Pension funds traditionally monitor future developments. In this regard a pension plan has to take into account a large number of uncertain external factors. Increasingly, the future situation of a pension fund will be influenced by economic and demographic developments. In addition, developments in the field of International Financial Reporting Standards (IFRS) and local financial assessment frameworks will have a big effect on the policy of a pension fund.
With its Asset Liability Management (ALM) solutions and expertise, ORTEC offers support to pension plans in establishing an optimum strategic policy in this dynamic and complex environment. Using our ALM-studies and software we can give our clients insight into the most important risk factors and their influence on the particular long and short-term goals concerned. In this regard, we not only analyse the future solvency situation of the Pension plans, but also the consequences for the company concerned and the participants.
The ALM project consists therefore in the first place of a solid risk analysis. Apart from that, the ALM is applied to support a pension plan in setting out an integral strategic policy while taking the liability structure into account. In respect of the investment policy the following components are included:
- Strategic asset allocation (static and dynamic);
- Currency policy and regional allocation;
- Duration policy of the fixed income portfolio;
- The application of financial derivatives (swaps, swaptions and equity derivatives);
- Additional alternative investment categories (hedge funds, private equity, commodities).
For corporations, ORTEC is able to use ALM studies to help set out the future pensions risks with regard to their balance sheets and profit and loss accounts on the basis of International Financial Reporting Standards (IFRS) or Financial Accounting Standards Board (FASB). This is not just limited to one country. ORTEC is able to provide multinationals with an integrated and consistent analysis of pension risks for the most important domestic and foreign pension plans. During the analysis it is not necessary to choose for either IFRS/FASB or local regulation. An integral view of the regulations is possible. Simultaneously, it is also possible to include a model for the specific risk of the company.
In The Netherlands ORTEC is the market leader in the field of ALM for Pension funds. In addition ORTEC regularly takes on ALM-projects in countries such as Belgium, Germany, Switzerland, The United Kingdom, Sweden, Norway, The United States, South Korea and Japan.
ORTEC provides the following ALM services:
- strategic management consultancy (ALM-studies);
- development and implementation of tailor-made ALM solutions;
- user licenses for ALM software (PALM);
- training for PALM users;
- calculation of liability prognoses;
- continuity and solvency analysis (FTK).
ORTEC maintains close relations with the academic world regarding the field of ALM and is thereby able to constantly stay at the cutting edge of innovation. With its advanced ALM solutions ORTEC is at the forefront of important social and scientific developments. ORTEC clients profit from this advantage and are thereby better prepared for the future.