A Dissection of Pensions Funding

1990 ◽  
Vol 32 ◽  
pp. 71-115 ◽  
Author(s):  
W. S. O'Regan ◽  
J. Weeder
Keyword(s):  
Working Party ◽  
Basic Structure ◽  
The State ◽  
Pension Scheme ◽  
Occupational Pension ◽  
Pension Schemes ◽  
Great Debate ◽  
Actuarial Methods ◽  
Legislative Activity ◽  
Terminology Report

This paper is about actuarial methods of funding pension schemes and follows on from the report of the Working Party of the Pensions Standards Joint Committee on Terminology of Pension Funding Methods (The Terminology Report) published in 1984. It looks at the basic structure of the main methods and at how they behave. We then discuss the question of the suitability of the methods under various conditions. The reader may find it useful to have a copy of the Terminology Report to hand.The paper is written against a background of uncertainty, as regards the State Earnings-Related Pension Scheme, and of great debate and legislative activity as regards Occupational Pension Schemes. This activity and debate makes it more important than ever before that the actuarial profession explains its methods and approaches to those in the pensions industry who are not actuaries, but who nevertheless rely on actuarial advice.

Objectives and methods of funding defined benefit pension schemes

1987 ◽  
Vol 114 (2) ◽  
pp. 155-225 ◽  
Author(s):  
D. J. D. McLeish ◽  
C. M. Stewart
Keyword(s):  
The State ◽  
Pension Scheme ◽  
Occupational Pension ◽  
Defined Benefit ◽  
Pension Schemes ◽  
The Future ◽  
State Pension

The Objective of Funding1.1. As every actuarial student is taught:‘Pay-as-you-go is acceptable for a State pension scheme because the State is, for practical purposes, assured of a continuing existence.’However:‘The position is quite different in the case of an occupational scheme, since an employer's business may cease to exist.’1.2. It seems to us to follow, therefore, that the prime purpose of funding an occupational pension scheme must be to secure the accrued benefits, whatever they might be, in the event of the employer being unable or unwilling to continue to pay at some time in the future. To that end, the contributions would have to be sufficient both to pay the benefits as they fell due for as long as the scheme continued, and also to establish and maintain a fund which would be sufficient to secure the accrued benefits in the event of contributions ceasing and the scheme being discontinued, whenever that might occur.

The Effect of Demographic Factors and Indexation on the Long term Financing of the State Earnings-Related Pension Scheme.

1987 ◽  
Vol 30 ◽  
pp. 181-198
Author(s):  
C. D. Daykin ◽  
A. G. Young
Keyword(s):  
Social Services ◽  
White Paper ◽  
The State ◽  
Pension Scheme ◽  
Occupational Pension ◽  
Pension Schemes ◽  
The Social ◽  
Change State ◽  
State Pension

In September 1974 Barbara Castle published her proposals for a new earnings-related State pension scheme in her White Paper “Better Pensions”. This followed a succession of attempts by previous Secretaries of State for Social Services to change State pension arrangements radically. Unlike the ill-fated Crossman and Joseph schemes, however, the Castle scheme succeeded both in reaching the statute book and in coming into operation. A Bill was introduced in February 1975 and on 7 August 1975 the Social Security Pensions Act 1975 received the Royal Assent. The State earnings-related pension scheme (SERPS) came into operation on 6 April 1978. It provided State pensions related to earnings, but also offered to employers with good occupational pension schemes the possibility of ‘contracting-out’ and providing equivalent or better earnings-related benefits through their own scheme.

Pensions and Providence: Dutch Employers and the Creation of Funded Pension Schemes

2009 ◽  
Vol 10 (2) ◽  
pp. 265-303
Author(s):  
Erik Nijhof
Keyword(s):  
Old Age ◽  
Legal Framework ◽  
International Perspective ◽  
The State ◽  
Pension Scheme ◽  
Pension Schemes ◽  
Role Of The State ◽  
Private And Public ◽  
Corporate Pension ◽  
Demographic Shifts

From an international perspective, the Dutch system of old age provisions stands out for its wide coverage, fixed benefits, and an overall actuarial soundness that seem to make this system more shock proof to demographic shifts and economic adversities than those in other “Western” countries. Its actual foundation is a compulsory old age insurance for all citizens, enforced by law and implemented by the state; this insurance is supplemented by fully funded pension schemes for workers and employees, operating under legal control; and finally there is a variety of additional and noncompulsory pension benefits and individual insurance arrangements. The main impetus to the genesis of this system came from employers who, with different agendas, created various pension funds; eventually it was the state, which set a decisive example with a funded pension fund for its civil servants. This became the standard to all corporate pension schemes and provoked innovations like branch funds. These initiatives were supported and regulated by legislation that made these arrangements compulsory and guaranteed their juridical independence and actuarial soundness. Only after this legally promoted maturation of private funds, the state set out to create public arrangements on a “pay-as-you-go” basis for all citizens. This delicate interplay between private and public pension arrangements is highly characteristic of the Dutch variety of capitalism in a broader context. In the polarity between liberal and coordinated market economies, as developed by Soskice and Hall, the Dutch system of old age provisions has played a prominent role in ranking this country more firmly into the latter category. However, within this range of countries the Dutch system of old age provisions is also a bit atypical: private corporate and branch arrangements were encouraged and at the same time embedded in a legal framework. The role of the state was also remarkable: a supervisor of the private funds, a collector and distributor in a universal insurance system, and an employer with an exemplary pension scheme.

