Research

Stressed?

How PFaroe’s detailed analytics allow some of the largest UK financial institutions to easily calculate capital in respect of their pension schemes and to evaluate ways to manage or optimise these requirements.

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Fast is fine, but accuracy is everything

Under the traditional approach, approximations exist in both the full actuarial valuations and roll-forward estimates between full valuations. These can lead to errors of up to 3% per annum – resulting in poor decision-making and economic inefficiencies for the trustees and scheme sponsor.

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The tipping point

When does high inflation become a good thing?

This paper analyses the positive impact that inflation increases could have on a real-life pension scheme. It looks at the impact on the scheme's funding level of both step changes across the entire inflation curve and short-term inflation shocks and explores how best to find the scheme's 'tipping point' – the point at which further inflation becomes beneficial for schemes.

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Insurance-based solutions

Timing is everything

This paper considers the difficulties preventing pension schemes from taking advantage of de-risking opportunities. The traditional methods of assessing and monitoring opportunities are compared with more timely and efficient mechanisms that can now be provided ensuring that temporary opportunities in the buy-out market are not missed.

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Pension Risk Modelling

Calculating accurate stresses to liability figures

For many financial institutions, defined benefit pension schemes represent a significant amount of risk. However, the complexity of benefit structures means that calculating accurate risk figures is difficult - particularly if conventional risk calculation models are used to approximate these complexities.

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Trigger-based strategies

Why technology is required for successful implementation

This paper outlines the required steps to employ a trigger-based strategy and considers the key barriers to successful implementation. In particular, it quantifies the economic benefits of a strategy based on accurate daily funding levels relative to one based on approximate or less frequent valuations.

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Pensions Hedging Inefficiencies

In this White Paper we consider a case study of the ABC Pension Fund which recently completed a Liability Driven Investment (LDI) strategy review. By taking advantage of the latest technology available in pension risk management, not only did the Fund achieve a more accurate optimal solution, but also saved almost £2m in execution costs.

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