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Projections of pension benefits in supplementary pension saving scheme in Slovakia

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Abstract

New Institutions for Occupational Retirement Provision Directive, effective since 2019, lays down new information requirements for all pension providers across the EU. The directive requires providers to supply their members and savers with a Pension Benefit Statement on a regular basis. The Pension Benefit Statement should inter alia contain the projections of future pension benefits that can reasonably be expected at the moment of retirement. However, the directive does not provide any further technical specification on the methods and processes of pension benefit projections. Our motivation is to contribute to this issue and present possible approaches on pension benefit projections. The complexity of pension benefit projections requires consideration of not only expected returns on various asset categories, but also the correlation between other variables such as expected life-cycle income or decisions on the default saving strategy. Our results provide indications on the possible solutions and compare the projected pension benefits using three simulation methods with back-tested results using real supplementary pension funds operating in Slovakia.

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Authors and Affiliations

  1. Department of Finance and Accounting, Faculty of Economics, Matej Bel University in Banská Bystrica, Tajovského 10, 975 90, Banská Bystrica, Slovakia

    Michal Mešťan

  2. Department of Public Economics and Regional Development, Faculty of Economics, Matej Bel University in Banská Bystrica, Tajovského 10, 975 90, Banská Bystrica, Slovakia

    Ivan Králik & Nikola Karkošiaková

  3. Department of Tourism and Hospitality, Faculty of Economics, Matej Bel University in Banská Bystrica, Tajovského 10, 975 90, Banská Bystrica, Slovakia

    Matej Žofaj

  4. Department of Mathematical Modeling, Kaunas University of Technology, Studentu 50-141, LT-51368, Kaunas, Lithuania

    Audrius Kabašinskas

Authors
  1. Michal Mešťan
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  2. Ivan Králik
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  3. Matej Žofaj
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  4. Nikola Karkošiaková
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  5. Audrius Kabašinskas
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Correspondence to Michal Mešťan.

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We thank several anonymous reviewers, for their recommendations which improved the manuscript.

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Mešťan, M., Králik, I., Žofaj, M. et al. Projections of pension benefits in supplementary pension saving scheme in Slovakia. Cent Eur J Oper Res 29, 687–712 (2021). https://doi.org/10.1007/s10100-019-00669-2

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  • DOI: https://doi.org/10.1007/s10100-019-00669-2

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