Social Security and Occupational Pension Schemes

1968 ◽  
Vol 94 (2) ◽  
pp. 173-253
Author(s):  
C. S. S. Lyon
Keyword(s):  
United Kingdom ◽  
Social Security ◽  
Pension Scheme ◽  
Original Form ◽  
Occupational Pension ◽  
Social Security Systems ◽  
Flat Rate ◽  
The United Kingdom ◽  
Pension Schemes ◽  
National Insurance

Since the idea of a wage-related national pension scheme was first launched in tangible form by the publication in 1957 of the Labour Party's ‘National Superannuation’ plan there has been a state of uneasy coexistence between national and occupational pension schemes in the United Kingdom. Social security systems providing not merely basic flat-rate benefits, but also benefits related to earnings, had been in existence for some years in other European countries, but it was not until the National Insurance Act, 1959 took effect in April 1961 that a national graduated pension scheme became a reality in the United Kingdom. Established at a modest level and designed primarily as a means of raising revenue to meet the rising outgo on flat-rate benefits, this graduated scheme has never seemed likely to endure in its original form. Nevertheless the National Insurance Act, 1966 has grafted on to it a scheme to provide short-term graduated sickness, unemployment and widows' benefits.

Pensions (Corporate Insolvency Only)

2018 ◽  
Author(s):  
James Ayliffe
Keyword(s):  
Pension Scheme ◽  
Occupational Pension ◽  
General Body ◽  
Pension Schemes ◽  
Present Context ◽  
Corporate Insolvency ◽  
Pensions Regulator

Transaction avoidance issues may arise in relation to pensions in the context of corporate insolvency. However, such issues are of a rather different nature from those that arise in the context of bankruptcy and are discussed in Chapter 14. In the bankruptcy context, the issue is avoidance of transactions by the bankrupt (in the form of contributions to pension schemes) that have diminished his estate. Avoidance is therefore sought for the benefit of creditors. In the present context, the issue is avoidance of transactions by the insolvent company or others that have diminished the funds of an occupational pension scheme in respect of which the insolvent company is the employer company. Avoidance is therefore sought for the benefit of the members of the scheme rather than the general body of creditors of the company.Moreover, if the company has received assets under the transaction in question and avoidance of the transaction is sought with a view to recovering such assets, such avoidance will operate to the detriment of the general body of creditors. The relevant provisions and principles are explained more fully below after a few words about pension scheme deficits and the Pensions Regulator.

Modelling the reverse select and ultimate mortality experience of UK ill-health retirement occupational pension scheme members

2016 ◽  
Vol 10 (2) ◽  
pp. 222-235 ◽  
Author(s):  
Mary Hall ◽  
Linda Daly
Keyword(s):  
Mortality Rates ◽  
Pension Scheme ◽  
Retirement Age ◽  
Occupational Pension ◽  
Mortality Experience ◽  
The United Kingdom ◽  
Pension Schemes ◽  
Males And Females ◽  
Effect Of Age ◽  
Normal Health

AbstractRetirements from the workforce can be split between those who are forced to retire early specifically for health reasons referred to as ill-health retirements and all other retirements referred to as normal-health retirements. Rates of ill-health retirement increase with age and are higher for females than males. Consequently, the mortality experience of ill-health retirement pensioners will become more important in the future as pension schemes increase their normal retirement age in line with increases in life expectancy and the proportion of women in the workforce and therefore in occupational pension schemes increases. This paper seeks to model the mortality of ill-health retirements from occupational pension schemes in the United Kingdom in the period immediately following retirement (reverse select mortality) and over the longer term (ultimate mortality) allowing for age at retirement. Females experience a longer reverse select period than males and for both males and females the improvement in mortality rates over the reverse select period is greatest at younger ages. Post the reverse select period the effect of age at retirement decreases over time with ultimate mortality rates converging by the mid-eighties for males and females.

Pensions, Funding and Risk

2001 ◽  
Vol 7 (4) ◽  
pp. 605-662 ◽  
Author(s):  
R.J. Chapman ◽  
T.J. Gordon ◽  
C.A. Speed
Keyword(s):  
Economic System ◽  
Economic Value ◽  
Pension Scheme ◽  
Occupational Pension ◽  
Pension Schemes ◽  
Financial Interests ◽  
The Way

ABSTRACTIn this paper, we identify the economic system in which occupational pension schemes operate. This system includes all parties to the pension arrangement, particularly the members of the scheme and the shareholders of the sponsoring company. This requires us to model the pension scheme not as a self-contained fund, but simultaneously alongside the company, and to recognise its interaction with other parties with financial interests in the scheme. Under this method, the stakes of the various parties aggregate to 100% of the assets of the company including the assets of the pension scheme. The power of this approach is that decisions taken in relation to the management of the pension scheme can be assessed by the effect they have on the way in which the overall economic value of the company is divided between stakeholders.

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.

Reflections on the Roles of State and Occupational Pension Schemes in the United Kingdom

1973 ◽  
Vol 34 ◽  
pp. 533-594
Author(s):  
A. J. Low ◽  
P. E. Felton
Keyword(s):  
United Kingdom ◽  
White Paper ◽  
The State ◽  
Occupational Pension ◽  
The United Kingdom ◽  
Pension Schemes ◽  
State Pension ◽  
The Cost

SynopsisThe paper considers the role which the State should play in the provision of pensions to the retired population. The role of occupational schemes is also considered with particular reference to the restrictions placed on that role by the authorities through the requirements for approval for tax purposes and the cost and level of State pensions. The main features of various State pension schemes which have been proposed in successive White Papers are discussed together with their shortcomings and advantages. The White Paper “Better Pensions” and its implications for the pensions industry are then considered in greater detail.

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