Welcome to Pension Funds Online

Pension Funds Online is the essential source for detailed financial and contact data on global pension funds and their advisers.

For advisers

  • Identify new funds to manage based on criteria such as asset allocation and AUM
  • View a complete picture of your prospects’ investments
  • Access direct contact details for key investment professionals
  • Export the complete database to run your own bespoke analysis
Find out more

For pension funds

  • Gain essential insight into the important issues facing pension funds
  • Source new service providers to help you manage your funds
  • Benchmark your fund’s performance against your peers
  • Update your fund’s entry online to ensure relevant advisers can contact you directly
Find out more
Advert alt text goes here

Pension Funds

Do the benefits outweigh the risks?

At a launch event on 12 September at Aviva's trendy Digital Garage in Hoxton, Economic Secretary to the Treasury, Simon Kirby, committed the Government to having developed a prototype Pensions Dashboard by next spring.

The Dashboard is an exciting concept, and – assuming that it can be made to work, of course – will provide information about accrued benefits with a degree of thoroughness that to date has not been possible.

Members will be able to track all their pension savings, including State benefits, and so will have a far clearer picture of when they can start to draw benefits.

For the privileged few for whom it is relevant, it will now be far simpler to manage contribution rates to avoid exceeding the Lifetime Allowance.

The concept is far from new. Data Aggregation websites first came to prominence at least a decade ago. In the UK, the concept is most closely associated with sites such as Expedia, Confused and Trivago.

Perhaps of more relevance here is the example of Mint, which was launched in the USA in 2007. Mint is an online platform for consumers designed to aggregate financial information such as banking details, savings and other investors.

To date, the venture has been reasonably successful, but there have been problems that will provide valuable lessons for the Pensions Dashboard.

Some financial institutions have been reluctant to participate as doing so involves publicly sharing commercially sensitive information about financial products. Whilst this is potentially beneficial for consumers, pension providers could come to perceive the Dashboard as something of a threat.

Another serious issue that the Dashboard will need to address is cybercrime.

A hacking exercise comparable to that suffered by Talk Talk could provide criminals with information about the pensions savings of millions of people, with information about not just one form of accrued pension saving but all of them.

The potential for fraud is enormous.

Finally, it is worth considering what the Dashboard tells us about the direction of the Government's pensions policy.

You may recall that previous Pensions Minister Steve Webb had his own aggregation project. Pot Follows Member was intended to consolidate previous pension savings into a single large pot.

It was due to be launched around the same time that the Dashboard was announced, but you will recall that last autumn it was quietly and unceremoniously parked.

Whilst the previous Government was keen to facilitate accumulation, the emphasis now appears to be on promoting decumulation.

This will do much to boost tax receipts over the short term but has the potential to cause a post-retirement poverty crisis at some point in the future.

The Dashboard is an exciting development which will do much to improve public engagement with pensions. However, the concept is not without risks, and we must consider these carefully.

Written by Tim Middleton, Technical Consultant, PMI.

Read more

Pension Funds

New research marks pensions awareness day

The research, released to mark pensions awareness day earlier this month, investigated four so-called 'tribes' of people, who share certain characteristics.

The 'Rebellious Renters' – people trying to save for their own property; 'Tired Parents' – those juggling numerous demands; 'Ladies Losing Out' – women prioritising happiness in later working life; and 'Sandwich Man' – men caught between providing financial support for elderly parents and adult children.

It found that all four groups would be motivated to save more if for every £80 saved, £20 was paid in for free by the government.

A difference between male and female savers was also highlighted by the research.

The difference was especially pronounced for the 'Tired Parents' group, where 42% of male respondents both having a workplace pensions and knowing how much is in it, compared with just 22% for females.

Among 'Rebellious Renters', 30% of men have a workplace pension and know how much is in it, compared to 20% of women; similarly, nearly half (46%) of the 'Sandwich Man' tribe have a workplace pension and know how much is in it, versus just a third (33%) of 'Ladies Losing Out'.

Polling nearly 5,000 consumers, the research also found that each group is more likely to continue to save, or save more, into a private pension than a stocks and shares ISA.

Overall nearly half of respondents said they are likely to save of continue to save into a private pension, compared to a fifth who would consider a stocks and shares ISA.

For those people who are not saving, most are not doing so because they feel they do not have enough money to save.

'Ladies Losing Out' is the tribe most likely not to be saving for retirement - almost half of respondents in this tribe (48%) say they are unlikely to save into a private pension and a third (34%) do not have a workplace pension.

Emma Douglas, head of DC at LGIM, said: "While it is encouraging to see that saving for retirement is important for each of these groups, we now need to motivate people to become more active about doing so.

