This week, we’re proud to announce the launch of a pensions-focused research report from the University of Kent and the University of Waterloo, in Canada. This research has been supported by an international partnership of funders, including the IFoA, the Canadian Institute of Actuaries and the Society of Actuaries in the US.
In this essential new research report, ‘A Tale of Two Pensions Plans’, the research team explore the potential challenges faced by Defined Benefit pension scheme sponsors and trustees in ensuring security of benefits for pension scheme members and the associated uncertainty.
A Tale of Two Pension Plans: Measuring Pension Plan Risk from an Economic Capital Perspective
The research undertakes a risk assessment of Defined Benefit pension schemes using a hypothetical application of the economic capital requirements under a Solvency II framework. The research found that economic capital had a greater impact from changes in asset allocation than changes in contributions. It also highlights to pension plan sponsors and trustees that there is a large range of potential outcomes in a typical Defined Benefit pension scheme and could result in a significant variation in contributions to the plan. The research suggests that the range of outcomes can be narrowed by appropriate selection of asset allocation.
This research paper is a key output from a project entitled Population Ageing, Implications for Asset Values, and Impact for Pension Plans: An International Study, which has been funded by the following partners: the Canadian Institute of Actuaries, the Institute and Faculty of Actuaries, the Society of Actuaries, the Social Sciences and Humanities Research Council, the University of Kent, and the University of Waterloo.
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