February 2025
17Feb

Living Beyond Age 100: A Possibility With Financial Impact

Living beyond age 100 might sound like the stuff of science fiction, but think about how many once-impossible ideas are now part of everyday life. Air travel, landing on the moon, mobile phones and even the ability to map our DNA were unthinkable not long ago. Now, breakthroughs in medicine and technology are nudging us closer to the possibility of living significantly longer, healthier lives. While immortality isn’t on the table just yet, the idea of living well beyond 100...

February 17, 2025
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10Feb

Pension funds foresee increased risk to assets and liabilities in 2025

The majority of pension fund executives expect their plans’ risk profile to increase in 2025, according to a survey conducted by Ortec Finance, a provider of risk and return management solutions for pension funds. The research shows that 77% of pension fund executives surveyed expect the coming year to bring an elevated risk profile. The survey targeted senior pension fund executives in the UK, the US, the Netherlands, Canada and the Nordics whose funds collectively manage $1.451trn (€1.399trn) in assets. The risks were...

February 10, 2025
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January 2025
29Jan

Retirement is a risky business for most people

Firstlinks published an article by Bruce Bennett on 8 January 2025 that highlighted some of the problems with the Commonwealth Super Scheme (CSS): This article drew comparisons between account-based pensions available from industry super funds and SMSFs. I think those comparisons are misplaced. A more interesting exercise would be to compare the CSS with the age pension because both are income streams that are paid for life and indexed to inflation. In both cases, the provider is the Commonwealth Government and benefits are...

January 29, 2025
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13Jan

US. Could climate change cost pensions 44 per cent?

Climate change is a complex financial risk. Its immediate impact on weather patterns and the various societal responses to a changing climate will influence GDP growth, inflation and ultimately, financial markets. An inaugural climate report released by Ortec Finance has found that Canadian pension funds are among the funds most vulnerable to climate change, second only to US pensions. Climate risk specialist at Ortec and author of the report Doruk Onal says Canadian pension funds are expected to experience profound...

January 13, 2025
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December 2024
13Dec

Private Equity for Pension Plans? Evaluating Private Equity Performance from an Investor’s Perspective

By Arthur Korteweg, Stavros Panageas & Anand Systla We evaluate private equity (PE) performance using investor-specific stochastic discount factors, and examine whether investors could benefit from changing their allocation to PE. Plans invest in PE funds with higher average risk-adjusted performance. This is mainly due to access to successful PE managers, not superior selection skill. Decomposing returns into risk-compensation and "alpha", we find that some plans obtain higher PE returns by taking more risk without earning higher, and in some cases earning lower,...

December 13, 2024
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03Dec

Half of US pension returns at risk of climate change wipeout

By Mona Dohle   UK institutional investors are closely examining their transatlantic counterparts amid ongoing discussions about whether the so-called Maple 8 Model could be replicated in the UK to attract private investment in the country’s ailing infrastructure. However, the combination of a home bias alongside a relatively higher allocation to alternatives are precisely the factors that leave pension funds more vulnerable to potential climate risks, according to new research by Ortec Finance, a Dutch climate risk modelling firm. North American and Canadian pension funds find...

December 3, 2024
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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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