Pensions and Retirement Training Course on Discount Rates and Sensitivities

Module 1: Introduction to Discount Rates in Pensions
Definition and significance of discount rates
Role in pension liability valuation and funding calculations
Overview of regulatory and accounting standards (IAS 19, IFRS, local regulations)
Case study: Impact of discount rate selection on pension liabilities

Module 2: Determining Appropriate Discount Rates
Market-based vs. corporate bond yields
Selection of risk-free and corporate bond benchmarks
Impact of plan type, currency, and maturity on discount rates
Exercise: Calculating discount rates for different pension plans

Module 3: Time Value of Money and Present Value Calculations
Principles of the time value of money
Calculating present and future values of pension obligations
Accounting for salary growth, inflation, and cost-of-living adjustments
Practical exercise: Present value calculations for sample liabilities

Module 4: Sensitivity Analysis – Concepts and Methods
Definition and purpose of sensitivity analysis in pensions
Key assumptions affecting pension liabilities (discount rate, mortality, inflation, salary growth)
Techniques for conducting sensitivity testing
Workshop: Setting up sensitivity scenarios for a pension plan

Module 5: Sensitivity Analysis for DB Plans
Assessing the impact of discount rate changes on DB plan liabilities
Evaluating funding ratio variations under different assumptions
Understanding the effect of demographic and economic shifts
Exercise: Sensitivity testing on a DB plan valuation

Module 6: Sensitivity Analysis for DC and Hybrid Plans
Effect of discount rates and investment assumptions on DC and hybrid plan outcomes
Evaluating contribution adequacy under different scenarios
Case study: Stress testing DC plan projections for participant outcomes

Module 7: Risk Management Using Sensitivity Analysis
Identifying risks through sensitivity and scenario analysis
Integrating sensitivity results into funding and investment strategies
Hedging and mitigation strategies based on sensitivity outcomes
Practical exercise: Developing risk management recommendations

Module 8: Regulatory and Reporting Considerations
Compliance with IAS 19, IFRS, and local pension regulations
Reporting requirements for discount rate assumptions and sensitivity results
Fiduciary responsibilities in selecting assumptions
Exercise: Preparing a regulatory-compliant report on sensitivity analysis

Module 9: Communication and Stakeholder Engagement
Explaining discount rate and sensitivity impacts to trustees and non-technical stakeholders
Visualizing outcomes using charts and tables
Drafting executive summaries for board presentations
Group exercise: Presenting sensitivity analysis findings effectively

Module 10: Case Studies and Practical Applications
Real-world examples of discount rate selection and sensitivity outcomes
Group simulation: Performing a full pension valuation with sensitivity analysis
Lessons learned and best practices for sustainable plan management
Developing actionable recommendations for plan sustainability
Final discussion, review, and certification