"As an industry, we also need to do a better job of raising awareness about the benefits of pension tax relief."

First published 22.09.2016


Read more

Pension Funds

Five key areas for auto-enrolment review, says Now: Pensions

The review is designed to safeguard the long term success of the policy and it is a statutory requirement for a review to take place in 2017.

It will identify the success of the initiative so far, and look for ways it can be improved in the future.

Now: Pensions has identified five key areas it believes the government needs to consider.

The first is the removal of qualifying earnings, the band of earnings on which auto enrolment minimum contributions are calculated.

For the 2016-2017 tax year, the band is between £5,824 and £43,000 a year, which means the first £5,824 of an employees' earnings do not count towards auto-enrolment, nor does anything over £43,000.

Now: Pensions CEO, Morten Nilsson said that although employers are free to pay more than the legal minimum requirement, 94 per cent do not.

He said: "The government should sweep away the qualifying earnings rules and instead base contributions on all earnings."

The second key area for considering, the company says, is to reconsider the trigger because currently more than 5 million people are excluded from auto-enrolment and some are being unfairly penalised.

"At the moment you can have several part time jobs that together pay more than the £10,000 trigger, but you won't be auto-enrolled by any of your employers – it's time to think again," said Nilsson.

Sorting out the 'net pay anomaly is the third key area for consideration, in order to make the current system fairer.

Nilsson said: "There are two ways that pension schemes can collect the tax relief savers benefit from when contributing to a pension; net pay, and relief at source."

"There is an inequality and the government needs to work with the Treasury and HMTC to address this, as all savers should be treated equally, regardless of the scheme they are in."

The fourth key area is rebalancing contributions to minimise opt outs, after recent research from Now: Pensions showed that 24% of auto enrolled savers said they would definitely or might opt out when minimum contributions hit 8% of qualifying earnings in 2019.

Now: Pensions fifth and final priority for consideration, is setting the roadmap for increasing contributions beyond 8%.

Nilsson said: "Very few experts believe 8% is an adequate contribution, and one of the important lessons we are learning is that when the government sets a minimum level of contribution, that is what nearly everyone ends up paying."

"To safeguard the future of auto-enrolment, the government needs to address these five key areas when it undertakes the review of auto-enrolment in 2017 and we strongly urge them to consider these changes to ensure its long-term success."

First published 22.09.2016


Read more

Pension Funds

DB pensions at risk from lack of sponsor default plan

Covenant risk is the risk that the sponsoring company will default on pensions commitments, and the survey found this isn't taken into account in strategic investment and funding decisions for a large number of schemes.

Citing the recent failure of the BHS and Tata Steel schemes as an example of sponsor failure, the head of trustee consulting, and partner at Hymans Robertson Calum Cooper, said it was a concern.

"The only risk that really counts in covenant – if there is no scheme sponsor, members typically lose a big chunk of their lifetime savings," he said.

"Although DB risk management is at the forefront of trustees' minds, independent trustees worry that not enough is being done to monitor scheme covenants."

The current cost of covenant risk is a £450bn reduction in the value of benefits, Cooper says it doesn't need to be this high.

"A trustee board's primary responsibility should be to ensure that there is a health scheme sponsor to stand alongside the scheme and this can be a delicate balancing act, especially in the current economic climate."

The solution, Cooper says, is for schemes to set clear objectives and timeframes to get clarity and idea of the scale of the risks schemes are running.

"If schemes continue with heavy foot on the accelerator, we estimate there's a one in six chance of UK DB schemes standing still with deficits remaining at around £1trillion in 20 years' time, despite additional cash injections from sponsors expected to run to hundreds of billions.

Cooper advises schemes to take less risk, and instead look for a steady stream of income over a longer period.

"It's about less pace and more certain progress – there's no rush to get to full funding," he said.

"Some UK schemes will already be clear on their purpose, their risk tolerance, and the journey ahead but even for these schemes, genuine integration of long term covenant risk will improve decision making and lead to more resilient strategies for managing DB schemes."

First published 22.09.2016


Read more


Anticipating Real Estate Capital Markets Downturns

To read this report please click here

Read more


China's Impact on Australian Real Estate

To read this report please click here

Read more

Pension Funds

Pension Wise to extend service to advise on secondary annuity market

From April 2017 the government will launch the secondary annuity market.

The original announcement of the new freedoms was back in the budget of March 2015 but the launch has been delayed until April next year.

Pension Wise will be providing a service which will guide individuals who are considering selling their existing annuities.

From April, individuals may be able to sell their existing annuity for a cash lump sum or an adjustable income placed into an income drawdown plan.

