November 2024
29Nov

Pension Liquidity Risk

By Kristy Jansen, Sven Klingler, Angelo Ranaldo & Patty Duijm Pension funds rely on interest rate swaps to hedge the interest rate risk arising from their liabilities. Analyzing unique data on Dutch pension funds, we show that this hedging behavior exposes pension funds to liquidity risk due to margin calls, which can be as large as 15% of their total assets. Our analysis uncovers three key findings: (i) pension funds with tighter regulatory constraints use swaps more aggressively; (ii) in...

November 29, 2024
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29Nov

Chinese Pension Insurance, Risk Attitudes, and Household Asset Allocation

By Hua Chen, Han Xiao, Yunxiao Guo & Ding Li Optimising household asset allocation is vital for expanding domestic demand in developing countries. This study uses 2017, 2019, and 2021 China Household Finance Survey (CHFS) data to explore pension insurance's effect on asset allocation among Chinese households. Key findings include that higher pension balances encourage investments in riskier assets. Specifically, for every 10% increase in pension account balances, the likelihood of investing in the risk asset market rises by 5%, and...

November 29, 2024
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27Nov

Managing the future of risk for Canadian public pensions

Canada’s largest public pensions — unofficially called the “Maple 8” — are internationally respected and in a healthy fiscal position at the end of 2024 [1]. These eight public pensions collectively hold $2.1 trillion in assets under management as of the end of 2023. Despite recent economic headwinds, the Maple 8 are in a strong financial position with almost all members of this unofficial group above 100% funding. In fact, by 2023, Canada Pension Plan (CPP) Fund assets were...

November 27, 2024
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October 2024
24Oct

Australian super funds face significant stability risks, says IMF

The International Monetary Fund has raised concerns about liquidity risks within Australia’s superannuation system due to a growing share of illiquid investments, such as private equity and credit. In its latest Global Financial Stability Report, the IMF warned that Australian super funds, which are increasingly allocating over 20 per cent of their assets to illiquid investments, face significant stability risks. “Australian superannuation funds are required to allow clients to switch between different investment options generally within three business days, even though...

October 24, 2024
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16Oct

Morocco faces challenges of corruption and reform of pension system

The Government Action Observatory, affiliated with Al-Hayat Centre for Civil Society Development in Morocco, has warned that one of the most prominent challenges facing the government of Prime Minister Aziz Akhannouch in its fourth year is that of reforming the pension system, which is at risk of bankruptcy by 2028. Corruption is also one of the pressing issues, as the cost of this affliction in Morocco exceeds 50 billion dirhams annually, which hinders economic growth and affects efforts to improve...

October 16, 2024
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August 2024
23Aug

Nigeria. Delta Pensions Board Raises Alarm Over Scammers Targeting Pensioners, Issues Warning Against Fraudulent Payment Demands

In an interview with SaharaReporters on Thursday, Ogidi-Gbegbaje revealed that numerous pensioners have reported receiving suspicious calls from individuals claiming to facilitate quick payment of their gratuities and benefits in exchange for money. Sir Edwin Ogidi-Gbegbaje, Chairman of the Delta State Bureau for Pensions, has raised concerns about a fraudulent scheme targeting pensioners in the state. In an interview with SaharaReporters on Thursday, Ogidi-Gbegbaje revealed that numerous pensioners have reported receiving suspicious calls from individuals claiming to facilitate quick payment of...

August 23, 2024
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21Aug

Milliman analysis: Competitive pension risk transfer costs climb from 100.3% to 102.5% in July

Milliman analysis: Competitive pension risk transfer costs climb from 100.3% to 102.5% in July Competitive bidding process saves about 2.4% of buyout costs as of July 31 Milliman, Inc., a premier global consulting and actuarial firm, today announced the latest results of its Milliman Pension Buyout Index (MPBI). As the pension risk transfer (PRT) market continues to grow, it has become increasingly important to monitor the annuity market for plan sponsors that are considering transferring retiree pension obligations to an insurer. During...

August 21, 2024
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July 2024
12Jul

US. DOL may review ‘derisking’ pension risk transfers, says congressional report

A recent Department of Labor report to Congress reaffirming current fiduciary standards for selecting annuity providers in defined benefit pension plans also includes notice that it may review the increasingly common, and controversial, practice of companies transferring pension risks to life insurers, commonly known as “derisking.” The report by the DOL’s Employee Benefits Security Administration (EBSA), which was mandated by 2022’s SECURE 2.0 Act, reviews its 1995 Interpretive Bulletin 95-1 that outlined the responsibilities of fiduciaries under the Employment Retirement Income Security...

July 12, 2024
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03Jul

General Electric sued over pension risk transfers to Athene

The employees accused Athene of violating ERISA and of “investing in lower-quality, higher-risk assets without the traditional mix of quality assets to support future benefit obligations,” in the case of Bueno et al. vs. General Electric Co. et al. filed June 28 in a U.S. District Court in Syracuse, N.Y. The lawsuit seeks class-action status, saying approximately 70,000 people could be affected by the pension risk transfer that was announced in December 2020. Athene is not a defendant, and neither is...

July 3, 2024
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June 2024
27Jun

UK. DB schemes taking steps to manage risks as funding positions improve

Defined benefit (DB) pension schemes have taken advantage of last year’s “relative calm” to make progress on endgame planning, net-zero targets, and tackling diversity, equity and inclusion (DE&I) issues, research from LCP has revealed. LCP’s latest Chart Your Own Course report found that many schemes have seen improvements to their funding positions and are exploring various endgame options. In particular, LCP found that completing a de-risking transaction remained a top priority for many, cited as a key priority in the coming year...

June 27, 2024
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