Our ServicesCCL provides policy, economic, actuarial and administration advice to the public and private sectors in all major areas of social security, especially pensions and occupational injury insurance, focusing on long-term planning.
Our expertise covers the full reform cycle, from preliminary analysis of system weaknesses and reform options, financial analysis and budgetary projections, through to assistance with reform implementation and institutional change management. Broadly, we provide the following services:
- Analysing policy/reform options
- Policy work and advice on informal sector retirement and savings options
- Advising on regulatory and supervisory systems
- Reviewing and drafting legislation and regulations
- Designing and evaluating financing systems
- Actuarial analysis and valuation
- Developing demographic, financial and economic models
- Mortality analysis and life table development
- Impact, analysis and risk work relating to climate change
- Organisational development, study tours and training
- Project management.
Our skills and sensitivity to local cultural and commercial practices are brought to bear on each case, as may be appropriate
- Policy Analysis
- Pension System Design
- Economic Analysis
- Regulation and Supervision
- Actuarial Valuations
- Investment Strategy
- Monitoring & Statistics
- Education and Training
- Institutional Development
Callund analyses existing pension systems and identifies weaknesses that prevent the system from meeting retirement income needs in a sustainable way. We assist governments to consider reform options and to make major policy choices – parametric or structural reform, state or private sector, pay-as-you-go or pre-funding; defined benefit or defined contribution – by carefully considering local stakeholders’ needs, expectations, risk attitudes and ability to pay. In providing policy advice, we draw on long-standing personal experience and in-house technical expertise such as computer simulation modelling.
Pension System Design
Building on preliminary policy analysis work, Callund can develop appropriate and affordable benefits structures, which balance the competing pressures of individual need and overall cost. Based on the major policy choices, we can design the specifics of pension and related benefits, like disability benefits and survivors’ pensions, and use our modelling expertise to propose sustainable solutions to finance those benefits. We also carefully consider transition arrangements, ensuring that while interim benefits remain equitable, transition costs are manageable and disruption is minimised.
Pension systems have a significant impact on the wider economy, through their impact on investment and savings, labour markets, income distribution and government finances. We keep track of pension reform developments around the world and follow closely the worldwide debate. We assess the macroeconomic impact of changes to a pension system, offering comparative studies and analytical papers on the topic to assist decision-makers in understanding the broader economic consequences of their policy choices.
Pension system modelling is a requisite decision support tool in any pension reform scenario. Simulations of the demographic, economic and financial influences on a pension system allow decision-makers to understand the consequences of various reform proposals. CCL utilises an in-house model for the analysis of pay-as-you-go systems, funded systems and the transition from one to another. The model technology is, we believe, more transparent and flexible than other available models and has been effectively applied in Estonia, Albania, the Russian Federation and Bosnia Herzegovina. Variants of the model have been used to assist work in Bulgaria and Poland.
Regulation and Supervision
In order to implement a pension system successfully, thorough and effective legislation, regulations and controls are needed. Callund provides advice on the design and implementation of supervisory regulatory and legislative frameworks, encompassing compliance procedures, minimum solvency standards, dispute resolution procedures, reporting requirements, accounting policies and investment restrictions.
Callund regularly advises on these matters and offers recommendations that address the purposes of supervision and regulation, whilst avoiding over-regulation.
Most pension systems rely on the maintenance and transfer of significant quantities of money and data between employers, employees, pension funds, investment managers and social security and taxation authorities. Callund can help design efficient administration systems, which are key to successful reform implementation.
Actuarial Valuations of both state and non-state pension funds are crucial to ensuring medium and long-term financial controls and sustainability. Applying international standards to the local situation, Callund can assess the financial soundness of a pension scheme and cost the impact of changes in key structural parameters, such as contribution rates, benefit design, mortality, retirement age and economic factors. Based on this analysis, we recommend actuarially sound solutions to strengthen the financial stability of a scheme. For private pension systems, Callund also develops guidelines for actuarial analysis and reporting and the assessment of unfunded liabilities.
Many pension systems now rely on accumulation of capital reserves and the investment of significant assets in order to meet their liabilities. Choosing assets that match pension liabilities over the long-term is a difficult decision, particularly in transitional economies where the local equity and bond markets may be illiquid, poorly regulated and unpredictable and where political pressure often demands significant local investment. Callund can help state pension and social security funds to design a prudent investment strategy. We can also assist pension fund regulators to design sensible regulations for investments, including guidelines on investment strategy and investment risks, reporting and accounting for investment returns and dealing with investment managers.
Investors, beneficiaries and regulators rely on accounting reports to help make decisions about the financial condition of pension funds, while pension funds themselves often rely on accounting reports to make decisions directly affecting beneficiaries, like allocation of investment return. Callund can help regulators and pension funds to design and implement consistent and appropriate accounting reports and procedures, which are in line with the growing number of international accounting standards.