'The government intends to allow annuities owned by an individual and held in their own name to be sold. However, the original contracts will still be in place and the third party will need to agree to take on the original terms of the annuity payments.

It is currently possible to sell an annuity but the penalty is high and the seller would face a tax charge of up to 70%. The government will scrap this, so people are taxed only at their marginal rate.

Critics believe that there are risks and if the decision isn't made properly then pensioners will be giving up the right to a guaranteed income and could be left with less than they thought.

Tom McPhail, pension expert at Hargreaves Lansdown warned that "selling a guaranteed income will not be right for many people, and it could be a dangerous step."

However these concerns may not be as desperate as McPhail predicts.

Adrian Walker, at Old Mutual Wealth, said: "A survey we undertook with YouGov suggested that less than 20% of people would even consider selling their annuity, with the major factor for this reluctance being a concern they would not receive value for money," he added.

"However individuals may want to sell an annuity for instance to provide a lump sum for relatives or dependants; in response to a change in circumstances for example getting divorced or remarried; or to purchase a more flexible pension income product instead," says the treasury.

The FCA has set up proposed standards for the guidance Pension Wise will offer. The consultation on the proposal will close on 4th October.

Published 09.09.2016


Read more

Pension Funds

UK pension deficits reach an all-time high

This week PwC released the latest figures from their Skyval Index which saw UK defined benefit scheme deficits increase by £100bn, bringing the total deficit to £710bn.

Pension deficits have risen drastically since the EU referendum, this due to the quantitative easing programme designed by the Bank of England to save against an economic slowdown faltered.

The Bank made plans to buy a certain amount of bonds, which it then failed to do, the expectancy that the Bank would buy the bonds helped push up their price.

This in turn pushed down on the yield and for some three and four year bonds the price rose so much that the yield turned negative.

The Bank had announced it would make up the £52m shortfall from Tuesday in future buybacks, which also helped push up the price of gilts.

Actuaries use the interest rate on gilts, otherwise known as the yield, as the main tool in estimating how much they will have to pay out in pensions in the future. A fall in the rate means a company needs more now than it had previously calculated.

Raj Mody, partner and PwC's global head of pensions, said:

"With the prospect of further action from the Bank of England to reassure the economy in these uncertain times, the challenging environment for pension funds is likely to endure for several years. PwC's recent pensions risk survey showed that half of funds had not protected themselves against falls in long-term interest rates.

"Companies and pension fund trustees should revisit their approach to the risk profile of their pension fund. They should also ask themselves if gilt yield measurements are still relevant for them when deciding how to measure and finance the deficit. There may be more appropriate measures that are better tailored to their own fund's strategy. This will give a more realistic view for trustees and sponsors helping them to make more effective decisions."

Published 09.09.2016


Read more

Pension Funds

Finding the perfect home

So, you think it might be time to move. The once solid foundations of your home have been crumbling for a few years, your family are complaining and your quality of life is worsening.

You've tried your hardest to maintain the house but, despite your best efforts, things are irreparable and the costs of upkeep are increasing year on year.

Now you need to begin the process of finding the perfect 'forever' home. What do you need to think about?

Looking for a new home

Well, first and foremost, you need to find somewhere that will give you and your family what you need. Think hard about what you really want from a home – what are the non-negotiables and the nice-to-have's? There will probably have to be a compromise somewhere along the line so make sure you know what compromises you're happy to make before you begin your search.

Then spend as much time as you need viewing potential properties. Are your family going to be happy here? After all, they are the ones who will spend most of their time in the new house and will have to live with the consequences of your decision.

Whatever property you choose needs to provide value for money, of course. However, be thorough. Make sure you have a good poke around all of the nooks and crannies, lift up the floorboards and look in all the cupboards – you don't want any nasty surprises or unexpected maintenance costs after you move in.

Finally, speak to as many of the neighbours as you can to find out what it's really like to live there day in, day out.


Now, the move itself. You need to spend some time finding out how all of your possessions will be moved to the new property. You can't afford for any of your belongings that you've spent years collecting to go missing or be broken during the move.

Speak to the moving team in detail about how they'll get you to your new place. They should be prepared to keep you informed during the move as well as giving your things a clean and polish as they're in transit.

If they're good, they'll even organise everything for you in your new home so you and your family can simply move in and enjoy a better quality of life immediately.

An investment in your future

Inevitably, there are costs involved in moving house: legal fees, stamp duty, estate agent fees (unless you've decided not to use one). Rather than viewing these as an unnecessary waste of money, you should see these as a long-term investment.After all, the value of knowing you've chosen the right home, that your possessions are secure and that your family will be happy for years to come will be worth the short-term upheaval of moving.

