A pension fund executes the agreements made regarding a pension scheme. In order to do so the pension fund receives a contribution. The first step is to check whether this contribution is sufficient to realize its commitment now and in the future. In order to perform this check correctly, the policy must be defined in detail. This can be referred to as the full implementation of the ‘pension deal’. The parties involved indicate the desired risk attitude and allocation over assets and liabilities. A pension fund defines policy areas, including investments, contributions, and liability management. When defining an investment strategy, choices have to be made regarding the strategic asset allocation (SAA), currency policy and regional allocation, duration policy of the fixed income portfolio, financial derivatives, and alternative investment categories.

These choices are supported by an Asset Liability Management (ALM) study. In such a study both sides of a pension fund’s balance sheet are brought together and funding ratio risks are translated to contribution and/or indexation and contribution consequences. ALM is increasingly treated as a continuous process, with the great advantage that the system remains up-to-date and is immediately available. This way, our clients are able to react promptly and effectively.

In addition, ALM analyses reveal the future pension risks for corporations with respect to their balance sheets and profit & loss accounts based on the latest reporting standards (IFRS, IAS, FASB). This applies to local corporations as well as to multinationals for which we perform an integral analysis of the economic and regulatory risk caused by domestic and foreign pension plans. This extends our approach, next to multi time horizon evaluations, with multi valuation view analysis.

For over three decades, Ortec Finance has been a trusted partner in ALM for leading pension funds worldwide. We regularly take on ALM projects across the globe. We have always fostered a close working relationship with the academic world to ensure our ALM expertise remains innovative. Pension Funds profit from this competitive advantage and are optimally prepared for the future.

Ortec Finance also provides Asset Liability Management solutions for Insurers, Asset Managers and Financial Planners.