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EAA Web Session 

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The aging population presents serious challenges for traditional pay-as-you-go pension systems. Longer life expectancies increase pension expenses while low birth rates weaken the future contribution base.

A buffer fund can help alleviate these problems. However, this raises questions about how much insured should contribute and how big the fund should be. Ideally, the contribution rate should be stable, but it also needs to be based on observable quantities and transparent rules.

Notional funding (NF) provides a coherent solution to this problem. It takes the liabilities of the PAYG system as seriously as those of the funded system. In NF, the PAYG system is treated as if it were a fund-ed system without assets to cover liabilities.

The objective of this web session is to illustrate the idea of Notional Funding and show how this approach unifies the analysis of funded and pay-as-you-go systems. In a first part, we will define the concept of NF and compare it with PAYG and fully funded systems. The second part is devoted to numerical results in the context of a stylised pension system. First, we show how different fertility scenarios affect contribution rates and benefit levels. Then, we will look how NF adapts to different asset return realisations. This is done by means of simple scenarios as well as by means of more realistic stochastic scenarios. In this online training, we will examine the questions of risk sharing between pension benefits and pension contributions, as well as the question of intergenerational risk sharing.

Your early-bird registration fee is € 100.00 plus 19% VAT for bookings by 29 August 2023. After this date, the fee will be € 140.00 plus 19% VAT.

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Coming soon...

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Communication for Actuaries | 23-26 October 2023

Introduction to Natural Catastrophe Modelling  | 31 October 2023

Hands-on Adaptive Learning of GLMs for Risk Modelling in R | 13 November 2023

...and a lot more! Explore our website for more information or download our overview.

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actuarial-academy.com

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