Fundamental changes have been taking a toll on the functioning of current federal PAYGO schemes. Deepening interest in this subject is rooted in one pivotal question: can current pension schemes withstand the challenges lying ahead? Budgetary consequences of such challenges raise serious concerns regarding the long-term sustainability of present PAYGO systems, not to mention their secondary negative economic effects. Pension expenditure can amount to exorbitant GDP figures across the globe, driven by demographics, labour market conditions and generosity of such schemes.

In response to these developments, PensionTransitions Inc. has been engaging in two categories of alleviating measures, namely parametric and systemic reforms. While parametric measures modify intrinsic parameters of the respective pension plan such as retirement age, benefits and contributions, systemic reforms change the underlying paradigm of the existing system by introducing a funding component to transitions towards a funded scheme. In addition to restoring and sustaining financial health of plans, both solution categories are geared towards increased transparency, fairness and labour market participation.

Pension fund solvency remains a key challenge for private sector corporations as there are numerous instances, current and past, where pension fund deficits have distressed the financial standing of the sponsoring organization. An authentic concern to the health of DB plans is the uncertainty in changes to key parameters of the plan. This major risk factor manifests itself in various forms such as the underestimation of cost drivers or the leeway provided to sponsors by regulations governing company pension plans when making those key assumptions.

In a first step, PensionTransitions Inc. aims to capture the factual size of pension obligations of corporate plans by making an implicit and hidden debt explicit. Further, we shed light on the impact of effects on DB plans when changes in key actuarial assumptions are made. For that purpose, we utilize various simulations with the objective of providing a means to bound uncertainty in actuarial calculations. And finally, we provide insight into what these changes would mean for the plan sponsor and through which mechanisms the underlying pension risk can find its way to the sponsoring corporation’s financials and further impact valuation of the respective company.

At PensionTransitions Inc., we believe that the adoption of technology in the world of pension finance has been particularly slow and pension data is not utilized in a way to realize its potential. Through our consulting work with governments and plan sponsors, we also have insight into the unique challenges facing this industry.

If you are a consultant or plan sponsor with an infinite number of spreadsheets or a software that reminds you of another millennium, you are not alone in the industry! We have seen it before, tackled it in one way or another, and we are ready to be your tech partner as you take charge of the future of your business.

Pension Transitions Inc. offers unique software solutions for the problems facing the pension industry. Recently we have been developing a web-based software to analyze corporate defined benefit pension plans.

Such DB plans use a limited set of assumptions for actuarial calculations and reporting. As a result, the analysis of such plans is difficult for a broader audience without the actuarial or pension expertise. Our aim is to shed some light on the financial health of a corporate DB plan with respect to the overall fundamentals of the company.

Launched as PenSight, this technology solution has been engineered to analyze corporate defined benefit pension plans transparently and consistently. The simulation capabilities enable objective analysis of a company‘s pension plan as well as benchmarking corporate pension health in a portfolio.