The assumptions to enhance the effective operations of the pension plan are of 2 types:
Economic assumptions: These deal with interest rates, salary increases, inflation and investment
markets. These assumptions are related to how the macro-economic environment will affect the pension plan calculations.
Demographic assumptions: These deal with the participant group make-up and expected behaviour and life
expectancy. These are specific to the people expected to participate in the pension plan and ho this will affect the pension plan calculations.