So, that's it. You've made the decision, agreed terms, contracts have been exchanged, your belongings have all been carefully moved and you're ready to move into your dream house.

Time to send out the invitations and welcome everyone to your housewarming party at Trafalgar House.

Written by Joe Anderson, Business Development Manager, Trafalgar House Pensions Administration

Read more


The Case for UK Private Rented Sector

To read this report please click here

Read more

Pension Funds

The Chancellor announces plans for the launch of the new Lifetime ISA

The treasury presented the House of Commons with the new Savings Bill this week, stating the intention to have the Lifetime ISA available by April 2017.

Since the announcement of the LISA in March this year there have been many concerns from within the pension industry. Notably, from previous pensions ministers.

Dr. Ros Altman who was replaced by MP Richard Harrington as Pension Minister earlier this year, says the move appears to downgrade the role of pensions.

Dr. Altman has previously spoken about how she would scrap the LISA altogether as she feels that it 'muddies the water between ISAs and pensions'.

Steve Webb, also former pension minister, described the LISA as an unsuitable retirement product and could leave younger savers with less at retirement age.

'With the government bonus being switched off at fifty, the Lifetime ISA starts to look very unsuitable for retirement compared with a workplace pension,' Webb warned.

Hargreaves Lansdown are welcoming the arrival of the LISA and are ready to offer savings options to their customers from April 2017.

Tom McPhail Head of pension research at Hargreaves Lansdown said it was "good news" that the Lifetime ISA would not be delayed and the design had been kept simple.

"It is good news for investors that the government has chosen not to delay the launch of the Lifetime ISA, as we know investors are keen to take advantage of it." say McPhail

Other companies have been less enthusiastic about the Lifetime ISA.

Aegon and Standard Life have said they would not be ready to launch by April 2017, and urged the government to delay the introduction of the LISA.

Published 09.09.2016


Read more

Pension Funds

How can we make pensions and investments as inspiring as the Olympics

Hearing inspirational stories about gymnasts who have trained locally to me in South Essex Gymnastics Club and made it to the Olympics in Rio, compelled me to find out about classes for my own children.

But such is the motivation of an awe inspiring event like the Olympics, there is now a two year waiting list. Everyone it seems, wants to be an Olympian!

It got me thinking about my own industry.

Sadly we lack that same level of inspiration.

While it's probably unlikely that children will ever dream about being the pensions and investment industry's equivalent of Usain Bolt or Laura Trott.

That doesn't mean we shouldn't strive to make the industry a much more compelling place to launch a career, or encourage young people to have a much better understanding of key issues and engage more, simply for a better quality of life.

Personal finance education and how to do it is an age old debate and I remember when I first joined the industry just before the millennium and doing some work with Proshare, which at that time did lots of work with schools, trying to help better educate children in the world of personal finance.

Fast forward to today and we now have fantastic companies like Redington, AHC, Cardano and Wealth at Work, which are all working really hard to stimulate financial engagement and education in many different arenas including schools and the workplace.

And I'm sure there are many other companies who do what they can in a similar way, even if there is more of a commercial objective at the end of it. Either way it doesn't really matter if it gets us to the same place in the end.

We can help as individuals too. At a journalist lunch earlier this week, one of our clients made a really interesting observation, which was that the US has a much higher engagement in pensions because in the UK we have such a taboo when it comes to talking about money.

Unlike sport which we openly encourage and sign our children up for (like my quest to have three little Olympians someday), personal finances, pensions and investment are pretty much a closed subject.

If as an industry we can open up just a little bit more with our own children, friends and family and help to make this topic, and of course talking about our own financial situation a bit less taboo, we might just be able to help make the world of pensions and investments more compelling, and more a part of everyday conversation of things you just need to know to get on in life.

In turn it could also open up a whole new world of career possibilities to individuals who may never have thought about them before.

While it's a leap to getting to the level of inspiration that is the Rio Olympics, little by little we can all do our bit to to help entice young people into the world of pensions and investments, no matter what the reason.

Written by Joanne Macklin, Consultant, KBPR.

Read more

Pension Funds

Major Defined Benefit scheme to close this year

The Post Office has announced the closure of its Final Salary scheme this September which will affect around 3,500 employees.

The union Unite organised a ballot in which it asked Post Office employees about the pending closure of the defined benefit scheme.

It found that 64% supported industrial action against the plans which could leave them thousands of pounds a year worse off.

The workers will be enrolled in to the company DC scheme from April next year. The DC scheme is already in place and running for newer members of the Post Office's workforce.