Monitoring and Statistics
Good statistics are crucial for the effective management and on going monitoring of pension systems. Through our modelling activities and experience advising on pension systems, Callund has gained extensive expertise in the generation, extraction and manipulation of pensions-related data in different forms and from various sources, including administrative, databases and survey responses. We advise on statistical requirements for reporting and decision support and make recommendations for improvement of monitoring procedures, data collection and information systems.
Education and Training
Sustainability of pension reforms depends crucially on the transfer of knowledge to local staff. Our staff is experienced in designing and implementing training programs in a wide range of pension related areas and our approach to projects aims to maximise knowledge transfer. We also arrange study tours abroad, so that key stakeholders can see first hand international centres of best practice.
Capacity building is one of the most important aspects of any reform process. To complement our technical skills in the pensions sector, Callund provides assistance to pension sector organisations, such as Ministries of Social Security and private pension funds and their supervisors and regulators in institutional development – including change management, human resources development and training.
Micro-Insurance and Micro-Pension / Informal Sector Savings
Many developing countries have a high proportion of rural workers with little access to social protection and other financial services. We are developing innovative micro-insurance solutions, which bring modern risk management techniques to the poor. This enables poor people to become more resilient to negative impacts, such as droughts and floods, and helps them towards a more sustainable livelihood and escape poverty.
Micro-insurance takes many forms; it can include micro-savings, life and health insurance. We believe that a particularly promising innovation is weather-index insurance. This uses modern technology, such as satellite data and mobile phones, to make pay outs to farmers when a particular event occurs. So, for example if rainfall is less than a trigger value to a certain date, the farmer will receive a pay out. The trigger is set so that if the rainfall is less than this amount, the farmer’s crops will be impacted; the payment will allow him to keep going until the next season.
In the micro-pension/ informal sector saving space; we have extensive experience having recently worked in Uganda (2017), Kenya (2017), Rwanda (2017/2018), Ghana (2018/2019) on informal sector long-term savings expansion. We have focused on landscaping and policy; as well as overseeing focus group exercises to better understand the local environment.
There are many reasons why individuals don’t save – they can’t afford to, appropriate products don’t exist, are unknown, or inaccessible. There are also issues around trust, customer service, punitive charges for small funds, and the lack of flexibility if funds can’t be accessed in time of need. There are however policy steps which can be taken to try and address a number of the issues; and in particular focusing on how costs can be controlled.
We have applied actuarial valuation techniques to assess the damage caused by sea level rises in the Caribbean, the results of which were presented at the COP 16 UNFCCC conference in Cancun, we have assessed the application of innovative risk management tools to adapt to climate change for the UNFCCC, DFID and the UK’s Government Office for Science and we have investigated the long-term impact of climate change on the UK financial sector for the Department of Business, Innovation and Skills.
Download our latest climate change reports:
Since 1978, Callund Consulting has been providing policy, economic and actuarial services to governments in the development of their social security systems and plans for poverty-alleviation. Callund’s advice focuses on the design and application of the most efficient options for the long-term financing and delivery of secure benefit expectations in the fields of retirement, old age, survivors’ and disability benefits. Our experience covers the full reform cycle, from the preliminary analysis of system weaknesses and the consideration of options for reform, through financial analysis and budgetary projections, including the utilization of public and private-sector financial mechanisms, to assistance with the implementation of reforms, institutional change-management, capacity-building and training.
Life tables in developing or emerging countries
Actuarial life tables are an essential, if somewhat hidden, part of the life and social insurance infrastructure in every country. The existence of local tables will aid credibility and growth to the life and pensions sectors.
Building bespoke life tables is something that the World Bank recommends, and is considered to be the international best practice for the following reasons.
Robust and relevant mortality tables allow more accurate actuarial modelling and reserving, which will better protect policyholders, and can stimulate competition which will facilitate the expansion of the life insurance industry. They can also enhance product development, as well as creating more stability within these industries as companies are better able to manage their risks. Out of date, irrelevant or inaccurate life tables can impede the expansion of the industry by forcing additional risk loadings to be included in the premium pricing thereby hampering their affordability. This is clearly not in the public interest. Furthermore, incorrect life tables can also present a risk to the sustainability of a country’s pensions or social insurance system.
We have teamed up with Barnett Waddingham, who have a great deal of experience in building life tables, both in the UK and internationally, to provide this service. We can offer a full package of data collection and advice on data collection techniques and tools, data analysis, building bespoke life tables, peer review of other life tables, advice on future projections in mortality and technical mortality training.
We are very experienced in working where data is difficult to obtain or where understanding local conditions and cultures is vital to the success of the project. Even in countries where there is a small population size, which can make it more difficult to ensure statistical credibility, we can produce credible tables through the use of life tables from similar countries and co-graduation techniques.
Together, we have recently built the first ever mortality tables for Rwanda and we are in discussions with a number of African countries about building their life tables.
We are passionate about developing longevity resources and expertise around the world particularly in countries that do not yet have their own life tables. We believe that CCL’s sizeable international experience in combination with specialist longevity experience, means that we can offer you a uniquely experienced and unparalleled team.