Projected interest rate and model calculations in the context of a pure defined contribution plan

Overview

Model calculations are widely used in occupational pension schemes. They are intended to give members an overview of the guaranteed and expected benefits from the pension. A corresponding expectation is therefore also directed at pure defined contribution plans.

As guarantees are explicitly prohibited in the case of pure defined contribution plans, all model calculations can only represent indications. In accordance with Section 41 (1) (1) PFAV and Section 8 VAG-InfoV, providers of pure defined contribution plans are also legally obliged to prepare such indications. The key parameter for these model calculations is the projected interest rate, which is used to extrapolate the accrued pension capital including the contributions paid and the resulting pension.

As the presentation of a pension according to a best estimate is new for the beneficiaries on the one hand and on the other hand occupies an important position in the context of information on pure defined contribution plans, there are special requirements for the quality of the estimation of these parameters.

This results paper deals with the question of how this projected interest rate (possibly also as a vector) can be determined appropriately on the basis of the investment strategy pursued.