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Actuarial Inputs and the Valuation Of Public Pension Liabilities and Contribution Requirements: A Simulation Approach
Author(s) -
Chen Gang,
Matkin David S. T.
Publication year - 2017
Publication title -
public budgeting and finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.694
H-Index - 30
eISSN - 1540-5850
pISSN - 0275-1100
DOI - 10.1111/pbaf.12154
Subject(s) - valuation (finance) , pension , actuarial science , economics , point (geometry) , public economics , business , finance , mathematics , geometry
There are significant concerns about the financial condition of public pensions in U.S. state and local governments. To date, studies of public pensions have given limited attention to the effect of actuarial inputs on the valuation of pension liabilities and contribution requirements. This paper uses a simulated public pension system to examine the sensitivity of actuarial input changes on funding ratios and contribution requirements. We examine instantaneous and lagged effects, marginal and interactive effects, and effects under different funding conditions and demographic profiles. The findings emphasize the difficulty of conducting cross‐sectional analysis of public pension systems and point to several important considerations for future research.