Modelling pension funds under climate change

Timeline:

Call description

Resource and environment issues, particularly climate change, are increasingly recognised as being relevant to the work of actuaries, and the IFoA undertakes a range of research, thought leadership and public affairs activities in this field. The impact of resource and environment issues on pension schemes is less understood.  Uncertainty over the size of the potential impact, and therefore whether it is material, is one of the barriers to adequately reflecting these emerging issues.

In response, the IFoA has formed a Working Party of volunteer members to focus on this issue. The “Resource and Environment Implications for Pensions Actuaries” Working Party has created a Practical Guide for actuaries who advise UK defined benefit pension schemes which will be published shortly. The guide explains where resource and environment issues are relevant to pension schemes and the work of pensions actuaries, as a first attempt at helping them navigate the associated uncertainties, in collaboration with covenant and investment advisers.

The Working Party has received feedback that pensions actuaries seek some quantification of resource and environment impacts before incorporating them into their work. It has concluded that the Practical Guide is likely to gain much more interest from and traction with, actuaries if it is supported by some quantification.  Therefore the IFoA is commissioning a piece of quantitative research which will be used to develop the supplementary report on funding advice, as well as being made available through standalone research outputs.

The research is intended to address the need for pensions actuaries to understand the potential magnitude of climate change impacts, and hence if and when climate change might be relevant to the funding advice they give.  The key difference from previous published work on pensions and climate change is that the Working Party would like this research to consider the impact on pension scheme liabilities as well as assets. 

Eligibility

Proposals would be welcomed from any research-led organisations within the university, not-for-profit, public or private sector.  Organisations may be based in the UK or elsewhere in the world.  We are particularly encouraging submissions from multi-disciplinary teams, which may span more than one organisation.

Call document

Download the Call for Research on Modelling pension funds under climate change. This document includes essential information for applicants, including how to apply.