Methodology Standards

A significant number of retirement income projection models have been introduced into the marketplace. The Retirement Income Industry Association (RIIA) believes that many of these models may need improvements in disclosing key underlying assumptions or limitations. Failure to improve such projection models is a disservice to both the industry and the clients that it serves.

Furthermore, the output of various projections differs widely even with consistent input. This may lead to confusion among the public which threatens a loss of confidence in the financial services industry. As the baby boomers march into retirement, their shift from focusing on accumulating retirement savings to creating a secure retirement income makes consistency, clarity and understanding of income modeling more urgent that ever.

Therefore, RIIA's Methodologies Committee has developed a Statement of Principles as the first step in creating industry standards for the development of tools, illustrations, and other materials that promote retirement income products and strategies. To view the Statement of Principals, click here.

In addition, RIIA's Methodologies Committee intends to provide:

A set of guidelines to these Principles which will provide guidance on meeting the RIIA standards.

A set of "calibration points" by which model developers can compare their assumptions and results against.

The future results that projection models seek to illustrate is inherently uncertain, meaning there can be no single "correct" methodology or answer. While it is acceptable for firms to create models that deviate from the RIIA calibration points, the reason for any deviation beyond a specified range should be explained such that the intended audience may understand the results that the model is illustrating.