All From Our Perspective articles – Page 6
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Features
Generational imbalances
Nowadays, it is much harder to define the broad interest groups that are representative of a country as a whole. Previous decades were notable for the division between capital and labour, which persists in the consensual political and decision-making models of continental Europe. But tripartite decision-making between employers, unions and government now seems rather antiquated as membership of organised labour groups has declined over the past 20-30 years and western economies have deindustrialised.
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Features
In the laboratory
It’s a good rule in life to learn from the mistakes of others if you can. So what could the board of a brand new pension fund learn from others to make sure its internal design and external relationships are as robust as possible?
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Features
No short or decisive war
The essayist Robert Wilson Lynd wrote that “belief in the possibility of a short decisive war appears to be one of the most ancient and dangerous of human illusions”. The twentieth century conclusively laid to rest the notion that wars between nations would end with the symbolic exchange of border provinces or notional reparations. The economic consequences of the First World War were profound and long lasting, just as the Second World War shaped politics in ways we still see today.
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Features
From our perspective: Armour-plating won’t do
Many criticisms of the quantitative impact study consultation of the European Insurance and Occupational Pensions Authority (EIOPA) on its holistic balance sheet proposal focused on the exercise itself – that it is too complex and opaque, and only large pension funds have the resources to do it.
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Features
Looking to IORP III?
The European Commission’s decision to postpone to summer 2013 its white paper on the IORP II Directive represents yet another delay in a highly protracted process that has to balance the need for reform of the first IORP Directive, the interests of occupational pensions and the insurance industry, as well as the Commission’s desire, as a lead global initiator of financial services legislation, to test the limits of its competence in harmonising EU laws.
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Features
From our perspective: The belt tightens
Europe’s economic turmoil is depressing defined benefit (DB) pension funding levels as yields drop and coverage ratios move in tandem. The fall in the 30-year euro swap rate from 2.54% to 2.19% between 25 Apr and 15 May makes certain that rights cuts will have to take place at Dutch pension funds, which have little hope of recovery in the short term. UK pension funding levels, and those in other countries, have also moved south, with implications for asset allocation and policy making.
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Features
From our Perspective: Voting with their feet
Two factors have prompted the French pension fund UMR Corem and the insurer AG2R La Mondiale to seek a jurisdiction outside France for pension activities. One is the onset of Solvency II and the other, closely related, is the lack of an IORP-compliant regime in France for the provision of second-pillar pensions that would help them avoid the structures of Solvency II.
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NewsFrom our perspective: No Tobin for pensions
The concept of a universal financial transaction tax is a flawed one.
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Features
From our perspective: Part of the solution
One of the more depressing side effects of the financial crisis has been the spectacle of government attacks on funded pensions. But the practice is not new. Back in autumn 2003, the Belgian government nationalised €3.6bn in first pillar pension assets held by the former state telecoms monopoly Belgacom. As finance minister, Gordon Brown launched a bold attack on UK pensions in 1997 when he announced the abolition of dividend tax relief for pension funds.
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Features
From our perspective: A very bumpy ride
Bumpy flights have predictable and unpredictable outcomes: you know the ride will be more uncomfortable and some of the passengers may be sick. You just don’t know precisely when you’re going to hit the turbulence, or whether you or the person next to you is going to be the one who needs the sick bag. You might end up landing at a different airport altogether if the flight is diverted.
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Features
From our perspective: All-terrain vehicles
As one commentator points out in this issue, Dutch pension funds were regarded as high performance cars in the early 1990s. High equity allocations and a cash-flow positive status meant many enjoyed years of good returns in the 1980s and 90s, riding the heights of the equity bull market and barely scathed by the 1987 crash. Perceived as ‘rich’, by politicians, they could be taxed and any remaining surplus distributed to employers.
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Features
From our perspective: Get reforming
In Greek mythology, Sisyphus was compelled to roll a boulder up a hill, continually, only to watch it roll down again and to repeat the procedure again and again.
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Features
From our perspective: Meet the governance police
Staffing a company board is many times more an art than it is a science. Appointments largely seek to balance sector specialisation with wider business experience, length and breadth of experience, and softer skills such as communication and advocacy. Other aspects, such as gender diversity, are of growing importance, as seen in the UK’s 30% Club and in Scandinavian countries that have minimum appointment figures for women.
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Features
From our perspective: What’s your co-operation plan?
As long-term expected portfolio returns settle at modest annual rates of well under 10%, basis points really do count as the pension fund community – and its sponsoring stakeholders – look to deliver pensions at a reasonable cost to all concerned.
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Features
From Our Perspective: Careful what you wish for
At the end of January, Michel Barnier, the European commissioner for the internal market, told an audience of Dutch pension funds definitively that the Commission will not apply Solvency II rules to pension funds.
