We explore the implications of alternative methods of discounting future pension outlays for the valuation of funded pension liabilities. Measured liabilities a¤ect the asset-liabilityratio of pension funds and, thereby, their policies. Our framework for analysis is an applied many-generation OLG model describing a small open economy with heterogeneous agents and a two-pillar pension system (with PAYG and funded tiers) calibrated to that in the Nether-lands. We compare mark-to-market discounting against various alternatives, such as discounting against a moving average of past market curves or a curve that is constant over time.The pension bu¤er is stabilized by adjusting indexation and contribution rates in response to demographic, economic and financial shocks in the economy. Mark-to-market valuation of liabilities produces substantially higher volatility in the pension bu¤ers, but it also generates slightly higher aggregate welfare.