DB Plan time horizon

CFA Level III
#1

I know this has been asked a lot on this forum in past years, but i cant find a solid answer.

If DB plan is going concern, but has higher than average workforce age (e.g. 55 years old) is the time horizon perpetual (going concern) or is it short (given that liability duration is short)?

Thanks

#2

I would say it’s not going concern only if all further Plan’s distributions and contributions are closed for new entrants. In case like above, you might compare this one with another one with different participants structure (e.g. younger participants) given a Plan’s risk and return overall performance.

#3

I think this answer would be relative. If the industry average age is substantially higher than 55, say 65, then the plan has lower liability duration, ultimately has the lower time horizon.