Once enrolled the employees who were previously enrolled in the DB scheme will lose the benefits of a final salary scheme and according to the union this loss could be around 30 per cent of their retirement income.

CWU assistant secretary Andy Furey says that scheme members will "suffer twice" under the changes proposed, explaining: "Members will lose future accrual and they lose the difference between the Retail Price Index (RPI) and the Consumer Price Index (CPI) revaluation on the benefits they have built up.

"And on top of all this, the scheme is in surplus – not in deficit. So not only is this all extremely unfair – there is no financial case for the changes either."

With the scheme reportedly being £100 million in surplus and not in deficit, Unite says the Post Office's executive team need to reflect on these changes before making them final as it will affect thousands of their employees.

Earlier this year, The Post Office told its employees that the costs of keeping the DB pension scheme completely open is "simply unaffordable".

The Post Office network and sales director Kevin Gilliland commented: "The business's financial position is improving but we remain loss making. Based on the advice of our actuary, the fund's surplus, which is currently being used to help subsidise the cost of the DB Plan, will run out in 2017.

The post office also looks to make 1700 people redundant by the end of the year.

Published 09.09.2016


Read more


How auto-enrolment is changing priorities at the Pensions Ombudsman

The volume of complaints handled by the Pensions Ombudsman has increased alarmingly in recent years, and the trend shows no sign of slowing. The number of enquiries fielded by the watchdog each year has almost doubled since 2012/13 and is expected to grow by a further 15% next year.

New cases were up 6% this year while the ombudsman completed 1,308 investigations – a 35% increase on the previous 12 months.

There has also been a marked shift in the type of complaints handled. The most obvious change over the last two years has been the rising prominence of pension liberation, which accounted for one in five cases closed last year.

Shifting landscape

But the wider trend reflects the changing pensions landscape, with the proportion of complaints that relate to DC schemes growing year on year.

When you think of the millions and millions enrolling, it isn't difficult to work out that the number of complaints is going to go up.

Pensions ombudsman Anthony Arter says: "The actual breakdown between DB arrangements and DC arrangements is currently 54% DB complaints to 46% DC, but the balance will change as auto-enrolment takes hold with micro companies."

Weak link

This is despite the fact that DC schemes are more straightforward than most DB set ups. "DC is certainly less complicated but you still have issues like charging," says Arter. "And you will always have problems with administration because in most schemes there has been a weakness there over the years."

But Arter is impressed by the efforts the biggest auto-enrolment providers – who will scoop up the vast majority of business from smaller firms – have made to minimise complaints.

"They have been very keen to get things right – there is no doubt about that," he says. "To get their administration right, to make sure their service delivery and customer service is right. It is the smaller ones that there are concerns over."

Employer gripes

The ombudsman believes many complaints relating to auto-enrolment will actually come against employers rather than pension schemes. He is concerned that small businesses with one or two employees will come to informal arrangements with staff to get around auto-enrolment requirements. These cases could land on his desk if the employee later feels duped or the relationship with their boss sours.

Employers could also find themselves the subject of complaints if they do not communicate auto-enrolment properly. One case investigated last year concerned a worker who had complained when his employer deducted his auto-enrolment contributions from a pension allowance he had been granted in place of contributions (see below). The ombudsman backed the firm's right to do this, but ordered it to repay the contributions and an extra £500 for not explaining the impact of auto-enrolment to the complainant.

Freedom and choice

The shake-up of DC at-retirement choices delivered in the 2014 Budget is also likely to see an increase in complaints. Most of them will relate to the financial advice members received, however, meaning they fall under the remit of the Financial Ombudsman Services rather than the Pensions Ombudsman.

"But it is an interesting area," says Arter. "People might complain that the providers of their scheme didn't give them the right projections and that would come under administration, so it falls between the two organisations."

So the two ombudsmen are in conversation about how they will work together, and Arter is in talks with the FCA about a memorandum of understanding to clarify his organisation's remit. The talks are at an early stage, but Arter says it is vital that his office is the one to deal with complaints about occupational schemes.

"I would expect workplace pensions to be dealt with by one entity, very clearly," he says. "From the pensions industry's, employer's and public's point of view, that makes it very clear.

"If it's a workplace pension, or concerning auto-enrolment, that should be the Pensions Ombudsman. We are the arm's length body for the Department for Work and Pensions, which has responsibility for auto-enrolment and workplace pensions."

Anthony Arter will be delivering the opening keynote at DC Insight on 26th October.

Read more


Pensions Regulator opens the discussion on what "21st century trusteeship" should look like

No doubt the outcome of this process will lead to the next instalments of regulatory guidance and possibly also statutory governance requirements, to complement the structure previously introduced for defined contribution schemes in 2015.

