Philippe-N. Marcaillou
- Published in print:
- 2016
- Published Online:
- May 2016
- ISBN:
- 9780198738794
- eISBN:
- 9780191802003
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780198738794.003.0001
- Subject:
- Economics and Finance, Financial Economics
To put the topic into context, this chapter provides an introduction to the pension fund industry in the UK. Statistics are presented regarding the risks that face UK defined benefit pension funds ...
More
To put the topic into context, this chapter provides an introduction to the pension fund industry in the UK. Statistics are presented regarding the risks that face UK defined benefit pension funds (DB PF) based on the 2013 Purple Book that covers around 99% of pension funds: amount of liabilities, assets, deficit, funding ratio based on various liability valuations. The chapter shows what impact a variation of a few bassis points in gilts, equity markets, inflation, and a few years in terms of longevity has on the UK DB PF and the trends in terms of asset allocations. As a general introduction the chapter provides definitions regarding what a DB PF is, some important key words, and how simple cash flows are calculated. It introduces the governance of a DB scheme and provides a comprehensive overview of the parties involved in the management process.Less
To put the topic into context, this chapter provides an introduction to the pension fund industry in the UK. Statistics are presented regarding the risks that face UK defined benefit pension funds (DB PF) based on the 2013 Purple Book that covers around 99% of pension funds: amount of liabilities, assets, deficit, funding ratio based on various liability valuations. The chapter shows what impact a variation of a few bassis points in gilts, equity markets, inflation, and a few years in terms of longevity has on the UK DB PF and the trends in terms of asset allocations. As a general introduction the chapter provides definitions regarding what a DB PF is, some important key words, and how simple cash flows are calculated. It introduces the governance of a DB scheme and provides a comprehensive overview of the parties involved in the management process.
Philippe-N. Marcaillou
- Published in print:
- 2016
- Published Online:
- May 2016
- ISBN:
- 9780198738794
- eISBN:
- 9780191802003
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780198738794.003.0003
- Subject:
- Economics and Finance, Financial Economics
Chapter 3 provides an understanding of how expected liability cash flows and their present values are calculated and series of future payments are distributed. Readers will understand the difference ...
More
Chapter 3 provides an understanding of how expected liability cash flows and their present values are calculated and series of future payments are distributed. Readers will understand the difference between nominal, inflation-linked, and real cash flows which have so much effect on the liability hedging strategy. This chapter provides key points regarding liability risks, liability valuation methodologies calculated by actuaries and the potential impact on the investment strategy through practical and easy-to-understand charts. This chapter provides the tools to negotiate a more appropriate discount margin with actuaries and, as a result, get an amount of contributions which maximize expectations. This chapter is an important step in understanding the liability driven investment techniques.Less
Chapter 3 provides an understanding of how expected liability cash flows and their present values are calculated and series of future payments are distributed. Readers will understand the difference between nominal, inflation-linked, and real cash flows which have so much effect on the liability hedging strategy. This chapter provides key points regarding liability risks, liability valuation methodologies calculated by actuaries and the potential impact on the investment strategy through practical and easy-to-understand charts. This chapter provides the tools to negotiate a more appropriate discount margin with actuaries and, as a result, get an amount of contributions which maximize expectations. This chapter is an important step in understanding the liability driven investment techniques.
