October 2022
14Oct

Liability Driven Investment and Asset Allocation inspired by JPM LTCMA

By Eddy H. Verbiest A white-box deterministic system simulates long-term LDI cashflows using as input J.P.Morgan Long Term Capital Market Assumptions adapted to make them interest rate dependent. Trading, coupons and dividends provide cashflows to pay liabilities and extract excess cash to stakeholders while maintaining the allocation weights and target lifes. Performance is measured by FixPct: the annually extractable Fixed Percentage of remaining liabilities to run-off to zero. This measure summarizes the interplay of drivers over many decades and allows...

October 14, 2022
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12Oct

Reforma Previsional en Chile: una demanda pendiente

Las AFP, o Administradoras de Fondos de Pensiones, cumplieron 42 años de funcionamiento. Antes existía en nuestro país un sistema de pensiones de reparto (sistema que se financia con los aportes que realizan los trabajadores activos y el Estado, por lo tanto el dinero aportado va a un fondo común con el cual se pagan las prestaciones; este sistema se concibe bajo los principios de solidaridad intergeneracional e intrageneracional), que agrupaba a un conjunto de cajas previsionales. Existía un consenso,...

October 12, 2022
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12Oct

Global financial instability risk hits new heights – IMF

A series of "cascading shocks" have raised the risk of global financial instability to new levels, officials with the International Monetary Fund said Tuesday. "It's difficult to think of a time where uncertainty was so high," Tobias Adrian, director of the IMF's monetary and capital markets department, said at a press briefing on the IMF's October 2022 Global Financial Stability Report. "The kind of risk we are flagging is the highest, outside of acute crisis," Antonio Garcia Pascual, deputy division chief...

October 12, 2022
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06Oct

UK. LDI Fallout Will Spur Pension Funds to Seek Life Sector Arrangements

The sudden need for pension funds to put up large amounts of extra collateral due to tumbling gilt prices will lead more UK defined-benefit pension funds to favour pension risk transfer deals with life insurers over liability-driven investment (LDI) arrangements with asset managers, Fitch Ratings says. The rapid drop in gilt prices following the UK’s ‘mini-Budget’ on 23 September led to a sharp increase in collateral requirements from many LDI funds as derivative contracts protecting against lower interest rates moved...

October 6, 2022
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September 2022
30Sep

Pension Insurance Corporation Group Limited. Annual Report and Accounts 2021

By Pension Insurance Corporation Group Limited PIC is a specialist insurer which has become a leader in the UK pension risk transfer market by focusing on our purpose: to pay the pensions of our current and future policyholders. We aim to balance the interests of all our stakeholders – policyholders, employees, shareholders, regulators and others – with excellence in customer service at the heart of what we do. Source @PensionCorporation 479 views

September 30, 2022
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29Sep

With Interest Rates Rising, Companies Look to Unload Pension Liabilities

The funding status of defined-benefit pension plans has been lifted by rising interest rates, which are expected to increase further Rising interest rates are boosting corporate pension plans, providing finance chiefs with an option to lighten their companies’ balance sheets and transfer obligations to insurers. The U.S. central bank has raised interest rates five times this year as it battles persistent high inflation, including last week when it opted for the third consecutive 0.75-point interest-rate increase and indicated further rate action. When...

September 29, 2022
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August 2022
29Aug

UK. Andy Bell: Common sense failure risks good work on pension transfers

By  Andy Bell In December last year I wrote in Money Marketing that new regulations designed to protect savers from pension scams would only work properly if common sense was applied by schemes administering transfers. Sadly, in certain parts of the industry, it appears ‘common sense’ is an alien concept, and it looks increasingly likely the rules will need to be revisited to ensure legitimate transfers aren’t slowed to a crawl or blocked altogether. Pension transfer scams As a reminder, this saga started...

August 29, 2022
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26Aug

GOP Fury Over ESG Triggers Backlash With US Pensions at Risk

Investment professionals are warning that a Republican campaign seeking to wipe ESG off the financial map puts at risk the savings of ordinary Americans caught in the political crossfire. Read also United States: ESG And Political Climate Changes Environmental, social and governance investing is now under attack in the world's largest economy. Florida Governor Ron DeSantis this week banned state pension funds from screening for ESG risks. Texas is seeking to isolate financial firms it says are hostile toward the fossil-fuel...

August 26, 2022
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26Aug

UK. Just 6% of pension transfers not flagged as scams

A staggering 94% of pension transfer cases reviewed by XPS Group’s Scam Protection Service were registered as having one or more scam warning signs in July 2022 – a small fall from 97% in June 2022. The firm said this is the second month in a row where the rate has been in excess of 90% of cases, with the overseas investment amber flag being the most common warning identified. However, pension transfer activity seems to be on the rise as...

August 26, 2022
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22Aug

Planets aligning for U.S. pension funds to offload their liability risk

U.S. corporate pension plans have reached a sweet spot in their derisking journeys that will enable them to pull the trigger on pension risk transfer transactions, including plan terminations. Their funding levels have risen primarily due to rising interest rates that are lowering pension liabilities even as plan assets have fallen due to the challenging return environment that has characterized the first half of 2022. "For corporate pension plans, this what they've been waiting for, for years," said Michael Moran, New...

August 22, 2022
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