Open AccessCollective Defined Contribution Schemes as an Alternative to Pension PlansCollective Defined Contribution Schemes as an Alternative to Pension Plans
Author(s) -
Denise Gómez Hernández,
Michael Demmler
Publication year - 2022
Publication title -
mercados y negocios
Language(s) - English
Resource type - Journals
eISSN - 2594-0163
pISSN - 1665-7039
DOI - 10.32870/myn.vi45.7651.g6730
Subject(s) - pension , pension plan , actuarial science , plan (archaeology) , sustainability , life expectancy , business , pension fund , economics , finance , medicine , ecology , population , environmental health , archaeology , biology , history
Traditional pension plans, such as defined contribution and defined benefit, face several risks: being the most known, the increase of the life expectancy. To reduce this risk, many hybrid pensions plans have been proposed, to mitigate this risk. The objective of this study is to explore the financial and actuarial sustainability of a hybrid pension plan known as collective defined contribution (CDC) by accumulating a pension fund with the methodology found in Aon (2020). The results of the simulations in this study show that the replacement rate defined in the design of a CDC pension plan is reached by all the members in the plan. Moreover, that through the same pension fund, deficits and gains are financed by it.