March 2019

07Mar

The Impact Of Population Ageing On Monetary Policy – Analysis

Population ageing is likely to affect many areas of life, from pension system sustainability to housing markets. This column shows that monetary policy can be considered another victim. Low fertility rates and increasing life expectancy substantially lower the natural rate of interest. As a consequence, central banks are more likely to hit the lower bound constraint on the nominal interest rate and face long periods of low inflation, especially if they fail to account for the impact of demographic...

March 7, 2019
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07Mar

UK. PensionBee flags risks of Now Pension fee structure

Fintech consolidator PensionBee has warned of "an unacceptable level of risk" that a large proportion of pots in Now Pensions will be eroded to zero by charges. Last month the master trust, the third biggest in the market, defended its charging model after criticism from Labour MP Steve McCabe. Mr McCabe, a member of the Work and Pensions select committee, said at a hearing in Parliament that Now Pensions had a charging structure where they charged a £1.50 admin...

March 7, 2019
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06Mar

Dutch fund commits to member preferences

One courageous pension fund is letting its members put their money where their mouth is. The Pensioenfonds Detailhandel has surveyed its members about their sustainability preferences and is actually making investment decisions based on the results of the survey. In June 2018, active members of the €23 billion fund for retail workers in the Netherlands were invited to participate in an online survey run by academics at Maastricht University. Respondents were asked to decide on the sustainable investment strategy...

March 6, 2019
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06Mar

UK. End to unnecessary benefit reassessments for disabled pensioners

Hundreds of thousands of disabled pensioners will no longer have to go through unnecessary reassessments for disability benefits, Work and Pensions Secretary Amber Rudd has said today (5 March 2019). Around 270,000 people receiving Personal Independence Payment (PIP) who have reached State Pension age will no longer have their awards regularly reviewed, instead moving to a light touch review every 10 years. The changes are part of a wider package of measures announced by Amber Rudd, signalling a shift...

March 6, 2019
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06Mar

Pension-Fund Giant Warns Policy Mistake Risk Is Now Elevated

MLC Ltd., one of Australia’s largest pension funds, is pinning its hopes on private-equity investments to lift returns amid an outlook for increasingly volatile markets and an elevated risk of policy errors as the global economic cycle ages. There is now a higher risk of policy mistakes coming from governments or central banks and the sustainability of corporate profit margins near all-time highs is under threat, according to Jonathan Armitage, the firm’s chief investment officer in Sydney, where he...

March 6, 2019
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06Mar

UK. Pensions watchdog tells weak companies to stop handing cash to investors

Weak companies have been told they must stop dishing out fat payouts to shareholders if they are struggling to fill a hole in their pension scheme. The Pensions Regulator (TPR), which has a responsibility to safeguard pensions, said that if an employer is “weak and unable to support the scheme” then it expects the “payment of shareholder distributions to have ceased”. The disparity between shareholder dividends and pension contributions has been a major area of focus since the high-profile...

March 6, 2019
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05Mar

Warren Buffet Tells Pensions and Endowments to Cut Management Fees

Warren Buffett has a word of advice for pension funds and endowments: cut out those high-fee “helpers,” namely consultants, outside managers, and others he deems a drag on returns. In Berkshire Hathaway’s latest annual letter, Buffett describes US growth over the last 77 years. Why 77 years? That refers to when he bought his first stock: three shares of Cities Service for $114.75. And he did a little math regarding public pension funds and college endowments. “If my $114.75...

March 5, 2019
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05Mar

Europeanising pensions and unemployment insurance

A European mechanism for pensions and unemployment insurance would protect vulnerable economies against asymmetric shocks and give life to the European Pillar of Social Rights. The debate about the future of the social dimension in Europe offers an opportunity to ground new policy directions and research. The European Pillar of Social Rights (EPSR) sets out, in its chapter III, the principles of social protection and inclusion, in which unemployment benefits and old-age income and pensions figure. Equality, fairness and...

March 5, 2019
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05Mar

How Merrill Lynch Is Planning for Its Customers to Live to 100

The world is getting older. Children born in the developed world today can anticipate living to 100 and beyond, and those of us arriving at old age in good health stand a very good chance of living into our 90s. These shifts will change the workplace environment, and also offer companies new economic opportunities. The impact of what’s known as the “longevity economy” — defined as the purchasing power of those 55 and older — is over $7.6 trillion...

March 5, 2019
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05Mar

India. Serving, retired staff of government insurers to benefit from pension scheme

Retired and serving employees of government-owned insurance companies are happy at the Centre's decision to offer another chance to opt for pension scheme. "I am happy with the development. With the interest rates on bank deposits sliding down, getting a steady pension income is good. I am going to opt for pension," said Y. Sivam, a retired employee of National Insurance Company Ltd. A serving employee in the same company said: "Earlier I didn't opt for the pension...

March 5, 2019
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