PPCmetrics FRP 4 Calculator
Basis for the recommendation of the valuation interest rate
At a glance
- The technical interest rate basically has two functions: As a “discount rate”, it evaluates the provisions capital as well as the technical reserves. As a “calculation rate”, it determines the interest rate for the financing of the future benefits of a pension fund.
- The guideline „Technischer Zinssatz“ (FRP 4) from the Swiss Chamber of Pension Actuaries forms the basis of the Actuary’s recommendation regarding the technical interest rate as discount rate.
Two central conditions
That’s what FRP 4 says:
The recommended technical interest rate (TI) must meet the two following conditions:
- Structural risk capacity: The technical interest rate must take into account the structure and characteristics of the pension fund as well as foreseeable changes.
- Ongoing financing: The technical interest rate must be below the expected return (appropriate margin).
The upper limit laid down in the directive is not mandatory and may be exceeded if justified. Any technical interest rate must be justified.
PPCmetrics FRP 4 Calculator
PPCmetrics support for FRP 4: With the PPCmetrics FRP 4 calculator, you can evaluate the technical interest rate for your pension fund in just a few seconds.
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