Describe the risks to bpo company, Risk Management

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Question 1:

You are the actuary to a pension scheme. Describe which asset types you would recommend, with reasons, for the following membership profile:

a) A newly set pension scheme with the oldest employee having 30 years before attaining retirement date

b) A closed scheme with 50% of liabilities attributable to pensioners and the remaining 50% of liabilities in respect of members with an average time to retirement of 10 years. Pension in payment is assumed to be level.

c) A mature scheme with 25% of pensioners, 25% of members with 30 years to retirement and the remainder with an average of 15 years to retirement. Pension in payment in indexed with inflation.

Question 2:

You are approached by the CEO of a BPO company which wants to set up a DB pension scheme. The scheme will provide for both pension benefits and lump sum death in service benefits.

a) Describe the risks to which the BPO company will be exposed should it put in place a DB scheme.

b) What are the measures available to contain/reduce/eliminate these risks, assuming the CEO wants to go for a DB scheme?


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