scholarly journals Integrated risk management for defined benefit pension schemes: a practical guide

2017 ◽  
Vol 23 ◽  
Author(s):  
A. N. Hitchcox ◽  
C. Patel ◽  
C. J. Ramsey ◽  
E. L. Studd ◽  
L. T. Ma ◽  
...  
Keyword(s):  
Decision Making ◽  
Risk Management ◽  
Continuous Process ◽  
Working Party ◽  
Investment Strategy ◽  
Pension Scheme ◽  
Defined Benefit ◽  
Pension Schemes ◽  
Integrated Risk ◽  
Integrated Risk Management

AbstractThe Working Party has developed some practical hints and tips for those developing integrated risk management (IRM) plans for UK defined benefit pension schemes in the context of the requirements of the Pensions Regulator. Four case studies are presented to illustrate its conclusions, which are encapsulated in the ten commandments for effective IRM. IRM is the consideration of investment, funding and covenant issues, and how these interact. Its purpose should be to aid decision making and so should have a clear outcome in mind. It should be a continuous process and should form part of everyday trustee governance – it is not simply a one-off exercise. Whilst most Trustees and advisors consider funding issues when setting their investment strategy and vice versa, fewer fully integrate covenant into their decision-making process. However, covenant underpins all risk taken in a pension scheme and so needs to form a regular part of trustee discussions and analysis by advisors.

scholarly journals Funding defined benefit pension schemes: an integrated risk management approach – Abstract of the London Discussion

2019 ◽  
Vol 24 ◽  
Keyword(s):  
Risk Management ◽  
Management Approach ◽  
Defined Benefit ◽  
Publication Type ◽  
Cambridge University ◽  
Pension Schemes ◽  
Integrated Risk ◽  
Integrated Risk Management

This abstract relates to the following paper: Cowling, C. A., Fisher, H. J., Powe, K. J., Sheth, J. P. and Wright, M. M. (2019) Funding defined benefit pension schemes: An integrated risk management approach. British Actuarial Journal, Cambridge University Press, 24. doi: 10.1017/S135732171800034X .

scholarly journals IRM: Putting theory into practice for UK defined benefit pension schemesy ‐ Abstract of the London Discussion

2018 ◽  
Vol 23 ◽  
Keyword(s):  
Risk Management ◽  
Defined Benefit ◽  
Publication Type ◽  
Cambridge University ◽  
Practical Guide ◽  
Pension Schemes ◽  
Integrated Risk ◽  
Integrated Risk Management

This abstract relates to the following paper: HitchcoxA. N., PatelC., RamseyC. J., StuddE. L., MaL. T., ElliottM. B. and KeoghT. W. (2018) “Integrated risk management for defined benefit pension schemes: a practical guide,” British Actuarial Journal. Cambridge University Press, 23, e1. doi: 10.1017/S1357321717000095.

Financial Management of the UK Pension Protection Fund

2013 ◽  
Vol 18 (2) ◽  
pp. 345-393 ◽  
Author(s):  
J-P. Charmaille ◽  
M.G. Clarke ◽  
J. Harding ◽  
C. Hildebrand ◽  
I.W. Mckinlay ◽  
...  
Keyword(s):  
Risk Management ◽  
Financial Management ◽  
Enterprise Risk Management ◽  
Pension Scheme ◽  
Defined Benefit ◽  
Corporate Sponsor ◽  
Stakeholder Groups ◽  
Pension Schemes ◽  
Enterprise Risk ◽  
The Uk

AbstractThe UK Pension Protection Fund (PPF) was established in April 2005 to protect the pensions of members of UK private sector defined benefit pension schemes which have insufficient assets and whose corporate sponsor fails. The Fund takes over the pension scheme assets and assumes responsibility for the payment of compensation to the former members of the scheme. The PPF is funded by a levy on the population of eligible schemes. This paper discusses the application of Enterprise Risk Management principles and techniques to the unique situation of the PPF. The elements of the financial management of the Fund have been developed by reference to practice within proprietary insurance institutions and within pension funds. The paper will be of interest and, we hope, of some value to students, researchers and analysts and also to the PPF's own stakeholder groups that have a stake in an effective pension protection regime.

scholarly journals Funding Defined Benefit pension schemes: an integrated risk management approach

2019 ◽  
Vol 24 ◽  
Author(s):  
C. A. Cowling ◽  
H. J. Fisher ◽  
K. J. Powe ◽  
J. P. Sheth ◽  
M. W. Wright
Keyword(s):  
Risk Management ◽  
Interest Rates ◽  
Management Approach ◽  
Defined Benefit ◽  
Integrated Risk ◽  
Low Interest Rates ◽  
Actuarial Methods ◽  
Fit For Purpose ◽  
Integrated Risk Management ◽  
Pensions Regulator

AbstractThe last 12 years have seen the evolution of a new funding regime under the supervision of the Pensions Regulator. Over this period, there has been significant turbulence in financial markets, including record low interest rates. This paper takes a critical look at the development of funding approaches and methodologies over this period. It analyses the Pensions Regulator guidance and how scheme specific actuarial methods have emerged since the move away from the Minimum Funding Requirement in 2001 and the introduction of the Scheme Specific Funding Requirements in 2005. It asks whether these new methodologies have been successful from the perspective of members, trustees, employers and shareholders. At a time when actuarial valuation methodologies have faced considerable criticism, this paper aims to propose a pension funding methodology which is fit for purpose and also reflects the latest guidance from the Pensions Regulator on integrated risk management.

scholarly journals Integrated risk management for defined benefit pensions: models and metrics

2014 ◽  
Vol 14 (2) ◽  
pp. 151-160 ◽  
Author(s):  
RAIMOND MAURER
Keyword(s):  
Risk Factors ◽  
Risk Management ◽  
Pension Plan ◽  
Pension Plans ◽  
Management Model ◽  
Risk Exposure ◽  
Defined Benefit ◽  
Integrated Risk ◽  
The Impact ◽  
Integrated Risk Management

AbstractThe Pension Benefit Guaranty Corporation (PBGC) insures private sector defined benefit (DB) pension plans, when an employer becomes insolvent and is unable to pay the pension liabilities. In principle, the insurance premiums collected by PBGC should be sufficient to cover potential losses; this would ensure that PBGC could pay the insured benefits of terminated pension plan without additional external funding (e.g., from taxpayers). Therefore, the risk exposure of the PBGC from insuring DB pension plans arises from the probability of the employer insolvencies; and the terminating plans’ funding status (the excess of the value of the insured plan liabilities over the plan assets). Here we explore only the second component, namely the impact of plan underfunding for the operation of the PBGC. When a DB plan is fully funded, the PBGC's risk exposure for an ongoing plan is low even if the plan sponsor becomes insolvent. Thus the questions most pertinent to the PBGC are: what key risk factors can produce underfunding in a DB plan, and how can these risk factors be quantified? We discuss the key risk factors that produce DB pension underfunding, namely, investment risk and liability risk. These are interrelated and must be considered simultaneously in order to quantify the risk exposure of a DB pension plan. We propose that an integrated risk management model (an Integrated Asset/Liability Model) can help better understand DB pension plan funding risk. We also examine the Pension Insurance Modeling System developed by the PBGC in terms of its own use of some of the building blocks of an integrated risk management model.

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