March 2020

Lessons from Latin America: Innovations in Politics, Culture, and Development

By Kirk Bowman, Felipe Arocena Since the early 1980s, Latin American countries have been innovative in a range of policy and cultural experiences, including health care, voting, pensions, and multiculturalism. And yet, their policy innovations are rarely found in textbooks. This book addresses that gap, providing a fascinating and wide-ranging exploration of both the history of "looking down" at Latin America and the political, economic, and cultural "lessons" (including successes, failures, and unintended consequences) that should inform important policy...

Insurance against Long-Run Volatility Risk: Demand, Supply, and Pricing

By Chuck Fang Despite its importance implied in asset pricing and macroeconomic models, insurance against long-run volatility risk has received little empirical documentation regarding its demand, supply, or pricing. This paper bridges the gap. First, I show that households have directly purchased large quantities of insurance against long- run volatility risk through the minimum return guarantees available in variable annuities, a form of retail retirement and savings product offered by life insurance companies. Total net assets with such insurance...

Grouping Individual Investment Preferences in Retirement Savings: A Cluster Analysis of a USS Members Risk Attitude Survey

By David P. Blake, Mel Duffield, Ian Tonks, Alistair Haig, Dean Blower, Laura MacPhee Cluster analysis is used to identify homogeneous groups of members of USS in terms of risk attitudes. There are two distinct clusters of members in their 40s and 50s. One had previously ‘engaged’ with USS by making additional voluntary contributions. It typically had higher pay, longer tenure, less interest in ethical investing, lower risk capacity, a higher percentage of males, and a higher percentage of...

Pension Superpowers and Financial Markets in the Sino-American Century

By M. Nicolas J. Firzli In this primer published in the Feb. 2020 issue of Private Debt Investor (PDI), Nicolas J. Firzli, World Pensions Council, looks at how institutional asset owners will come to the fore in the new geo-economic context defined by renewed Sino-American "coopetition" across ASEAN countries, Australia, Eastern Europe and the MENA area, Brexit and the resurgence of one-nation conservatism in Britain, the slow, relative decline of the European Union and the secular rise of "Pension...

Australia. Social protection and viral recession

So far, Australia’s help for people displaced, self-isolating or ill has been far from generous. If the Australian Financial Review is right, the federal government is considering a new transitional income support payment for workers who lose their jobs because of the coronavirus crisis. Read also Australia. Veteran pensions set to increase The temporary payment, a central feature of a package that will be “more about survival than stimulus,” will be set at a higher rate than Newstart. Applicants won’t...

Dutch pension funds receive billions as additional collateral

Dutch pension funds received billions of euros as additional collateral on swap contracts last week in the wake of rapidly declining interest rates. Liability-driven investment managers at Achmea Investment Management and NN Investment Partners, which deal with swaps used by pension funds for hedging their interest risk, said that checking whether banks and central clearing houses could fulfill their obligations required a lot of attention. Last week, the 30-year swap rate – schemes’ main criterion for discounting liabilities –...

Australia. Veteran pensions set to increase

Veteran pension payments will increase in March in line with the biannual indexation process. Pension recipients including veterans, their partners, war widows and widowers across Australia will see the increase from 20 March 2020. Due to the calculation of pension rates on a daily basis, the first pension indexed on payday 26 March 2020 will comprise a component of both the old and new rates. The new pension rates will be fully effective from pension payday 9 April 2020....

Finnish unions, employers agree crisis proposals over coronavirus

Finnish trade unions and employers on Wednesday agreed measures to support the labour market and promote temporary changes in legislation to shore up the weakening economy, they said in a joint statement. “The troubles of companies are here and now. Businesses need ways to cope with the corona crisis,” said Jyri Hakamies, the head of industry federation EK. The package - which needs to be approved by the centre-left government - includes measures such as shortening the duration of...

UK. Coronavirus scams: greater risk of being a victim of pension fraud

Pension savers face a greater risk of being targeted by fraudsters, research from the All-Party Parliamentary Group on Pension Scams (APPG) has revealed. The government has advised more people to stay at home amid the coronavirus crisis, which could increase their chances of being contacted via phone or online. Investment markets plunging over recent weeks may also make people more susceptible to pension scams as they attempt to recover losses from their retirement savings. The figures show...

Nigeria: Backlog of Unpaid Pensions, One of My Worst Pains ― Ortom

Governor Samuel Ortom of Benue State has apologized to retirees and workers of the state over the inability of successive governments to find lasting solution to the nagging backlog of unpaid pensions in the state. The Governor who tendered the apology in Makurdi while flagging off Contributory Pension Scheme, CPS, for the state workforce, said the huge pension liabilities he inherited was one of the unpleasant realities his administration had been battling with. He said "the pension problem was...