount rate assumption and the investment return assumption is often blurred in practice because it is assumed that they are numerically equal. The actuary may assume multiple investment return rates in lieu of a single investment return rate. We believe, however, that it may be acceptable for employers to consider probable changes in the portfolio mix (e.g., to bring it back in line with the target mix or to align with a new target mix), provided the changes will occur in a reasonable period of time and have been approved by the appropriate level of management. For example, the assumed rate of investment return for the pension plans was 7 percent for . If the actuary learns of an event occurring after the measurement date that would have changed the actuarys selection of an economic assumption, the actuary may reflect this change as of the measurement date.
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