Risk Assessment And Stress Testing For Pension Plans

The increasing volatility of the current economic environment threatens the stability and growth of pension funds. As the population in Africa continues to age, the importance of pension plans becomes even more evident. Pension funds should be managed well so as to secure the future of today’s workers. This requires information about the expected changes in the future economic and social situation in the country and how these changes are likely to affect the performance of pension plans. Events such as economic crises in terms of recessions, unemployment, inflation, currency depreciation or rise in interest rates are likely to negatively
affect investments.

Scenario analysis and planning as well as stress testing techniques are tools that could be used to provide useful information for use in the management of pension plans in the light of changing circumstances. This is why we need capacity to not only anticipate future negative socio-economic events, but also measure the impact they will have on the pension fund’s investment portfolio. This programme is intended to develop capacity needed to predict and analyze future socio economic scenarios. It is meant to focus on the analysis of the resilience of pension fund portfolios to adverse socio economic events.