🇦🇺Australia

Poor ALM Decisions

1 verified sources

Definition

Asset-Liability Matching Analysis failure exposes pension funds to interest rate risks, causing funding gaps and increased sponsor contributions.

Key Findings

  • Financial Impact: AUD 25% excess contributions for underfunded plans (e.g., 80% funded requires 125% levered assets)
  • Frequency: Ongoing with rate changes
  • Root Cause: Manual modeling ignores full liability dynamics

Why This Matters

The Pitch: Pension Funds in Australia 🇦🇺 waste AUD 100,000+ annually on excess contributions from ALM mismatches. Automation of ALM analysis eliminates this risk.

Affected Stakeholders

CFO, Pension Fund Manager, Actuary

Deep Analysis (Premium)

Financial Impact

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Current Workarounds

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Methodology & Sources

Data collected via OSINT from regulatory filings, industry audits, and verified case studies.

Evidence Sources:

Related Business Risks

ALM Modeling Delays

20-40 hours per quarterly ALM review at AUD 500/hour = AUD 10,000-20,000

LDI Collateral Calls

AUD millions in collateral for swap MTM losses (no cash offset from liability gains)

Fehlentscheidungen bei Asset-Allokation durch ungeeignete aktuariellen Annahmen

Estimated opportunity cost of 0.5–1.0% of assets per annum from suboptimal asset allocation in a AUD 100–500 million DB fund, i.e., AUD 0.5–5 million per year, cumulating to AUD 2.5–25 million over 5 years.

Fehlentscheidungen bei Rentenplanung durch falsche Inflations- und COLA-Annahmen

Quantified (logic-based): A 1 percentage point understatement of effective COLA over 20 years on a AUD 30,000 p.a. income target creates ≈AUD 6,000–7,000 per member real purchasing power gap; at 50,000 members this is ≈AUD 300–350 million equivalent mis‑estimation of retirement income needs over the liability horizon.

Funded Status Reporting Penalties

AUD 10,000+ per breach (ATO administrative penalties up to AUD 18,000 for entities; typical 20-40 hours/month manual reporting)

TBAR Lodgement Delays

AUD 5,000-15,000/year in GIC (15.5% pa on shortfalls) + 20 hours/quarter manual delays

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