Evaluating pension insurance pricing

Evaluating pension insurance pricing

David F. Babbel
Financial Services

David Babbel’s paper, published in the Journal of Pension Economics and Finance,  focuses on the Pension Benefit Guaranty Corporation’s (PBGC) termination liabilities and addresses four pressing issues: (1) the need to discount the liability stream by current riskless interest rates instead of using corporate bond rates that reflect credit risk, call risk, and other risks, or using some ad hoc prescribed average of past rates; (2) the need to use a term structure of interest rates; (3) the need to employ more useful investment management benchmarks; and (4) how to implement a relevant and rigorous liability benchmark. To read more, click here