Pensions for Treasurers

Identifying and managing the risks in maintaining a company pension scheme

What is it about?

This one day course will explain why Defined Benefit (DB) pension deficits continue to represent a risk for the sponsor.

It will identify the risks in maintaining a company pension scheme and indicate how the issues raised can be managed. Pension risks may affect the funding required by the sponsor, and its perception by stakeholders such as banks, bondholders, shareholders, and rating agencies.

Programme

How did we get here?

• How factors combined to create the current problems

Understanding Valuation Sensitivities

• A deficit as a liability of the company
• The profile of pensions cash flows
• Risk of DB schemes versus DC schemes
• Sensitivity factors in long-term annuities and investments
• Application of Value at Risk

Accounting and Valuation

• IAS 19 in outline
• Basis of valuation for IAS 19 versus buy-out
• Accrued Benefit Obligation versus Projected Benefit Obligation
• Longevity assumptions
• Implications: the augmented pension balance sheet

Potential Conflicts

• Potential conflicts for the treasurer
• Active versus deferred members
• Managing scheme closure

Managing the Sponsor / Pension Scheme Relationship

• Creditworthiness of the sponsor
• The problem of ‘dealing with’ trustees
• Managing / dealing with trustees’ advisors
• Funding the deficit; agreeing the plan to eliminate the deficit
• Funding issues for the sponsor with a deficit
• The bank / rating agency view

Derivatives in Pension Risk Management

• Liability driven investment (LDI)
• Using derivatives to aid risk management

How do you benefit?

You will develop a good understanding of the financial and related risks associated with a pension scheme, and the ways in which those risks might be managed. The pitfalls when managing such risks will also be discussed.

Who is it for?

• CFOs wanting to understand the implications of running a pension scheme
• Treasury and finance staff with responsibility for managing the pension liability
• HR professionals who need to understand the financial risks of a pension scheme
• Trustees wishing to understand the concerns of their sponsor and the pressures it may be under

Trainer

• Ian Jakeways FCT