Download Fair Value and Pension Fund Management by Niels E. Kortleve, Theo E. Nijman, Eduard H. M. Ponds PDF

By Niels E. Kortleve, Theo E. Nijman, Eduard H. M. Ponds

The papers amassed during this e-book are concerning the program of fair-value rules to accounting for pensions and its outcomes for pension coverage. through comparability with valuing the substantial bulk of company resources and liabilities, the marketplace values of 401-k resources and liabilities should be envisioned particularly thoroughly. however, pension accounting has been, and mostly nonetheless is, some of the most arcane and opaque components of monetary reporting simply because fair-value rules are usually not utilized. a number of reports have documented the distorting results that these accounting practices have had on company pension investment and asset allocation selection. based on new principles followed by way of the foreign Accounting criteria Board, yes fair-value rules should be utilized within the yr 2006. The e-book of this publication now's hence just-in-time. It bargains nice price to pension pros, pension fund trustees, regulators, and certainly somebody with a major curiosity in pension coverage. It offers with the applying of fair-value rules to accounting for pensions. it really is written based on the hot principles set by way of the overseas Accounting criteria Board. This publication fills a considerable hole during this box.

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3. Although the assumptions required for fair values to be an appropriate are likely to be met from the perspective of a shareholder looking at the economic cost of meeting pension and insurance liabilities, these assumptions are less likely to be met from the perspective of an individual beneficiary, for whom we argue a fair value generally represents an upper bound on the value. The last of these arguments lays down an important challenge for the pensions and insurance industry. 2. Individual choices Pension and insurance assets and liabilities do not exist in isolation – they are part of a wider economic framework.

Ewijk, C. van (2003), Nieuw pensioenakkoord nodig, ESB, 21 February 2003 (in Dutch). Ewijk, C. van and M. van de Ven (2002), Pensioenvermogen Vanuit Macro-economisch Perspectief, Preadviezen van de Koninklijke Vereniging voor de Staathuishoudkunde (KVS), Amsterdam (in Dutch). Ewijk, C. van and M. van de Ven (2003), Pension funds at risk, CPB report 2003/1, pp. 22–27. Ewijk, C. van, B. Kuipers, H. ter Rele, M. van de Ven and E. Westerhout (2000), Ageing in the Netherlands, CPB/Sdu, The Hague. SER (The Social and Economic Council of the Netherlands) (2002), rapport Witte vlekken op pensioengebied, quick scan 2001 (in Dutch).

Equities) $100 PV of future pension payments $100 Contingent Liabilities Contingent Assets Claim on additional contributions $a Claim on additional benefits $b Option to reduce benefits $c Claim on excess hard assets $d ‘Musical Chairs’ option to wait and see what happens and sort things out later $e ‘Musical Chairs’ option to wait and see what happens and sort things out later $f Notes to balance sheet: • • • • Hard Liabilities are the PV of a payment stream discounted on a market-determined yield curve basis Hard Assets are a portfolio of equities marked to market.

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