May 2017

04May

India. 7th Pay Commission: Centre approves modifications on pay and pensionary benefits

Rejecting the 7th pay commission’s recommendation of a slab-based system to calculate the disability pensions, the Union Cabinet Wednesday approved the original percentage-based system that was implemented after the 6th pay commission’s recommendations. Retention of the percentage-based system will benefit existing and future defence pensioners. This system also brings additional pension expenditure of Rs 130 crore per year will make Centre’s total annual pension bill approximately Rs 1,76,071 crores. This modification will be implemented from January 1, 2016. An official...

May 4, 2017
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04May

US. Senate Kills State-Sponsored Retirement Plans For Private Sector Workers

In a narrow vote, 50 (yes) to 49 (no), the Senate by resolution killed an Obama-era rule that greenlighted state-sponsored auto-IRA retirement programs for small business workers. A majority vote was needed to repeal the rule. The AARP cried foul and urged a “no” (don’t repeal the rule) vote because: “Too many small business employees don’t have a way to save for retirement out of their regular paycheck.” That’s 55 million workers. “This is an industry effort to try to...

May 4, 2017
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03May

Nigeria. State Government of Uyo suspends payments of pensions for retired Civil Servants

AKWA Ibom State pensioners have decried non-payment of their pensions and gratuities despite recent bailouts and Paris Clubs refunds, pleading with the state government to pay their entitlements. It was gathered that from August 2015 till January 2017, retired civil servants have not been paid their gratuity and pension arrears, due to perceived embargo on the payment of gratuities and pensions by the state government. One of the pensioners claimed that from January 2017 till date, the total amount of...

May 3, 2017
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03May

How pension funds can help relieve Kenya’s debt burden

Kenya’s heavy debt burden could be managed without hurting ongoing execution of the mega infrastructure projects if the government taps into the multi-billion shilling pension funds. That was the verdict of the pension industry leaders meeting in Nairobi last week, under the auspices of an African Development Bank-backed think-tank, Making Finance Work for Africa (MFW4A). African governments, they said, must rethink their sources of development funds and opt for those that best serve the interests of their countries in the long...

May 3, 2017
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03May

UK. Retirement: are pensions going to be much smaller in future?

Increasing life expectancy has seen the number of years in which people spend in retirement creep ever upwards. Using census data, the Office for National Statistics calculated that in 1981 a 65 year old man could expect to live another 13 years (17 for a woman). By 2011 this had increased by five years to 18 years of retirement (21 for a woman). By 2050, more than 50,000 Britons are expected to reach 100, and it is now predicted that...

May 3, 2017
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03May

US. The Obama-era workplace retirement plans that the GOP wants to kill

I’m at a loss as to why some Republicans on Capitol Hill want to block the creation of workplace retirement plans for small-business employees. We know that Social Security will soon face some serious funding issues. And with fewer companies offering pensions these days, we know that workers have to save for their own retirement. The percentage of employers still offering a traditional defined benefit plan to new hires has fallen significantly, according to advisory services firm Willis Towers Watson. In...

May 3, 2017
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02May

350,000 Workers Benefit After Billions Pulled From Asset Managers

Britain’s $32 billion railway pension scheme has halved the cost of running its biggest asset pool by moving investments in-house. RPMI RailPen, which oversees the retirement assets of 350,000 British railway workers, pulled billions of pounds from hedge funds and other money managers, reducing the cost of overseeing its main fund to half a percentage point. And there’s more cost-cutting to come, says the firm’s investment chief. “Fifty basis points is not bad for something that has property in it, but...

May 2, 2017
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02May

African pension funds see low returns in limited cross-border investment

Pension schemes are finding it difficult to make cross-border investments due to political interference, a Pan-African forum was told in Nairobi last week. Subsequently pension funds hold billions of shillings in unattractive government-linked ventures, thereby denying members higher returns as well as the opportunity to profitably contribute to development. The forum heard that most pension fund trustees are subject to political sway thus making it difficult to innovate new products or investments. Cross-border investments are often considered unpatriotic. The Making Finance Work...

May 2, 2017
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02May

Pension Reform in Asia is Extremely Difficult to Get Right

Pension reform has taken centre stage in Singapore and Hong Kong over the past two years, and more recently, in Taiwan. Just two weeks ago, chaotic scenes outside Taiwan's parliament, the Legislative Yuan, forced a planned review of to be postponed to next month. But pension reform in these three Asian Tigers have been done for different reasons; in Singapore and Hong Kong, reforms have been motivated by a lack of pension adequacy, in Taiwan, pension adequacy is not...

May 2, 2017
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02May

Credit Suisse releases study on the challenges faced by Swiss pension funds

Credit Suisse on May 2 published a study entitled "Swiss pension funds survey – Low interest rates and demographics as the main challenges". Starting point of the study, written by Credit Suisse's economists and strategic investment consultants for institutional clients, are the results of a survey among almost 200 pension funds. Based on the survey results, the authors estimate that in 2015, some CHF 5.3 billion of second-pillar funds were redistributed from active insured persons to pension recipients. In this...

May 2, 2017
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