Pensions Risk Management in 2017
Akash Rooprai, Head of Pensions Risk Management at Capita Employee Benefits, talks about pension scheme de-risking and what scheme sponsors should consider in 2017.
Hi. I’m pleased to introduce Akash Rooprai who joined Capita towards the end of last year as Head of Pensions Risk Management. Akash has agreed to share some of his thoughts on the year ahead and a little bit more on his own background and experience.
So Akash, if 2016 showed that we need to expect the unexpected, what can those with responsibility for pension schemes do to prepare for 2017?
Well, in 2017 we will have ongoing discussions and negotiations in relation to Brexit, we have a new US President and a number of European elections. So the uncertainty will continue. In many ways this makes planning and decision making difficult. On the other hand, it has never been more important to be prepared to take action and react to changes. By considering all areas that impact on pensions risk in a holistic way and developing a plan of action that allows decisions to be made quickly and efficiently within an agreed framework, it’s possible for trustees and employers to take advantage of circumstances as they arise and to take positive and decisive action towards their ultimate end-game – whether that be buy-out or self-sufficiency.
Your recent experience has been in the insurance market; can you share with us what the insurers have been up to in terms of de-risking?
In 2016 we saw some constraints in insurer capacity for pension schemes mainly as a result of large back book deals between the insurers. There was also increased demand for re-insurance as a result of Solvency II. Together these factors will mean that pricing will probably increase at some point in the future. So schemes that want to insure their liabilities should ensure they have plans and monitoring in place and take other actions consistent with that end game in mind. Understanding the appetite of insurers creates opportunities for schemes to do transactions at advantageous prices, especially for schemes that have unusual, or seemingly unattractive, features.
So could you summarise how schemes looking to de-risk should approach 2017
Ensure you have a plan in place, with an agreed framework for quick decision making and appropriate monitoring. Having triggers in place means that you can act quickly. Remain flexible and be prepared to re-align if circumstances change. The key to a good plan is adaptability to the unexpected.
And can you also share with us a little more about background?
Sure, having followed the traditional actuarial path I then moved into bulk annuities and was involved in a number of “firsts”, including the first buy-out over £1 billion, the first Public Sector bulk annuity, the first transaction in the UK involving a captive insurer and the first transaction for deferreds only where pensioners had not been insured first.
I have recent experience at an insurance company where I learned their approach to bulk annuities and their perspectives. I then returned to consulting late last year; I have taken this position at Capita as Head of Pensions Risk Management where my responsibilities are mainly bulk annuities, liability de-risking and journey planning.
So what attracted you to Capita?
I was attracted to Capita by the people and the potential for growth in this exciting area in pensions. Risk management is on the agenda for all pension schemes, especially in these times where the unpredictable is seemingly “normal”. We have a fantastic business model and a huge pool of talent able to draw on experiences from the wider pensions industry.
Thanks Akash for your time today and thanks everyone for watching.