Pensions and Retirement Training Course on Derivatives in Pension Fund Hedging
Master Pensions Retirement Training with expert training. 10 Days course with certification. Comprehensive training program. Online & in-person. Enroll now!
Pensions And Retirement Courses10 DaysCertificate Included
Duration
10 Days
Mode
Online & Physical
Certificate
Included
Language
English
Course Overview
This course provides pension fund professionals with a deep understanding of how derivative instruments can be effectively used for hedging, risk management, and portfolio optimization. The program explores interest rate swaps, options, futures, forwards, and credit derivatives, focusing on their role in managing liabilities, reducing volatility, and enhancing funding stability. Through practical workshops and case studies, participants learn how to design and implement derivative-based hedging strategies that align with regulatory frameworks and governance standards within pension fund management.
Secure enrollment • Professional certificate included
Learning Objectives
By the end of this course, participants will be able to:
Understand the types, structures, and purposes of derivatives in pension fund management.
Apply derivatives to hedge interest rate, inflation, and currency risks.
Design and execute effective liability-driven investment (LDI) hedging strategies.
Evaluate the risk, cost, and performance implications of derivative use.
Manage collateral, counterparty, and operational risks in derivative transactions.
Comply with regulatory and accounting standards governing derivatives.
Integrate derivatives into overall asset-liability management frameworks.
Monitor and report the impact of derivative positions on funding ratios and performance.
Build internal governance and oversight mechanisms for derivatives use.
Apply best practices for ethical, transparent, and responsible hedging management.
Course Content
Module 1: Introduction to Derivatives in Pension Fund Management Definition, types, and characteristics of derivatives The role of derivatives in institutional investing Why pension funds use derivatives: risk management vs. speculation Overview of derivative markets (exchange-traded vs. OTC) Regulatory evolution and implications for pension funds Case study: Global pension funds using derivatives for liability management Module 2: Interest Rate Risk and Hedging Fundamentals Nature of interest rate exposure in defined benefit (DB) pension schemes Measuring duration and convexity of liabilities Impact of interest rate movements on funding ratios Using interest rate derivatives to manage exposure Case analysis: Duration-matching with interest rate swaps Module 3: Interest Rate Swaps and Swaptions Structure and mechanics of swaps and swaptions Pricing and valuation basics Fixed-for-floating interest rate swaps for duration extension Forward starting swaps and swaption strategies for LDI Hedging fixed income portfolios and pension liabilities Practical session: Designing a swap-based hedge Module 4: Inflation Hedging with Derivatives Understanding inflation risk in pension liabilities Real vs. nominal interest rates Inflation-linked bonds vs. inflation swaps Using zero-coupon swaps and break-even inflation strategies Simulation: Building an inflation hedge using derivatives Module 5: Currency and Exchange Rate Hedging Currency exposure in global investment portfolios Impact of exchange rate fluctuations on returns and liabilities Forwards, futures, and currency swaps for hedging FX risk Passive vs. active currency management Workshop: Structuring a currency hedge for a global equity portfolio
Module 6: Futures and Forward Contracts in Pension Fund Portfolios Overview of futures and forwards markets Using bond and equity index futures for tactical adjustments Portfolio rebalancing through derivatives Cost and margin management in futures positions Practical exercise: Implementing a duration hedge with bond futures Module 7: Options and Structured Products Mechanics and valuation of options (calls, puts, and exotic options) Option strategies for downside protection and yield enhancement Overlays and collars in pension fund risk management Use of structured notes and derivative overlays Case study: Option-based hedging for funded status volatility Module 8: Credit Derivatives and Counterparty Risk Management Overview of credit derivatives: CDS, TRS, and credit-linked notes Applications in credit risk transfer and portfolio diversification Counterparty exposure in OTC derivatives ISDA agreements, collateral, and netting arrangements Risk control through clearinghouses and CCPs Workshop: Assessing counterparty risk exposure in a swap portfolio Module 9: Governance, Compliance, and Performance Measurement Governance and oversight frameworks for derivative use Risk monitoring and internal control procedures Regulatory reporting under IFRS, EMIR, and local pension laws Measuring derivative performance and hedge effectiveness Ethical considerations and transparency requirements Simulation: Developing a compliance checklist for derivative operations Module 10: Integrating Derivatives into the Pension Investment Framework Derivatives within asset-liability management (ALM) and LDI strategies Scenario testing and stress modeling for hedging strategies Reporting derivative exposures to boards and regulators Strategic use of derivatives in rebalancing and liquidity management Capstone project: Designing a comprehensive derivative-based hedging strategy for a pension fund
Who Should Attend
Pension fund managers, investment officers, actuaries, risk managers, portfolio strategists, treasury managers, compliance officers, and trustees involved in pension fund investment and risk management.
