Asset Liability Management
Pension funds need to manage their balance sheet effectively in order to make good on their pension promise. They must identify the major risk sources and quantify the potential impact on future pensions, contributions and funded ratio. They also need to determine risk and return measures that keep the interests of various stakeholders in mind. A proper risk-return tradeoff, taking the liabilities into account, should be an integral part of the investment strategy. Asset liability management (ALM) studies address various allocation and hedging strategies, new and alternative asset classes, passive vs. active investments, leverage, derivatives and more.
ALM studies are used to advise senior management and trustees on strategic policy issues and risk budgets. They deal with investment policy, pension schemes (Defined Benefit vs. Defined Contribution vs. Collective DC), contribution and indexation policies. They help the sponsor to grasp the financial consequences of maintaining a pension plan, or the impact of mergers and acquisitions, and provide the basis for clear and open communication to the individual members.
These solutions can also be applied for corporate sponsors. We are able to provide corporate sponsors more insight into and a better understanding of their pension plan risk, to support the decision-making related to their pension plans.
Ortec Finance is a leading ALM provider for pension funds in the world today. Our sophisticated software models and strategic pension advisory are based on three decades of experience. We offer a complete and consistent simulation framework for modelling pension liabilities, asset classes, investment- and contribution policies. This leads to an increased understanding of the pension dynamics and supports the strategic decision making process.
Complete Modelling Framework
- Consistent modelling of possible future developments of assets and liabilities
- Monthly/annual simulations provide a framework for decision making, monitoring and risk management purposes
- Multinational approach (able to aggregate plans with differences in currency, accounting standards (IFRS, IAS, US GAAP and FRS) and regulatory requirements (FTK, MFR, TLS, etc.)
- Cash flow or pension liability projections on member or cohort basis, by configuring specific pension scheme and valuation rules in the embedded actuarial pension module
- User-friendly software, customized to client’s needs
- Understanding the needs of our clients ensures smooth and practical application of our advice
- Support decision making on investment strategies, contribution policy and pension arrangements
Thorough Risk Assessment
- Simulation of future consequences in terms of relevant objectives and risk factors
- High-quality economic scenarios (DSG) based on more than 400 variables, including all major regions in the world