Tag Archives: Italy

How are defined benefit plans in the UK affecting southern European companies?

Private sector defined benefit (DB) pension plans are uncommon in Spain and Italy. However, DB plans remain an important issue for companies in the United Kingdom. They can have a significant effect on the financial performance of multinational companies.

MBW International, Milliman’s joint venture with Barnett Waddingham, recently analysed 20 multinational companies in Spain and Italy with around £51.7 billion of UK DB pension liabilities between them. The analysis by Isabel Coles and Andrew Vaughan considers the effect UK DB pensions are having on the companies that make up the Spanish IBEX 35 and Italian FTSE MIB indices. The authors look at how funding levels have changed and consider developments in three important areas: assets and investment risk, benefit payments and cash contributions. They also discuss how these companies are addressing the challenges posed by their pension obligations.

To download the report, click here.

Asset-liability management improves Italian pension funds’ investment strategy

In Italy, some pensions are obligated to offer a capital guaranteed subfund to plan participants. While many participants see guaranteed subfunds as safe options, the investment may not meet their long-term retirement objectives. In this article, Milliman’s Dominic Clark highlights asset-liability management (ALM) analyses that were conducted for a large institutional Italian pension fund. The client’s main aims were twofold:

• To better understand the fit between asset allocation and expected future liabilities given the constraint of having to respect the capital guarantee of the guaranteed subfund.
• To better inform participants regarding the likely evolution of their account balances, and in particular, provide fund-specific projections that can help guide members in their choice of future contribution levels.