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- Title
Financing a Defined Benefit Pension Plan and Computer Simulations Can a Plan Sponsor Really Evaluate Funding and Investment Policy by Rolling Dice Electronically?
- Authors
DeMonte, Arnold
- Abstract
Quantifying financial risks in defined benefit pension plans means knowing the odds that contributions will increase to a specified level over a period of years if the equity allocation is increased, or knowing the chance that a charge to equity will be reported at some time if a funding method is changed. This article describes a method that is designed to make the appropriate calculations and produce results in a format particularly suited to the pension financing question. This technique, which is often called the "Monte Carlo simulation," requires the use of high-speed computing capabilities.
- Subjects
PENSIONS; PENSION plan funding; DEFINED benefit pension plans; DEFINED contribution pension plans; MONTE Carlo method; NUMERICAL analysis
- Publication
Benefits Quarterly, 1995, Vol 11, Issue 4, p15
- ISSN
8756-1263
- Publication type
Article