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

The 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 enca...

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Bibliographic Details
Published in:British Actuarial Journal 2018, Vol.23, p.1-60, Article e1
Main Authors: Hitchcox, A. N., Patel, C., Ramsey, C. J., Studd, E. L., Ma, L. T., Elliott, M. B., Keogh, T. W.
Format: Article
Language:English
Subjects:
Actuarial science
Advisors
Collaboration
Cooperation
Decision making
Defined benefit plans
Employers
Funding
Investment policy
Management decisions
Objectives
Pension plans
Public domain
Risk management
Sessional meetings: papers and abstracts of discussions
Trustees
Citations: Items that cite this one
Online Access:Get full text
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Summary:The 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.
ISSN:1357-3217
2044-0456
1748-5002
DOI:10.1017/S1357321717000095