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Market Consistency and WMC [13]

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Bullet points include: Two main types of valuation. Funding / budgeting valuations. Typically, aim is to establish a contribution rate to be paid by sponsor into the fund. Usually (in UK) calculation takes some credit for potential future excess returns on risky assets such as equities. These excess returns may not materialise (even if they have done so in the past). Discontinuance valuations. Typically, aim is to establish whether there are sufficient assets to buy out liabilities with a third party. Set bearing in mind market observables (e.g. prices insurers would ask to take on the liabilities). Market prices do not typically take advance credit for risky future returns (instead these are viewed as compensation for the risks being borne)

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