Description: An increased focus on pension plan cost and risk management has led plan sponsors to pursue innovative plan designs. This, in turn, is driving the need for actuaries to utilize new approaches to modeling the underlying market risks of such plan designs. The presenters will discuss advanced techniques to pension plan cash flow modeling that will ensure that the risks embedded in complex plan design features are fully captured. Specifically, a new dimension to cash flow modeling, benefit commencement year (in addition to payment year), will be introduced as well as the concept of 'collapsible' cash flow. Case studies will illustrate how techniques can be used in practice for cash balance plans, pension equity plans and other lump sum paying plans. Other risks such as form of payment and longevity will also be covered. This session is intended to meet the needs of actuaries and investment consultants focused on providing advice on risk management and investment strategy to sponsors of pension plans with complex design features.

Description: This document is a summary of a session which was presented at the 1975 SOA Annual meeting. It includes discussions on the following topics: Effects of ERISA on valuation methods, discussion of Claude Y. Paquin's paper A Review of Actuarial Cost Methods for Defined Benefit Pension Plans, funding standard account, asset valuation and allocations, plan mergers, a discussion of Josiah M. Lynch's paper A Practical Approach to Gains Analysis, information related to Individual policy pension trusts.

Description: The paper demonstrates that the most popular rationalization for evolving glide paths is flawed and should be discarded. The paper also demonstrates that glide paths should generally evolve for investors that endeavor to optimize outcomes and reevaluate their portfolios regularly.

Description: Many retirement actuaries have experience developing, implementing, and monitoring Liability Driven Investing (LDI) strategies for plan sponsors. These strategies typically involve modifying a plan’s investment strategy to remove a significant portion of the investment and interest rate risk now or at some point in the future when specific triggers are met. The tactics often involve the use of fixed income assets to cash flow and/or duration match the liabilities. In the spirit of helping actuaries expand their roles in an evolving defined contribution world, this article explores the application of LDI and derisking strategies within defined contribution and individual retirement accounts. The economic theory behind this approach is called the lifecycle hypothesis, or lifecycle finance. The benefits of the lifecycle finance method are that it provides a safe approach to save for retirement and a secure source of floor income during retirement. Similar to pension plans, each individual has his or her own idiosyncratic needs, wants, and risks that should be considered. Actuaries are uniquely situated to help defined contribution plan sponsors, individuals, and even themselves implement the lifecycle finance approach by developing and distributing tools and methods that focus on income (rather than wealth), LDI strategies, and personalization.

Description: Over a short span of two weeks, the financial system has observed the collapse of two mid-sized U.S. commercial banks, California-based Silicon Valley Bank (“SVB”) and New York-based Signature Bank, and a takeover of troubled Credit Suisse by a rival in Europe. Other banks that serve a similar demographic as SVB, such as First Republic Bank and PacWest Bancorp, have also experienced an elevated level of customer deposit withdrawals while their stock prices plummeted. The U.S. Federal Deposit Insurance Corporation (FDIC) quickly stepped in and guaranteed all deposits from the failed banks to prevent a broader crisis in the banking system. The current turmoil in the financial system is a stark reminder of the importance of effective risk management and regulation.

Description: Legislative changes and the economic environment have created a need for plan sponsors to understand and manage pension risk and volatility. Dynamic asset allocation glidepaths reduce risk as plans become better funded. But what about the risk that plan sponsors face when their plans are underfunded? The presenters will discuss the challenges of managing pension risk when assets don't keep pace with liabilities.

Description: 10 Considerations for DB Pension Plans in Light of the Coronavirus Crisis of 2020. The article discusses the following topics: ERISA funded status & benefit restrictions; cash contributions & tax deductibility; PBGC premiums; Pension Accounting Expense; Commencing Benefits After Normal Retirement Age; Bringing Back Former Participants; Actuarial Assumptions; Asset Allocation and Re-Risking; De-Risking Expectations and Future Funding Relief