More comment – Page 58
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NewsCardano on the future of pension fund liabilities
Kerrin Rosenberg and Theo Kocken draw startling conclusions about the future shape of pension fund liabilities
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Opinion Pieces
Deficits in focus
The EU has now made a significant concession to accommodate the demands made by eight CEE member states and Sweden in August last year for the incorporation of future pension funding shortfalls into national annual budget statistics. Their governments claimed current rules effectively punish them for having made reforms to their pension systems that involved channelling some contributions away from the state system and into private funds.
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Opinion Pieces
Svobodka Kostadinova and Nickolai Slavchev
For decades, countries in Europe and beyond have been rebounding between the two ideas of privatising social security and nationalising private pension schemes. Perhaps it is high time that the EU proposed a third way.
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Opinion Pieces
George Hoguet, State Street Global Advisors
As the industry ponders the medium-term implications of quantitative easing, sharp fiscal adjustment in Ireland, Greece and elsewhere, intervention by the Bank of Japan in the Japanese equity market, ‘currency wars’ and the future of the Obama presidency, they must confront a stark reality.
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Opinion Pieces
Public vote for change
The Republic victory at the November elections has huge implications for public pension funds. The results are, in fact, supportive of reform to retirement systems that are threatening to bankrupt several state and local administrations. A few newly elected governors advocate moving towards a hybrid pension model where at least ...
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Opinion Pieces
Toby Nangle, Director, Baring Asset Management
“Developing countries are positioned to enjoy a demographic dividend from now until 2030-35”
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Opinion Pieces
A private equity rethink
At the end of a tumultuous decade, US public pension funds are re-evaluating their relationship with private equity firms. Disappointing returns, high fees and a number of scandals are pushing pension fund managers either to quit investing in this asset class or to take more control themselves. But no solution ...
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Opinion Pieces
EIOPA: Mixed feelings
The new European Insurance and Occupational Pensions Authority (EIOPA) opens its doors in 2011 with the prospect of greatly increased powers and a fivefold increase in staff in due course. EIOPA replaces the existing Committee of European Insurance and Occupational Pension (CEIOPS), which is one of the three ‘level three’ ...
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Opinion Pieces
Damian Handzy, chairman and CEO, Investor Analytics
Never mind what went wrong in the financial crisis, what went right?
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Opinion Pieces
Social reform tensions
The campaign for the November mid-term Congressional elections is heating up, and one topic raising temperatures is social security reform. Depending on the outcome of the elections in the House and the Senate, the recommendations of the National Commission on Fiscal Responsibility and Reform (NCFRR), due by 1 December, will be received in a different political environment.
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Opinion Pieces
IAS19 volatility danger
Perhaps unsurprisingly, pension fund representative bodies have registered their objection to the International Accounting Standards Board’s (IASB) fair value proposals for defined benefit (DB) pension accounting. There is also backing from two major US organisations and a European one, plus general support by a second European body.
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Opinion Pieces
Getting its Act together
US pension funds won two important battles in the debate that led to the approval of the Dodd-Frank Wall Street Reform Act in July. One is concern over the use of swaps to hedge plan risks, and the other is with stable value funds. The Act is also so complex that institutional investors are still waiting to see how it will affect them. It runs to more than 2,300 pages and its full impact might not be felt for years: according to conservative estimates, regulators have been conducting nearly 100 studies and writing more than 350 new rules implementing the changes.
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Opinion Pieces
The Commission hides its teeth
The authors of the European Commission’s policy paper, ‘Towards Adequate, Sustainable and Safe European Pension Systems’, are clearly aware that solving Europe’s pension challenge is a formidable task. Not only are there the oft-cited demographic problems and injustices to workers who move across national boundaries, but there is also the fragmented nature of member states’ legislative frameworks to consider.
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Opinion Pieces
Pension contracts and regulation
Robert C Merton and Jan Snippe argue that Dutch pension legislation should be inspired by fresh and logical thinking
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Opinion Pieces
Con Keating, head of research at Brighton Rock Group
“The optimal distribution of risk between member and sponsor is complex”
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Opinion Pieces
Ratings war
Two new developments in the recent rating agency drama could radically change the way pension funds manage their bond portfolios. One is the a court decision allowing the California Public Employees’ Retirement System (CalPERS), the largest state pension fund in the US, to go ahead with a lawsuit against Moody’s, S&P and Fitch, which it claims caused it to lose about $1bn (€809m) because of inaccurate ratings. The other development is the US Senate’s approval of an amendment to the financial reform proposed by Florida Republican George LeMieux and Washington Democrat Maria Cantwell to remove references to the raters from the laws governing securities and banking.
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Opinion Pieces
Worse than it looks
The forthcoming loss of Jörgen Holmquist, director general, and David Wright, deputy director-general, two of the most senior and experienced officials from the European Commission’s division responsible for legislation for the banking, insurance, free movement of capital, pensions and capital reserves sectors is bad enough. But accusations that there is a shortage of personnel preparing a “crazy number of legislative initiatives” make the losses worse in this time of crisis.
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Opinion PiecesDominique Senequier, chief executive of AXA Private Equity
“SWFs, being long-term investors with steady funding sources, will have a role to play in shaping the future landscape of private equity”
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Opinion Pieces
The state we are in
In the US, most defined benefit (DB) pension schemes are public and their members are employees of states, municipalities and other local administrations. Their future to a great extent depends on their members’ unions: if the unions refuse to accept radical reforms in order to reduce the growing fund deficits, the current funding crisis will become explosive, say two new reports by independent research institutes. The budget season and the November elections are helping to draw attention to this vital issue.
