Topics in Pension Research
Background and Purpose
The Society of Actuaries Retirement Section Research Committee is committed to providing objective and informative research for actuaries and other pension professionals. With new developments in the changing pension environment, there is a need for information, data and tools that are useful to practicing pension actuaries and other professionals. With this in mind, the Retirement Section Research Committee is interested in sponsoring research on current pension topics that will be both practical and valuable for retirement section members and others. Proposals are welcome on the suggested topics below and others of interest to pension practitioners. The Retirement Section Research Committee is also interested in proposals that include a multi-disciplinary perspective and may involve partners from other organizations.
Research Objective
The Retirement Section Research Committee is seeking researchers to address one or more pension-related topics. The following are topics that are of interest to the Committee. Note that the list below is not meant to be exhaustive, rather examples of proposed topics of interest. We welcome partnerships with academics and practitioners to explore further the below topics and refine scopes.
Proposals on other topics are also welcomed and encouraged!
- Pension Plans and Domestic Investments - There have been discussions in some countries about increasing economic productivity by encouraging and/or incentivizing large pension plans to increase their allocations of plan assets to domestic investments. The researcher would investigate the macroeconomic implications for a country in the event that pension plans in their country significantly increase their allocations to domestic investments. The research could take into consideration factors such as the potential effects and implications of changes to investment performance, funding requirements, and the amounts of retirement income that can be provided to pensioners. A related question is assessing whether plan members are well-served by pension investment strategies that strengthen their local economy and promote ESG goals, alongside traditional financial risk/return goals?
- Changes in Fixed Income Markets - Innovation in fixed income securities over the past 30 years has led to significant changes in the composition of the bond market. Treasuries, corporates, and municipal bonds are no longer the only options. Mortgage-backed securities, asset-backed securities and private credit form an increasingly large part of the market. How have these changes impacted pension plans? This topic would entail summarizing changes in fixed income markets and the impact to pension investment portfolios, assumptions, hedging strategies, and pension risk transfers.
- Target Benefit Pension Plan Equity Measures - A target benefit pension plan is a plan with fixed contribution rates that provides a target lifetime pension which can be increased or decreased depending on the financial performance of the plan. A key governance consideration when managing a target benefit plan is equity between groups of plan members. This includes intra-generational equity (i.e., the level of equity between different groups participating in the plan at any point in time) and inter-generational equity (i.e., the level of equity between groups of members who participate in the plan during different periods of time). This topic would investigate ways in which the level of equity between groups of target benefit pension plan members can be measured and how plan design and financial management decisions can affect the level of equity between groups of plan members.
- Leveraging Defined Benefit Plan ALM Ideas - Defined benefit pension plan sponsors have used liability-driven investing and a mark-to-market approach to managing risks and returns. In contrast, defined contribution plans focus on risk and returns measured relative to cash and prospective future investment returns. Are there potential applications of concepts from DB asset/liability management in defined contribution plan management? What may be obstacles to their use?
- Megatrends and Pension Plans - The SOA Research Institute paper on Megatrends Impacting the Future of Retirement Plans | SOA points to new kinds of relationships between individuals and enterprises. How can enterprises foster long-term relationships with the individuals who provide labor and talent to their enterprise and with the individuals who purchase their products and services? Are there financial structures similar to the pension plans of the 20th century that can promote enterprise-based economic security in the 21st century?
- Self-Insured Lifetime Income A variety of programs have been developed to diversify longevity risk without a defined benefit program or an insured annuity. For example:
- QSuper’s Lifetime Pension in Australia
- University of British Columbia‘s Variable Payment Life Annuity in Canada
- Collective Defined Contribution (CDC) schemes in the United Kingdom
- TIAA-CREF variable annuity accounts in the United States
Proposal Requirements
To facilitate the evaluation of proposals, the following information should be submitted:
- Resumes of the researcher(s), including any graduate student(s) expected to participate, indicating how their background, education and experience bear on their qualifications to undertake the research. If more than one researcher is involved, a single individual should be designated as the lead researcher and primary contact. The person submitting the proposal must be authorized to speak on behalf of all the researchers as well as for the firm or institution on whose behalf the proposal is submitted.
