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FutureCost: Keeping track of retirement plan risks and trends

March 16th, 2012 Leave a comment Go to comments

By Vanessa Vaag

Defined benefit plan sponsors face a tremendous amount of uncertainty. With financial market volatility and liabilities essentially marked-to-market, understanding short-term risks and long-term trends under countless scenarios is invaluable.

Plan sponsors need to understand the impact of variations in asset returns, discount rates, contribution patterns, investment strategies, and plan design so that they can be prepared for potential effects on plan funded status, accounting costs, and contribution requirements. Understanding and planning for future possibilities is a must. That is why many sponsors are turning to Milliman’s FutureCost.

FutureCost is an interactive model that provides short- and long-term projections of key financial metrics, helping decision makers prepare for what could be right around the corner as well as for what could lie further down the road. The results are easy to produce and review, with both graphical and numerical outputs generated.

Whether looking at a few deterministic projections to illustrate the sensitivity to changes in asset or liability measures of contributions requirements or accounting results, or doing a full stochastic model with thousands of scenarios to assist in the implementation of a liability-driven investment strategy, FutureCost can help sponsors make important decisions, keeping their eyes open to the potential outcomes.

To see an example of data generated by FutureCost, play the video above or click here.

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