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Cass showcases new way to value pension liabilities

New research from Cass is offering a new way to value pension plans that takes financial risks into account.

New research from Cass is offering a new way to value pension plans that takes financial risks into account.

Managing Financially Distressed Pension Plans In The Interest Of Beneficiaries, by Director of the Pensions Institute, David Blake, and colleagues Joachim Inkmann and Zhen Shi from the University of Melbourne, shows how companies are not currently valuing their pension plans in a way that accurately reflects their financial risks, and proposes a new approach to the valuation of the pension obligation of corporate defined benefit pension plans.

Prof David Blake

Professor Blake said: “This approach has important advantages for all stakeholders of the corporate pension plan. Staff taking out pensions will have a clearer picture of the true value of their pension promise.

“Our approach also increases transparency for the sponsoring company and – especially - its shareholders who are now better able to plan for future contributions into the pension plan and to value the sponsoring company more accurately. A revision to the accounting standards that report the valuation of corporate defined benefit obligations is a clear policy implication from our analysis.”

You can read about it in the FT here.

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