Modelling superfunds
We used actuarial modelling to help the Department for Work and Pensions assess the effectiveness of possible options to regulate superfunds.
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We helped the Department for Work and Pensions (DWP) with its response - Consolidation of defined benefit schemes - to a 2018 consultation. The response set out that the proposed authorisation regime will assess whether a superfund:
- has a viable business model
- is financially sustainable
- is well governed
- has a high probability of being able to pay member바카라 사이트檚 benefits when required
Modelled and tested
The 바카라 사이트 Actuary바카라 사이트檚 Department (GAD) assessed possible regulatory parameters to determine if a suitable authorisation regime might meet superfund policy objectives.
We modelled an example superfund, as at 31 December 2022, to test a range of technical provision (TP) discount rates, profit triggers and some possible investment strategies. We used these techniques to determine expected outcomes for the superfund members and investors.
Results
Modelling results suggest a TP discount rate of around gilts plus 0.75% and a profit trigger of 150% of the capital requirement for authorisation may come closest to achieving superfund policy objectives at the effective date of the calculations.
Under the modelling assumptions this provided a balance between superfund commercial viability and reasonable cost of entry against a controlled risk to members바카라 사이트� benefits from superfund failure.
The DWP used this analysis to support the consultation response to move forward with plans for a superfund regulatory regime. DWP will determine the suitable levels of risk and affordability required for the final regulatory framework.
GAD바카라 사이트檚 analysis
Report co-author and Deputy 바카라 사이트 Actuary Matt Gurden said: 바카라 사이트淭his was a complex and detailed analysis of the wide range of factors which can affect superfunds.
바카라 사이트淲e modelled an example superfund, in discussion with DWP. The long-term objective was for this example scheme to reach a buyout level of funding when most non-pensioners had retired.바카라 사이트