Chapter 15 of the SA2 notes talks about allowing for management actions in calculating the capital requirements for the stresses under the different risk modules/sub-modules. There is then an additional item called "Adjustments" that is included in the SCR. This is described as allowing for the loss absorbing capacity of technical provisions by reducing discretionary benefits. Would this "Adjustments" item not already be accounted for under the risk sub-modules through allowance for management actions (specifically in relation to reducing discretionary benefits) ?
I can't give a definitive answer here and this may be an area where further guidance will be issued over time. However, my reading of the directive and Omnibus 2 is that the allowance for reducing discretionary benefits is done at the "Adjustments" stage (as stated in the Core Reading) rather than the individual stresses. The alternative approach stated in the ActEd text may be derived from some other guidance, eg QIS 5, although I can't find a suitable reference. Its best to stick to the version in the Core Reading for the exam. Apologies for the confusion here. Best wishes Mark
