Risks 2013, 1(1), 1-13; doi:10.3390/risks1010001
Article

Early Warning to Insolvency in the Pension Fund: The French Case

1 Institut mational d'études démographiques, 133, bld Davout, 75980, Paris cedex 20, France 2 Ecole des hautes études en sciences sociales, 190 Avenue de France, F—75013 Paris, France 
Received: 9 November 2012; in revised form: 4 January 2013 / Accepted: 7 January 2013 / Published: 18 January 2013
PDF Full-text Download PDF Full-Text [269 KB, Updated Version, uploaded 25 January 2013 15:19 CET]
The original version is still available [269 KB, uploaded 18 January 2013 16:22 CET]
Abstract: 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.
Keywords: pension funding; retirement benefits; control differential equation; misestimation of mortality

Article Statistics

Load and display the download statistics.

Citations to this Article

Cite This Article

MDPI and ACS Style

Bonneuil, N. Early Warning to Insolvency in the Pension Fund: The French Case. Risks 2013, 1, 1-13.

AMA Style

Bonneuil N. Early Warning to Insolvency in the Pension Fund: The French Case. Risks. 2013; 1(1):1-13.

Chicago/Turabian Style

Bonneuil, Noël. 2013. "Early Warning to Insolvency in the Pension Fund: The French Case." Risks 1, no. 1: 1-13.

Risks EISSN 2227-9091 Published by MDPI AG, Basel, Switzerland RSS E-Mail Table of Contents Alert