PASI study to help investment managers

By Zainab Al Nasseri — MUSCAT: May 23 – A study was conducted by Public Authority of Social Insurance (PASI) aimed at helping PASI’s board of directors in risk assessment to determine a long-term asset allocation strategy. According to Ishaq al Mawaali, Head of Asset Management at PASI, the study, ‘Asset-Liability Management for Pension Funds (ALM)’ looked at making appropriate allocations among major asset classes and help establish a suitable long-term investment policy.
PASI’s strategy depends on its investment objectives, governance levels and investment beliefs. “Our trustees believe the best strategy is the one that helps the fund grow as much as possible, subject to investment guidelines,” he said. Aiming at finding a scheme for Omani employees working in the private sector, PASI has adopted two types of insurance: one against old age, disability and death, and another against work injuries and work illnesses.
For the first type, employee contribution rate stands at 6.5 per cent, employer will contribute 9.5 per cent and public treasury 4 per cent. For the second, 1 per cent contribution comes from the employer. As a pension fund, PASI has a fiduciary duty to invest the accumulated contributions in several asset channels in favour of those insured. Al Mawaali said the latest study, conducted in 2006 and reviewed in 2011, helps investment managers and the actuary (a business professional who deals with the measurement and management of risk and uncertainty) understand investment requirements.
It provides a way of examining the implications of different investment policies and different future funding and membership scenarios. It also provides a framework for companies and trustees to take part in the financial planning of a fund. “All social security institutions, respective of their size, should develop a strategy and implementation plan that is properly aligned with the individual institutions’ strategy,” Al Mawaali said. Talking about a framework for ALM, he said it should be practical as ALM isn’t a static activity. “It continues to evolve. Yet, a periodic and detailed review process has to be built into the framework to ensure the focus remains appropriate and relevant.”