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Jun 6, 2022

Measuring Active Risk in Defined Benefit Pension Plans

The portfolio of a defined benefit (DB) pension plan is often described in terms of its market value exposure—such as a “60/40” mix between risky assets (equities) and less risky assets (bonds). While “asset mix” is an easy way to describe the broad level of risks in DB portfolios, it is not the best way to think about the pension risks that matter for at least two reasons. First, while the asset mix explains why some funds are riskier than others, even a static asset mix (same 60/40) has a changing risk profile over time. For example, equity sectors—such as energy or technology—become more or less concentrated over time even when the portfolio is invested passively (e.g., S&P 500 Index). Second, what matters for optimizing portfolios is the marginal risk contributions that assets make relative to their expected returns.

Apr 27, 2022

Calculating Risk and Cash Flow for Pensions

Defined benefit (DB) pensions often use inferior tools or apply the wrong rules when managing their portfolios, which can lead to suboptimal results. While actuaries and accountants have developed their own custom tools, pension plans can’t simply borrow those tools or apply the rules from those professions and expect the best outcomes. Pension plans need their own specific tools, accompanied by a healthy dose of common sense.

Apr 25, 2022

How Data and Discipline can Drive the Future of Retirement Savings

Continuous improvement is a concept that has taken hold in many manufacturing and service-oriented industries. It involves regularly measuring and then adapting processes in order to realize either incremental or breakthrough improvements.

Apr 22, 2022

Generational Considerations for Retirement Planning

We’ve discussed previously how pension funds in the UK and superannuation funds in Australia face many of the same challenges. One particular challenge lies in the generational considerations of the demographics participating in these funds. For example, as people live longer, they may find their accumulations at retirement are insufficient to reach the duration of their lives. Premature depletion, or accessing retirement funds earlier than expected, only exacerbates this problem.

Mar 10, 2022

Retirement Planning: Same Challenges, Different Solutions

As UK defined contribution pensions and Australia superannuation markets seek to improve member outcomes, they each have much to learn from the way the other addresses the common challenges of aging populations, longer lifespans and reduced savings. As a service provider in both countries, SS&C is uniquely positioned to offer a global perspective, identify best practices and share lessons learned from our experience.

Feb 25, 2022

EBA Proposals Eye Enhanced Credit Spread Risk and Standardized NII

With interest rate hikes now almost a given in the medium-term horizon as a result of increasing inflationary pressure, European regulators are shifting their focus to ensure financial institutions are prepared to weather associated impacts. In December 2021, the European Central Bank (ECB) announced its supervisory priorities for the triennium of 2022-2024 where “Sensitivities and shocks to interest rate and credit spreads” are clearly identified as a key vulnerability for the European banking sector, and therefore, a supervisory priority for the period.

Feb 22, 2022

Outsourcing Retirement Plan Recordkeeping and Servicing

Retirement plan providers are outsourcing their recordkeeping platforms and servicing operations to address increasing competitive pressure, changing customer expectations and high technology costs. Outsourcing also allows plans to overcome challenges like finding and retaining IT talent, maintaining legacy systems, meeting new regulatory changes as they arise, and overcoming the fee compression that stems from higher sponsor demands without increasing pricing.

Dec 17, 2021

Digitally Engage Members with Mobile Technology

In a recently conducted survey, SS&C learned that 90% of surveyed Australian super fund members prefer digital and electronic communication regarding their superannuation accounts. Technology plays a critical role in reaching members with meaningful interactions. One area of significant opportunity is through mobile communication. Consumers spend upwards of three to four hours a day on their smartphones, meaning that mobile access with a responsive interface is a must-have.

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