For trustees and sponsors of occupational pension schemes, it makes interesting reading, and many may wish to consider responding - the deadline for responses is 9 September 2016.

In this analysis, we draw out and provide comment on some of the key themes which emerge from the paper.

To read this paper please click here

Read more


The Case for Investing in US Core Real Estate

To read this report please click here

Read more

Pension Funds

The Welfare State & Bankrupt Pensions

A Masters dissertation can be a lonely task. Seemingly endless research, interviews, debates, analyses, all elegantly distilled into a concise, well-structured argument of 10,000 words.

You could see my LSE friends start to glaze over when I told them I was writing my dissertation on how 'New Financial Products' could help fix the retirement system.

Upon reflection, they also thought I was nuts to be so excited by the world of 'Pensions' and 'Retirement'.

What I discovered in my initial research alarmed me. For example, by 2042, the United States Social Security System would be paying out hundreds of billions of dollars annually, effectively bankrupting the system and, ultimately, the country.

Why wasn't anyone talking about this?

Things in the UK were not looking good then either. Trillion pound deficits and unfunded pensions promises (much like those in the United States) were looming on the horizon, and they still are now.

Don't forget the Welfare State

Before jumping to conclusions, I think it is helpful to provide a bit of context. The man whose authoritative report helped shaped the Welfare State, Beveridge envisaged a post WWII system that would provide a base standard of living for all citizens (e.g. birth of the NHS). It was also designed to perform two key functions for society:

1. Facilitate the redistribution of wealth from the rich to the poor;

2. Support the intergenerational contract between the young and the old.

Arguably, both of these components are currently broken.

Debt is future consumption brought forward, and we've consumed a lot in recent decades. Once feared, inflation is now wanted and needed to help Western Economies 'inflate' their way out of the debt overhang.

Quantitative Easing was supposed to help with this, but it now looks more and more like a large Repo with a central bank.

This, combined with a falling velocity of money, means that inflation looks ever further away. In the UK, the fall in Sterling should provide some short term inflation, but that is likely to be short-lived.

So what's to be done?

There are arguably three leavers to pull to help fix the problem:

1. Delay the age of retirement / eligibility criteria to receive a pension (reducing liabilities);

2. Don't pay as much to those in retirement (reducing liabilities);

3. Save more today (increase assets).

There is much being done today to encourage savings. At mallowstreet, we have designed a defined contribution pension scheme with a road map to encouraging employees (supported by larger employer contributions) to save more than 15% of their annual income.

Yes, this is hugely expensive as an employer, but an essential step for the private sector to take in helping to solve the pensions and savings crisis.

Additionally, a reduction in liabilities for those who've already been promised a pension is extremely difficult for individuals to accept (understandably, if regretfully) and politically impossible for the current Government to implement.

This is where the role of the welfare state should come into play:

A true redistribution of wealth would not only create a fairer society, but spread the burden of solving the pension and savings crisis across the entire population.

It is my generation that's feeling the true squeeze: funding a pensions system with today's tax dollars whilst simultaneously trying to save as much as we can for our retirement.

Oh, not to mention all that student debt, dreams of home ownership, and starting a family.

Without any action today and in the next few years, tears before bedtime are an absolute certainty. Engaging in the difficult conversations today, across the industry, will help us all to come up with the right way forward.

Pensions are complex; everyone has a self-interest, and simultaneously has something to offer to the solution.

Written by Stuart Breyer, CEO at mallowstreet.

Read more


Pension Fund Indicators 2016

• Need for schemes to proactively consider a positive near term cash flow whilst embarking on a de-risking programme
• Current reforms will lead to improvements in the way local authority funds approach ESG and SRI considerations
• The short-term response to the vote to leave the EU will likely be intense while the longer term implications will take years to play out
• In 2015 the overall weighting to bonds decreased slightly to 37%, compared to a weighting of 38% in 2014

UBS Asset Management publishes Pension Fund Indicators 2016* ("PFI") its annual industry-leading study of pension schemes, their asset allocations and investment trends, This year's report covers the current thinking in UK pensions, an overview of international pension markets, the economic backdrop, a review of equities, bonds, real estate, infrastructure and alternative sources of return (hedge funds, private equity, currency, gold, commodities and art).

