Pensions

Question 1

Pillars

Answer 1

First pillar
State pension
Purpose - coverage of needs

Guaranteed by :

Second pillar
Employee benefits insurance
Purpose : continuation of the accustomed standard of living

Third pillar
Purpose: Private pension provision
Individual supplement

Question 2

Pension liabilities

Answer 2

The amount that must be paid to satisfy all pension entitlements that have been earned by employees up to that dateo

Question 3

Balance sheet risk management

Goals and risk tolerance

Answer 3

The goal of the pension fund is to ensure that the current and future pension obligations can be paid to its participants

Risk tolerance - is defined as preventing the regulatory coverage level from falling below 104% over the short and long term

Need the funds and policy strategy to manage and monitor the financial and non financial risk factors that create volatility and can potentially lower the coverage level

Question 4

Balance sheet risk management risk factors

Answer 4

Financial :

Interest (hedged)
Market 
Credit risk (spread)
Currency risk (hedged)
Concentration risk 

Non financial :
Mortality and longevity risk
Operational risk
Expenses