How deep do you go on pension-liability valuation in a middle-market valuation?

A deep pension analysis covers:

• DBO components: active members (accruing), deferred vested (leavers with entitlements), pensioners (in-payment). The pensioner share shows the 'cash-out trajectory'.
• Discount-rate sensitivity: a 1% rise in the discount rate typically reduces the DBO (defined benefit obligation) by 12–18%. The recent recovery in market yields has reduced DBOs by 30–40% since 2022.
• Plan assets: the investment allocation is critical (equity vs. fixed income), as is funding status (funded vs. unfunded). Many mid-cap companies rely on unfunded direct pension promises with no plan assets — fully on the balance sheet.
• Demographic assumptions: mortality (standard national mortality tables), retirement age, salary increases.
• De-risking options: pension funds (CTA structures — contractual trust arrangements), insurance solutions, and the national pension-protection scheme (e.g. PBGC in the US, PPF in the UK).