Measuring Intergenerational Equity in Pension Plans

Target benefit plans (a type of hybrid pension plan combining defined benefit and defined contribution plan features) continue to attract interest within the Canadian pension landscape yet many important questions remain about their operation, especially concerning intergenerational equity. Historically, pension actuaries have not explicitly measured the tradeoffs between the risks and benefits of different cohorts of plan members but this is becoming a necessity with target benefit plans . This project will explore alternative ways of measuring and communicating intergenerational equity in search of simple numeric and/or graphical tools to express the plan's tendency to accelerate or delay payments to current versus future members. We will conduct a literature search and implement some of these tools in R.