Pension and Burial Funds

Kenston Services GmbH offers a comprehensive portfolio of services for pension and burial funds. Among other things, a total of around 15 pension and burial funds under the supervision of BaFin (German Federal Financial Supervisory Authority) are looked after as the Responsible Actuary.

However, Kenston Services GmbH is also the right partner for smaller burial benefit funds under state supervision, which usually only require an Actuarial Report every 5 years to review the financial situation and prepare the balance sheet. They not only receive actuarial expertise in the form of expert opinions, but also assistance in communicating with the insurance supervisory authorities. We would like to emphasize that our team is able to provide expert opinions on short notice due to high specialization and many years of experience, so that even small insurance companies do not have to fear a waiting period of months.

Therefore, get to know the actuarial services of Kenston Services GmbH for pension and burial funds below:

Execution “Calculations performance cases”
Pension calculations are also carried out professionally for complex pension arrangements or in special cases. Optionally, the calculation can be documented in a short and clear form or in detail and completely comprehensible in an attachment. Often, especially in the case of small pension funds, an independent review of each benefit case is even required by BaFin.

Certificate of vested entitlement
After leaving the sponsoring company, insured persons receive a certificate of vested entitlement.

Actuarial reserves and transfer values
For individual cases, the actuarial reserves are usually only requested in connection with the lump-sum settlement or the transfer with transfer value pursuant to Section 4 of the German Occupational Pensions Act (BetrAVG), but the determination of the transfer value to satisfy the claim for information pursuant to Section 4a of the German Occupational Pensions Act is also part of the service portfolio.

Pension equalization
Proposals for the equalization value for pension equalization in the course of divorce proceedings usually require the commissioning of an actuarial expert due to the specification of a capital value. If there is still a lack of division regulations or business plan regulations or an interpretation of existing regulations on the basis of a disputed individual case, we also provide support in this area.

Examination of the collateral in the calculation bases
It is standard practice in actuarial reports to examine the calculation bases. If necessary, however, it is also possible to examine outside a regular report how the collateral has developed over a period of time or what the future development is likely to be. This enables the fund to react at an early stage.

Estimates, portfolio forecasts, deterministic and stochastic long-term forecasts
The medium-term development of an insurance portfolio can be forecast relatively well using second-order accounting bases. Such forecasts can, among other things, be important for the collateral in the actuarial bases (development of the administrative cost budget) or can also influence investment decisions. Long-term forecasts are also frequently required for ALM studies.

Cash flow analyses and sensitivities
Every forecast is based on assumptions, but how much does the forecast result change if the assumptions are varied? Methods used under Solvency II can be used to determine the fluctuation effects and, if necessary, the dependencies of individual assumptions, and thus to examine the informative value of the forecasts. The level of detail is arbitrary; the final result is the calculation of the Solvency Capital Requirement (SCR) from the underwriting risks under Solvency-II.

Effects of changes to the calculation bases
Even if the changes to the actuarial bases are only minor – the impact on the actuarial reserve can usually only be determined on the basis of simulation calculations on the respective portfolio, because the relative cost of the change depends to a large extent on the individual portfolio structure (e.g. in the case of reinforcements of collateral in interest or biometrics). Often there are also different approaches, e.g. in the case of changes in business plan cost rates, which have different effects on the actuarial reserve or the premiums for future new business.

Transitional models for financing post-reservation
In the case of supplementary reserving, it is not only important to know what level of security a fund should achieve. Often, it also matters with what flexibility the funds can be accumulated so as not to put the fund under unnecessary pressure in the event of extraordinary events.

Review of participation in the valuation reserves
Regulated pension funds have usually deviated from the participation in the valuation reserves pursuant to Section 211 No. 2 of the German Insurance Contract Act (VVG) with the approval of the supervisory authority. The review of the amount of the valuation reserves eligible for participation can be carried out, among other things, according to the procedure proposed by the German Actuarial Association (DAV), although there is certainly scope for interpretation.

Screening processes
Complex processes often conceal errors or inaccuracies that cannot be detected at first glance. Processes can be successively screened for risks. Typical processes are, for example, the creation of BaFin statements (stress test or forecast calculation), processes in connection with pension equalization, certificates in accordance with § 22.5 EStG or reports in accordance with § 22a EStG, but also the standardization of data delivery to the responsible actuary. For this purpose, the execution of critical processes is reflected on the basis of real processes with the actual acting persons and examined and classified with an experienced view.

Quality assurance, dual control, further development of internal tools
Through independent parallel development of existing or new functionalities, an instrument for quality assurance can be installed in day-to-day business, which, if set up correctly, guarantees only minimal effort with high process reliability. It is also conceivable that simple actuarial tools, which are frequently required, are created individually for the fund (e.g. for own calculations of pension equalization or transfer values or capital settlements or also for automated calculations of the actuarial reserve, during the year or also for forecasts).

Consulting actuary for regulated pension funds
Many typical issues also affect other pension funds in an analogous way: Synergies arise when experience already exists for many processes as to how other pension funds were able to solve a challenge. In addition to the pension funds we serve directly, we also have contacts with a network of more than 20 pension and burial funds under the supervision of BaFin. The intensity of the advice provided varies greatly. Conceivable is a consultation depending on the process (usually initiated by the board of directors, e.g. in case of changes in processes or because of new EDP). However, regular appointments can also be arranged in which, analogous to the “screening process”, higher-level topics are dealt with, the interfaces between individual departments or support with risk management too.

Activity as Actuary in Charge
The cooperation with the actuary in charge is usually based on long periods of time and is characterized by special trust. In addition to the reliability of the content-related work, adherence to deadlines and flexibility are certainly of particular importance. In our opinion, this is essentially a matter of proper coordination so that, for example, no unnecessary delays occur in the tight schedule of the annual financial statements. And especially in the dialog with the supervisory authority, it can be an advantage if solutions to comparable cases are already available from other insurers. A total of 14 pension and burial benefit funds under the supervision of BaFin are currently being served as Responsible Actuary.