The first chapter highlights a number of developments in UK pensions including:

• The pooling of assets of 89 Local Government Pension Scheme funds in England and Wales into a small number of 'British Wealth Funds', each with a minimum of £25bn.The sheer scale of the plan to consolidate these assets means it will be a milestone event.
• MIFID II, taking effect from 3 January 2018, will introduce changes that will have a large impact on the EU's financial markets. Strengthening protection for clients is a key focus, but there are also stricter organisational requirements for product design and distribution, product intervention powers and the disclosure of costs and charges.
• Generating sufficient income and positive cash flow whilst pension schemes de-risk presents a significant investment and governance challenge. Finding solutions which not only meet these challenges but also ensure pension schemes are able to meet their ongoing growth and longer term liability requirements is critical to the achievement of full funding. This chapter explores a full range of options for trustees to consider to meet their evolving objectives.

For the first time, PFI includes a section dedicated to ESG. Dr. Dinah A. Koehler, Head of Sustainability Research in the UBS Sustainable Investors Team, writes about impact investing and how to measure social impact investing in public equities. This meets a growing demand from institutional and private wealth clients for a greater understanding of their investment creates a measurable impact on the world in which we live.

This year's guest chapter by Guy Sears of the Investment Association analyses how the industry is responding to the challenges it faces by providing innovative solutions for investors during a continuously changing regulatory landscape

Key statistics from this year's publication include:

• Total occupational pension scheme membership stood at 30.4 million in 2014, an increase of 2.5 million in 2013. This includes active members, pensions in payment (pensioners) and preserved pension entitlements (deferred pensioners).
• Over the last ten years, DC assets have grown at a rate of 7.1% p.a. while DB assets have grown at a slower rate of 3.4% p.a. with a split of 68:32 for DB/DC assets in the UK at the end of 2015.
• The markets with a bigger proportion of DC assets relative to DB in 2015 are Australia with 87% and the US with 58%.
• The average pension fund return over the 53-year period was 10.1% p.a. which is 4.4% p.a. ahead of retail price inflation and 2.9% p.a. above wage inflation.
• UK equities have produced a long-term return of 11.6% p.a., 5.9% p.a. ahead of retail prices and 5.8% p.a. ahead of wages and salaries over the period 1963 to 2015.
• Asset allocation of the average pension fund has seen the overall weighting to bonds decreased slightly to 37% in 2015 vs. 38% in 2014.This still remains high relative to previous periods: the last time that bond exposure was in excess of 40% was almost 50 years ago in 1967, when it stood at 45%.
• The gradual shift towards DC schemes has picked up pace and is likely to continue. The latest data shows only 9% of private sector DB schemes were open to new joiners in 2015, compared to 12% in 2013.
• Denmark, Japan and the Netherlands continue to have high allocations to bonds. Denmark stands out with a 60% allocation to bonds and 16% in equities, reflecting the nation's prudent approach to pension management.
• In Japan, where allocations to bonds totalled 40% in 2015, it is expected that pension funds' exposure to bonds will face downward pressure over the coming years, as Japan's government encourages a move to equities / riskier instruments in an attempt to pull Japan out of its period of deflation.

* Pension Fund Indicators 2016 can be downloaded here: https://www.ubs.com/content/dam/static/epaper/index.html?id=1b70a129

This document is for Professional Clients only. It is not to be relied upon by Retail Clients under any circumstances. This document is issued by UBS Asset Management (UK) Ltd and is intended for limited distribution to the clients and associates of UBS Asset Management. Use or distribution by any other person is prohibited. Copying any part of this publication without the written permission of UBS Asset Management is prohibited. Care has been taken to ensure the accuracy of its content, but no responsibility is accepted for any errors or omissions herein. This document is a marketing communication. Any market or investment views expressed are not intended to be investment research.
The document has not been prepared in line with the Financial Conduct Authority requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. The information contained in this document should not be considered a recommendation to purchase or sell any particular security and the opinions expressed are those of UBS Asset Management and are subject to change without notice.
Furthermore, there can be no assurance that any trends described in this document will continue or that forecasts will occur because economic and market conditions change frequently. Source for all data/charts, if not stated otherwise: UBS Asset Management as at 31 December 2015.
Please note that past performance is not a guide to the future. The value of investments and the income from them may go down as well as up, and investors may not get back the original amount invested. UBS Asset Management (UK) Ltd is a subsidiary of UBS AG. Registered in England and authorised and regulated by the Financial Conduct Authority: UBS Asset Management (UK) Ltd, UBS Asset Management Funds Ltd. Telephone calls may be recorded. © UBS 2016. The key symbol and UBS are among the registered and unregistered trademarks of UBS. All rights reserved.

Read more

Pension Funds

Beginning of the end for DB schemes, says Hymans Robertson

Citing economic uncertainty as one of the factors, Jon Hatchett said the cost of providing a DB scheme has risen to 50% of pay.

