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Inflation Hedging for Absolute Beginners                 Interview by Helen Winsor, Finance IQGary Knapp, CFA, Trustee of ...
IQPCPlease note that we do all we can to ensure accuracy within the translation to word of audio interviews but that error...
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Inflation Hedging for Absolute Beginners

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Gary Knapp, CFA, Trustee of the Pramerica Retirement Savings Plan, speaks to Finance IQ about Inflation Hedging for Absolute Beginners – offering a snapshot of why it is so high on the pension funds agenda nowadays and just why the rate of inflation matters so much to pension funds portfolios.

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Inflation Hedging for Absolute Beginners

  1. 1. Inflation Hedging for Absolute Beginners Interview by Helen Winsor, Finance IQGary Knapp, CFA, Trustee of the Pramerica Retirement Savings Plan, speaks to Finance IQabout Inflation Hedging for Absolute Beginners – offering a snapshot of why it is so high on the pension funds agenda nowadays and just why the rate of inflation matters so much to pension funds portfolios.Finance IQ: Gary, welcome to the show. How are you today?G Knapp: Very good. Hello.Finance IQ: Glad you could join us. Now, I understand that you’ll be delivering a session onthe Inflation Hedging for Absolute Beginners. So, in this interview, it would be good to get aquick snapshot of this area. So, I’ve got five questions for you today. First of all, why, Gary, isinflation hedging so high on pension funds’ agenda nowadays?G Knapp: Well, I think many things have moved to the agenda just due to the generalvolatility in capital markets. But inflation in particular affects those schemes with indexedbenefits, benefits that change where changes from planned inflation can significantly changethe liability values. So, for example, rising inflation perhaps from current economic stimulus,may raise future benefits and asset returns may not keep up or even falling inflation may notcause benefits to fall, but this also usually means lower interest rates and that can increaseliability values.The second thing that makes it very important these days is people have realised thatinflation risk is linked to the longevity assumptions for the plan. So, even a little unanticipatedinflation combined with an unanticipated increase in the longevity of the plan’s beneficiariescan require significantly increased contributions to keep a scheme healthy.To download this interview in full please click here: bit.ly/O8g63YThe IQPC Pension Funds De-Risking Summit 2012 is due to take place from 05 - 06November, 2012, London, UK. For more details about this event, please visitwww.pensionfundderiskingsummit.com/ or Email enquire@iqpc.co.uk. Also for info you cancall 0207 036 1300 And to register 0207 368 9300
  2. 2. IQPCPlease note that we do all we can to ensure accuracy within the translation to word of audio interviews but that errors may stillunderstandably occur in some cases. If you believe that a serious inaccuracy has been made within the text, please contact +44(0) 207 368 9425 or email helen.winsor@iqpc.co.uk.

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