Pensions and Retirement Training Course on Dynamic Hedging Strategies

Module 1: Introduction to Dynamic Hedging
Definition and objectives of dynamic hedging in pensions
Overview of financial risks affecting pension portfolios
Difference between static and dynamic hedging approaches
Case study: Benefits of dynamic hedging in real pension plans
Group discussion: Challenges in implementing dynamic hedging strategies

Module 2: Pension Fund Liabilities and Risk Assessment
Understanding liabilities in DB, DC, and hybrid plans
Measuring interest rate, inflation, and longevity risk exposure
Asset-liability management (ALM) principles
Exercise: Identifying key risks in a sample pension plan
Discussion: Risk prioritization for effective hedging

Module 3: Derivatives and Financial Instruments for Hedging
Overview of interest rate swaps, inflation swaps, and options
Futures, forwards, and swaptions in pension risk management
Selecting appropriate instruments based on plan objectives
Practical exercise: Identifying suitable derivatives for a sample portfolio
Case study: Successful use of derivatives in pension fund hedging

Module 4: Designing Dynamic Hedging Strategies
Principles of dynamic hedging and continuous adjustment
Constructing hedging portfolios to match liability profiles
Rebalancing strategies in response to market changes
Workshop: Designing a dynamic hedge for a hypothetical pension plan
Discussion: Balancing cost, risk reduction, and operational complexity

Module 5: Liability-Driven Investment (LDI) and Hedging Integration
Overview of LDI strategies for DB and hybrid plans
Integrating dynamic hedging into LDI frameworks
Aligning assets with liabilities under different scenarios
Exercise: Implementing LDI with dynamic hedging for a sample fund
Case study: LDI and hedging integration in practice

Module 6: Scenario Analysis and Stress Testing
Conducting scenario and sensitivity analysis for hedging strategies
Stress testing for interest rate shocks, inflation spikes, and market downturns
Evaluating effectiveness and limitations of hedges
Workshop: Scenario testing for a dynamic hedging portfolio
Discussion: Using results for decision-making and risk mitigation

Module 7: Monitoring and Adjusting Hedging Strategies
Establishing monitoring frameworks for ongoing hedge performance
Dynamic adjustment rules based on market and liability changes
Reporting and governance considerations for trustees and sponsors
Exercise: Setting up a hedge monitoring dashboard for a sample plan
Case study: Lessons learned from ongoing dynamic hedge management

Module 8: Accounting, Regulatory, and Compliance Considerations
Accounting treatment of derivatives and hedge effectiveness under IFRS/IPSAS
Regulatory requirements for pension hedging and risk management
Reporting obligations to auditors, regulators, and trustees
Practical exercise: Preparing regulatory-compliant hedge reporting
Discussion: Ensuring transparency and compliance in dynamic hedging

Module 9: Communication and Stakeholder Engagement
Explaining hedging strategies and their impact to trustees and members
Visualization tools for communicating risk reduction and portfolio adjustments
Preparing executive summaries and board presentations
Group exercise: Presenting a dynamic hedging strategy to stakeholders
Case study: Effective communication in complex pension risk management

Module 10: Case Studies and Practical Applications
Review of real-world dynamic hedging strategies in pension funds
Group simulation: Designing, implementing, and monitoring a full dynamic hedge
Lessons learned and best practices for sustainable risk management
Developing actionable recommendations for hedge implementation
Final discussion, review, and certification