IC313-Finance and Occupational Pensions

Module Provider: ICMA Centre
Number of credits: 20 [10 ECTS credits]
Level:6
Terms in which taught: Spring term module
Pre-requisites:
Non-modular pre-requisites:
Co-requisites:
Modules excluded:
Current from: 2023/4

Module Convenor: Prof Charles Sutcliffe
Email: c.sutcliffe@icmacentre.ac.uk

Type of module:

Optional

Summary module description:

This is an applied course with little mathematical content. It deals with the largest group of institutional investors - pension schemes, focussing on occupational pension schemes. They employ fund managers to invest many £trillions on their behalf. Pensions are in a state of crisis and change and have become the subject of popular debate and controversy. Developing countries, such as China and India, have the potential for an enormous expansion of their pension schemes. Therefore, the assets under management of pension schemes globally are likely to increase considerably. The investment of pension funds requires an understanding of how pension schemes work, and corporate finance needs to allow for the presence of large pension schemes. This module provides a detailed knowledge of the biggest group of global institutional investors (pension schemes), and the real-world problems they face.

Aims:

The aim of this module is to give students an understanding of the financial aspects of occupational pensions – investing the money, and the effects of a pension scheme on the corporate sponsor.Ìý

Assessable learning outcomes:

By the end of the module, it is expected that students will be able to:-

• Explain the basics of how the main types of occupational pension scheme operate.


• Discuss the main challenges facing pension schemes, and some approaches to meeting these challenges.


• Explain the investment decisions pension schemes must make when managing the pension fund.


• Discuss the financial implications of the relationship between a pension scheme and its corporate sponsor.


• Explain how annuities work, and their role in providing pensions.

Additional outcomes:

Pensions are a subject that is very important to each student in the following ways:-

(a) personally, as a third of adult life will be spent as a pensioner (about 25 years). Therefore your most important source of income in retirement depends on your occupational pension scheme.

(b) academically, and quite possiblyÌý

(c) occupationally (e.g. as an investment manager who invests pension money, as a security analyst who needs to assess the value of companies with large pension schemes, or as a company manager responsible for their company’s pension scheme).

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Outline content:

1. Introduction to Pension Schemes


2. Selected Pension Scheme Topics


3. Investment and Pension Schemes


4. Corporate Finance and Pension Schemes


5. Annuities

Global context:

Pension schemes exist in almost all countries and, while there are differences between countries, tend to face similar problems and operate in broadly similar ways.

Brief description of teaching and learning methods:

Lectures are used to introduce the concepts covered in this module. The seven seminars allow students to discuss real world problems, including Harvard Business School case studies of General Motors, Unilever, Boots and Bethlehem Steel. These problems and case studies illustrate the concepts covered in this module.

Summative assessment- Examinations:

One 2 hour examination.

The examination for this module will require a narrowly defined time window and is likely to be held in a dedicated exam venue.

Summative assessment- Coursework and in-class tests:

One 1 hour multiple choice test. This test will take place in the first two weeks of the Summer term after all the lectures and seminars have been completed.

Formative assessment methods:

The seven classes involve Harvard Business School case studies, allowing discussion of the pension issues facing real world companies. The marks for the multiple choice test provide feedback on performance that is available before the examination.

Penalties for late submission:

The Support Centres will apply the following penalties for work submitted late:

? where the piece of work is submitted after the original deadline (or any formally agreed extension to the deadline): 10% of the total marks available for that piece of work will be deducted from the mark for each working day (or part thereof) following the deadline up to a total of five working days;

? where the piece of work is submitted more than five working days after the original deadline (or any formally agreed extension to the deadline): a mark of zero will be recorded.

The University policy statement on penalties for late submission can be found at: /cqsd/-/media/project/functions/cqsd/documents/cqsd-old-site-documents/penaltiesforlatesubmission.pdf

You are strongly advised to ensure that coursework is submitted by the relevant deadline. You should note that it is advisable to submit work in an unfinished state rather than to fail to submit any work.

Assessment requirements for a pass:

A minimum mark of 40%.

Reassessment arrangements:

A resit examination worth 100%.

Additional Costs (specified where applicable):

Last updated: 30 March 2023