November 2019

20Nov

Netherlands Spares Pensioners Cuts in 2020 as Funds Rebuild Ratios

Millions of Dutch pensioners were spared cuts to their retirement income in 2020 after the government granted pension funds a year's grace period to restore sagging coverage ratios, although it said future cuts and higher premiums are likely. The retreat by Mark Rutte's centrist government had been widely expected, given anger among pensioners and national elections due in 2021. But the decision could hurt the reputation of the Netherlands' pension system, often rated 'best in the world' and framed...

November 20, 2019
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19Nov

US. Understanding The FedEx Pension Closure

“FedEx Closes Pension Plan to New Hires”: that’s the headline at the Wall Street Journal today. Or, as the Memphis Commercial Appeal reported, “FedEx to launch a new 401k plan with a higher match, but no pension with it. ” Superficially, it looks like a repeat of the same old story of employers taking pensions away from their employees. But, in fact, there are a few wrinkles here. In the first place, FedEx had already frozen its traditional pension plan,...

November 19, 2019
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19Nov

The human face of pension management

The Pensions Act 2004 placed more responsibility on employers to manage and protect their employees’ final salary pension benefits. Many companies welcomed the move, but subsequently found the additional requirements to address shortfalls in scheme funding and regulation an expensive and time-consuming administrative burden. As a result, a growing number of defined benefit pension scheme trustees and sponsors started to choose to transfer the risks associated with their pension schemes to specialist insurers such as the Pension Insurance Corporation...

November 19, 2019
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18Nov

Australian Pension Giants Join Global Push Into Private Credit

Australian pension funds are stepping up direct lending to companies, following their global peers into the booming market for private credit in a hunt for higher-yielding assets. UniSuper, IFM Investors and First State Super -- all giants in the nation’s A$2.9 trillion ($1.9 trillion) retirements savings pool -- are turning to the loan markets, taking on credit mandates or building out their own investment teams. Banks are “starting to exit some of these sectors, which creates a capital need for other...

November 18, 2019
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15Nov

Operational Risk Modeling in Financial Services: The Exposure, Occurrence, Impact Method

Patrick Naim, Laurent Condamin Operational Risk Modeling in Financial Services provides risk professionals with a forward-looking approach to risk modelling, based on structured management judgement over obsolete statistical methods. Proven over a decade's use in significant banks and financial services firms in Europe and the US, the Exposure, Occurrence, Impact (XOI) method of operational risk modelling played an instrumental role in reshaping their oprisk modelling approaches; in this book, the expert team that developed this methodology offers practical, in-depth...

November 15, 2019
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08Nov

Longevity Risk and Retirement Income Planning

By Patrick J. Collins, Huy D. Lam, Josh Stampfli The past 50 years have seen an abundance of research on retirement planning and longevity risk. Reviewed here is the academic side of the research and its varied viewpoints and nuances. The evolution of retirement risk models, retirement portfolio problems and solutions, and annuities are some of the many topics covered. Get the book here

November 8, 2019
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08Nov

US. Pensions Venture Into Risky Corners of the Market in Hunt for Returns

Some pension-fund managers are venturing further into unusual investment territory as this year’s plunge in bond yields makes it harder to find decent long-term returns. Read also US. Coal Mine Workers Pension “Death” Deserves An Autopsy Funds are dabbling in riskier asset classes, including private markets, real-estate projects, infrastructure financing and direct lending. Some are making riskier fixed-income bets, buying volatile assets such as 100-year Argentine government bonds. Others are going farther afield, investing in greenhouses and waste management. Read also...

November 8, 2019
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October 2019

22Oct

IOPS Supervisory Guidelines on the Integration of ESG Factors in the Investment and Risk Management of Pension Funds

Published today, IOPS Supervisory guidelines on the integration of ESG factors in the investment and risk management of pension funds highlight a range of challenges to be met by pension funds governing bodies, asset managers and pension supervisors. Environmental, Social and Governance (ESG) factors are key and timely issues for the investment and risk management of pension funds, whose consideration is relatively new in the landscape of regulatory frameworks of pension funds worldwide. They are also dynamically evolving and...

October 22, 2019
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11Oct

Tactical Target Date Funds

By Francisco Gomes, Alexander Michaelides, Yuxin Zhang We propose target date funds modified to exploit stock return predictability driven by the variance risk premium. The portfolio rule of these tactical target date funds (TTDFs) is extremely simplified relative to the optimal one, making it easy to implement and communicate to investors. We show that saving for retirement in TTDFs generates economically large welfare gains, even after we introduce turnover restrictions and transaction costs, and after taking into account parameter...

October 11, 2019
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04Oct

Defined Benefit Pension De-Risking and Corporate Investment Policy

By Brian Silverstein U.S. corporate sponsors of defined benefit pension plans in recent years have been de-risking by paying premiums to transfer their pension plan assets and liabilities to the balance sheets of third party insurers. The passage of the Moving Ahead for Progress in the 21st Century Act (MAP-21) in 2012 provided the pension funding relief necessary to make de-risking a mainstream corporate activity. This study provides the first empirical analysis of plan and firm factors that cause...

October 4, 2019
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