The costs which are related to the funding of the certain additional service would be further increased when there will be a declination in the discount rate and increase in annuity premiums. This statement is true and the pension plans may also be impacted due to the same. Because of the tendency to offer more and more discounts to the different customers, the companies fail to provide the required pension amount to the people. It would also lead to the increase in the overall liabilities which may be related to the pension provider and some of the other companies which are related to the insurance. Because of the lower discount rate there will also be the higher premium related to the annuity. This would be reflecting the lower growth investment, return on investment. The lower discounted rate will also have an impact on the risks which were related to the longevity. Other than this, the lower rate of discount also means that there would be lower amount of return on the value of the fixed income asset. This makes it particularly difficult to find a way out for the problems related to the underfunding.As a member of the pension committee, I would like to suggest that the organization should not be implementing the traditional pension scheme. From the analysis of the above points, it can be identified that due to the traditional pension schemes there can be several issues within the organization. It can also be leading to the increased complexities to the employee. Instead of this, the organization should focus more and more on comtributiom pension plan and the measures related to the same. This would help in easing the pressure both from the perspectives of the organization and the employee.
This is important to ensure that the employees should get the better pension plan which is secure for the future of the employee and can help them in withstanding the pressures of life in the latter age. I would also suggest the committee, to create a post retirement insurance plan and add them along with the pension plan. This should be done in order to ensure that both the organization and the employees should have a better level of satisfaction. In the recent times, it is important to be more concerned about public guarantees. As a result of the same, there are chances that the employer will be having higher chances of risk. This will have an impact on the traditional pension as well and would further increase the burden of the pension on the employer. As a result of the public guarantee, the other companies are paid a large number of money. From the above, a large number of demand and supply related factors have been identified which may prove to be negative for the traditional pension plan. Therefore, this is the correct time to come above the traditional pension plan and work hand in hand with the employees in terms of the contribution based pension plan. The government should be concerned more and more for the existence of the risk related to the longevity risk. This can be done by knowing in the contingent liability. The government should also help in supporting a number of the private sectors while dealing with the risks which are related to the longevity.