Chapter 2: Stakeholders

Question 1

Stakeholders involved in a pensions scheme

Answer 1

• members
• members’ dependents
• trustees
• shareholders of the sponsor
• directors of the sponsor
• employees of the sponsor
• auditors
• regulators
• the government
• administrators
• investment fund managers
• creditors

Question 2

Interests of policyholders

Answer 2

Protection against death, sickness, unemployment and protection of property, investment and savings.

Question 3

Interests of the board of directors of an insurance company

Answer 3

• Pricing
• Provisioning
• Ensuring benefits are paid
• Managing assets and liabilities
• Meeting legislation
• Obtaining adequate reinsurance
• Corporate governance

Question 4

Interests of shareholders

Answer 4

Obtaining a return commensurate with the level of risk taken.

Question 5

Interest of creditors

Answer 5

Ensuring monies owed will be paid.

Question 6

Interests of auditors

Answer 6

Assessment of long-term liabilities

Question 7

Interests of regulators

Answer 7

Ensuring regulatory requirements are met.

Question 8

Interests of the members of pension schemes

Answer 8

Provision of benefits on

• death
• retirement
• illness
• withdrawal

Question 9

Interests of trustees

Answer 9

• Paying benefits when they fall due
• managing assets
• maintaining solvency

Question 10

Interests of sponsors

Answer 10

• Provision of retirement and protection benefits to meet the needs of members
• Controlling costs
• Meeting legislation

Question 11

Interests of employers

Answer 11

• Protection against losing employees
• Provision of benefits to attract and retain staff
• Protection of assets
• Meeting legislation
• Controlling costs
• Raising, quantifying and investing capital

Question 12

Interests of employees

Answer 12

• Provision of retirement and protection benefits

- Savings

Question 13

Interests of the government

Answer 13

• Setting legislation and monitoring compliance with it

- Funding state benefits and monitoring the funding

Question 14

How may appetite for risk vary by stakeholder?

Answer 14

The risk appetite will vary by the class of stakeholder
There will will be variation within a class of stakeholders.
The appetite will reflect existing risk exposure and also cultural factors.
Different risk appetites lead to a market in risk transfer

Question 15

What are the 3 different types of advice an actuary can be asked to give?

Answer 15

• factual
• indicative
• recommendations.

Question 16

Policyholders

Answer 16

Want product that meets their needs in terms of amount and/or certainty of level of income received

Question 17

Employees

Answer 17

Success of new product may provide more jobs/ better security

Question 18

Directors

Answer 18

Poor product negatively affects reputation

Question 19

Regulator

Answer 19

Want to ensure product is suitable for and understood by policy holders and that the insurer has sufficient capital to support it

Question 20

Reinsurers

Answer 20

Interested in providing reinsurance appropriate to the design of the new product, eg to protect insurer vs longevity risk

Question 21

Professional advisors

Answer 21

Interested in features of new product and communicating them to their customers