He said: "Post Brexit and the Bank of England's policy response to economic uncertainty caused by the UK's decision to leave the EU, the cost of providing a DB scheme has risen, and this is clearly unsuitable for the majority of employers.

Hatchett believes the last remaining open private sector schemes will close, with a number of high profile employers indicating this is the path they will take.

"Back in March 2015 there were 11m people with a DB scheme, but only 1.75m were still accruing benefits – and since then we've seen a large number of closures," he said.

"Since the new flat rate state pension was introduced in April this year, costs increased for many DB schemes due to the end of a 'contracting out', which was a catalyst for many companies to close their scheme."

"This is only the beginning of the end for open DB schemes."

Looking at the future sustainability of the schemes, Hatchett said he believed the involvement of the Government is a positive thing.

"It's good the Work and Pensions Select Committee is looking at the issue, as the figures involved are gargantuan – either companies are going to have to pay more at the cost of investment, jobs, or salaries; or pensioners are going to lose out."

Hymans Robertson's research among FDs at the beginning of the year supported this idea, with one in seven finance directors (FDs) saying their DB scheme was a major risk to their business.

"Since then, deficits are up by over £250bn or over one third," says Hatchett.

Further analysis by the company showed that post-Brexit, the number of DC savers who will retire on inadequate income has risen from two thirds to three quarters, with many falling back on the state pension, which will also be lower.

"We should not be lulled into a false sense of security with auto-enrolment - while it's been a huge success with low levels of opt-outs, with contributions at 2% of pay it doesn't even come close to securing a decent retirement income," said Hatchett.

"It now takes 50% of pay to fund a decent DB pension at current retirement ages - you don't have to be an actuary to see that this is a car crash waiting to happen."

First published 02.09.2016


Read more

Pension Funds

Now Pensions joins forces with reality TV Star

The company, one the UK's largest auto-enrolment workplace pension providers, is teaming up with Stacey Solomon – a former contestant on television talent contest, The X Factor.

Stacey will feature in the lighthearted campaign, which has been designed to target small business owners, which will be on air from today (1 September 2016).

Now: Pensions says the advert aims to address the complex nature of auto enrolment by directing employers to them, for a "simpler workplace pension solution."

Solomon was chosen to be the face of the campaign due to her widespread appeal, no-nonsense attitude and the fact that she's a small business owner herself, Now: Pensions says.

Amy Mankelow, communications director at NOW: Pensions, said: "Stacey Solomon and auto enrolment are two phrases that you wouldn't necessarily expect to see together.

"But, when we thought about the campaign and the focus on making complex subjects simple and easy to understand, we could see she'd be a perfect fit.

"Stacey has done a great job at bringing some humour to a somewhat dry topic and we hope that small employers will sit up and take notice."

The advert will be broadcast via Sky AdSmart and programmatic radio including Spotify, CBS, Aol Radio, among other mainstream radio stations.

There was also be outdoor and online advertisements for the campaign, also featuring Stacey Solomon.

Now: Pensions aims to bring cost-efficiency and simplicity the the pensions industry with a modern approach based on transparency and low costs.

First published 02.09.2016


Read more

Pension Funds

Schemes lack independent advice for fiduciary managers, survey says

The survey, by independent consultant LCP, found one fifth of respondents appointing a fiduciary manager use an independent adviser to review and monitor their performance.

LCP found that although 63% of respondents received advice from an independent third party of which fiduciary manager to appoint, only 20% received third party advice on monitoring the continued performance of their scheme's fiduciary manager.

This leaves many schemes without independent oversight of the appointed manager which, LCP says, means they are in unchartered territory.

The survey also showed that 41% only considered one fiduciary manager, and that 79% of respondents said the main challenge they face is being able to identify a suitable replacement or managing the complex transitional process to another manager.

Clay Lambiotte, investment partner at LCP, said the shortfall of independent oversight was worrying.

He said: 'The lack of independent oversight of fiduciary management is clearly a growing concern."

"Whilst this can be an attractive form of investment delegation, managers and trustees must not overlook the pitfalls.

"There can be inherent conflicts involved in the process – whether due to fees and assets under management, or simply a lack of oversight."

The survey also found schemes wanted a change in regulation – 57% of respondents said they wanted to see a change following the FCA review of the asset management industry.

More than half of these people would like to see new regulations or disclosure rules around the selection process of fiduciary managers, while a third want to see a requirement for independent firms to oversee advice provided by the fiduciary manager.

"The FCA review has a wide remit, but it is clear that scheme managers and trustees want more regulation and transparency over fiduciary management," said Lambiotte.

First published 02.09.2016


Read more