From the blog: What if I told you that a diagram from the Pensions Regulator is an example of the artistic technique of stippling – where individual dots of paint are used to build up a picture?
The approach illustrated is essentially a framework on which to hang actuarial funding risk, investment risk and those risks relating to the strength of the sponsor’s business: their own investments, the market in which they operate and their continuing ability to support the pension scheme.
If trustees use the right framework, information from each adviser – actuarial, investment and covenant – can be pulled together to build up a clear picture of the risks the scheme is exposed to.