Dauds Advisory

Pensions

Pension funds typically collect, pool and invest funds contributed by sponsoring employers and their employees to provide for the future pension entitlements of beneficiaries. Pension schemes thus provide a vehicle for individuals to accumulate savings over their working life so as to finance their consumption needs in retirement.

Relative to other investor groups, pension funds are typically:

• very active in both equities and debt capital markets
• significant cross-border investors
• owners of large corporates and financial institutions through their equity holdings

Through the pensions market, pension funds are also suppliers of capital for investment or consumption to end-users such as corporates, state-owned entities, and households.

Through their sheer size and activities, pension funds:

• exert great influence on financial markets
• are a significant contributor to savings, investment, and economic growth

At the same time, problems in the pensions industry have become increasingly complex. The slightest fall in the equities market has the potential to sharply cut the funding ratios of pension funds, potentially causing underperforming problems. A fall in bond yields may have a similar effect. Coupled with that is:

• the mismatch between the average duration of the fund’s assets and the duration of the fund’s liabilities
• the lack of availability of financial instruments needed for pension funds to better meet retirement needs
• the need for pensions reform

The multi-dimensional nature of these problems calls for solutions with a multi-disciplinary approach thoroughly conscious of:

• the role of pensions in lifecycle financial planning
• how pension liabilities respond to macroeconomic shocks
• the various risks faced by pension funds
• how pension rules and regulations impact on scheme governance
• the increasing need for more and new capital market instruments to better manage pension liabilities

We bring together disciplines such as finance, economics, law and regulation through to accounting and corporate governance to undertake extensive research in all fields related to pensions, and so enhance our strategic insight.

Our multidisciplinary approach places us in a prime position to deliver integrated, cost-effective, and sustainable solutions to the increasingly complex problems facing the pensions industry.

To enhance our strategic insight, we continue to develop and maintain links with a network of international pensions research institutes. We keep our clients fully abreast of new developments in the pensions industry – financial, legal and regulatory – and help them absorb and implement relevant changes as quickly and efficiently as possible.