- An outline of the approach to be used (e.g. literature search, model, etc.), emphasizing issues that require special consideration. Details should be given regarding the techniques to be used, collateral material to be consulted, and possible limitations of the analysis.
- A description of the expected deliverables and any supporting data, tools or other resources.
- Cost estimates for the research, including computer time, salaries, report preparation, material costs, etc. Such estimates can be in the form of hourly rates, but in such cases, time estimates should also be included. Any guarantees as to total cost should be given and will be considered in the evaluation of the proposal. While cost will be a factor in the evaluation of the proposal, it will not necessarily be the decisive factor.
Please note that as a policy, the SOA Research Institute generally does not provide funding to cover academic institution overhead expenses.
As a guide for developing the project budget, please review the Historical Project Cost Guide (see Appendix) - A schedule for completion of the research, identifying key dates or time frames for research completion and report submissions. The Retirement Section Research Committee is interested in completing this project in a timely manner. Suggestions in the proposal for ensuring timely delivery, such as fee adjustments, are encouraged.
- Other related factors that give evidence of a proposer's capabilities to perform in a superior fashion should be detailed.
Selection Process
The Retirement Section Research Committee will appoint a Project Oversight Group (POG) to oversee the project. The Retirement Section Research Committee is responsible for recommending the proposal to be funded. Input from other knowledgeable individuals also may be sought, but the Retirement Section Research Committee will make the final recommendation, subject to Society of Actuaries Research Institute (SOA) leadership approval. An SOA staff research actuary will provide staff actuarial support.
Questions
Any questions regarding this RFP should be directed to Research-AR@soa.org.
Notification of Intent to Submit a Proposal
If you intend to submit a proposal, please email written notification by August 15, 2024 to Research-AR@soa.org
Submission of Proposal
Please email your proposal to Research-AR@soa.org; proposals must be received no later than August 30, 2024. It is anticipated that all proposers will be informed of the status of their proposal by the end September 2024.
Conditions
The selection of a proposal is conditioned upon and not considered final until a Letter of Agreement is executed by both the Society of Actuaries Research Institute and the researcher.
The Society of Actuaries Research Institute reserves the right to not award a contract for this research. Reasons for not awarding a contract could include, but are not limited to, a lack of acceptable proposals or a finding that insufficient funds are available. The Society of Actuaries Research Institute also reserves the right to redirect the project as is deemed advisable.
The Society of Actuaries Research Institute plans to hold the copyright to the research and to publish the results with appropriate credit given to the researcher(s).
The Society of Actuaries Research Institute may choose to seek public exposure or media attention for the research. By submitting a proposal, you agree to cooperate with the Society of Actuaries/sponsoring entity in publicizing or promoting the research and responding to media requests.
The Society of Actuaries may also choose to market and promote the research to members, candidates and other interested parties. You agree to perform promotional communication requested by the Society of Actuaries Research Institute, which may include, but is not limited to, leading a webcast on the research, presenting the research at an SOA meeting, and/or writing an article on the research for an SOA newsletter.
Conflict of Interest
You agree to disclose any of your material business, financial and organizational interests and affiliations which are or may be construed to be reasonably related to the interest, activities and programs of the Society of Actuaries Research Institute.
Appendix
The cost ranges below are intended as a guide for budgeting project costs for proposals in response to SOA Research Institute Request for Proposals (RFP). Please note these figures span the 33rd to 66th percentiles for all projects as well as projects that involve a specific approach (lit review, survey, etc.). They are based on historical costs over several recent years. Expected costs for some RFPs may fall outside these ranges depending on the nature of the work and resources required for completion.
All Contracted Projects
This category includes all contracted projects that the Institute has undertaken within the last several years.
The 33rd-66th percentile project costs range is $25,000 - $50,000.
Literature Reviews
This category includes projects that involved only a literature review or the cost for the portion of a larger project that included a literature review.
The 33rd-66th percentile project costs range is $15,000 - $20,000.
Surveys
This category includes all projects that had a survey as their primary component.
The 33rd-66th percentile project costs range is $28,000 - $55,000.