The Ft 3 trillion (12 Mrd. Fr.) taken from private pension funds in 2011, when the government nationalised such funds, had dwindled to Ft 218.7 billion (49 Mio. Fr.) by the end of July, Világgazdaság writes. The bulk of the money, Ft 1.85 trillion, was spent on reducing the state debt, including the repayment of IMF loans. The state pension fund received Ft 406 billion in 2011, and now manages Ft 218.7 billion after paying Ft 233 billion to former pension fund members.
Entries in International (724)
A new assessment of state pension obligations suggests the problem is even worse than it already appears. How much worse? Using a more conservative method of accounting for financial gains in the marketplace, there is a $4.1 trillion gap between assets and liabilities — known as the “unfunded liability” — of all state-level pension systems in the United States, according to State Budget Solutions, a fiscally conservative think tank that deals with tax and spending issues at the state level.
On a per-capita basis, each American would have to fork over about $13,100 to fill that gap and fulfill the promises made to current and retired state workers. The new survey makes the pension crisis look worse than in other reports because of the way State Budget Solutions calculates the plans’ unfunded liabilities.
The group uses a measure called “market value liability,” which assumes that pension funds will earn about 3.22% annually — in line with what long-term U.S. Treasury bonds pay. That measure is more accurate than often bloated assumptions that underpin most state pension plans.
Detroit’s municipal pension fund made payments for decades to retirees, active workers and others above and beyond normal benefits, costing the struggling city billions of dollars and helping push it into bankruptcy, according to people who have reviewed the payments.
The payments, which were not publicly disclosed, included bonuses to retirees, supplements to workers not yet retired and cash to the families of workers who died before becoming eligible to collect a pension, according to reports by an outside actuary and other people with knowledge of the matter.
How much each person received is not known. But available records suggest that the trustees approving the payments did not discriminate; nearly everybody in the plan received them. Most of the trustees on Detroit’s two pension boards represent organized labor, and for years they could outvote anyone who challenged the payments.
Detroit has nearly 12’000 retired general workers, who last year received pensions of $19,213 a year on average — hardly enough to drive a great American city into bankruptcy. But the total excess payments in some years ran to more than $100 million, a crushing expense for a city in steep decline. In some years, the outside actuary found, Detroit poured into the pension fund more than twice the amount it would have had to contribute had it paid only the specified benefits.“
This abuse of discretion was most egregious in 2009,” said Mr. Moore, a managing director at the firm of Conway MacKenzie. He said the pooled pension trust had lost 24 percent of the value of its assets that year, but the trustees appeared to have credited the individual accounts with 7.5 percent interest.
Despite nearly one in four pension professionals believing that the level of de-risking will increase dramatically, many schemes may be unprepared to de-risk themselves, research commissioned by EDM Group has revealed.
Investors responsible for more than $2 trillion recently gathered at a resort in the Canadian Rockies, far from the news media and, more important, far from Wall Street.
Those in attendance, including leaders of Abu Dhabi’s sovereign wealth fund and France’s pension system, were there to consider ways to put their money to work together without paying fees to private equity firms and hedge funds. Over that weekend, three of the attendees completed the details of a $300 million investment in a clean-energy company.
The group holding the gathering, the Institutional Investors Roundtable, has kept a low public profile since it began in 2011, but it attracted 27 funds managing public money to its latest meeting and is spinning off concrete investments. The group is part of a much broader push by the world’s biggest pension and sovereign wealth funds to reduce their reliance on the Wall Street firms that used to manage almost all their money.
The efforts to change the way public money is managed are motivated, in no small part, by the big fees and lackluster performance that many hedge funds and private equity firms have delivered to their biggest clients in recent years. Investment managers like Leo de Bever, at the Canadian province of Alberta’s $70 billion fund, have found they can often manage their own money at a lower cost without losing out on returns.
Top Democrats in the California Senate asked the state's multibillion-dollar public employee pension funds to refrain from making future investments in Russia, adding their voices to protests against restrictions on gay rights there.
CalPERS, the largest employee pension system in the nation, has $266 billion invested around the globe, of which $1.4 billion is invested in Russia.
UK pension fund assets hit £2 trillion for the first time at the end of December 2012, up from £1.9 trillion a year earlier, according to the latest figures from the Investment Management Association.
Local government pension schemes accounted for a larger proportion of assets in 2012, representing 6.9% of total mandates at £171 billion. This was up from £142 billion, 5.8% of total mandates, in 2011.
Corporate pension funds remained around the £1 trillion mark, although in-house occupational pension scheme assets under management grew by £3 billion during 2012.
The IMA’s annual report includes both defined contribution and defined benefit assets. Pension funds accounted for 51.6% of the UK institutional investment market by the end of December 2012, up from 50.3% at the end of 2011, with the insurance market shrinking by 2.9 percentage points. The remaining institutional assets – including public sector, non-profit, corporate and sub-advisory funds — totaled 14.1%, down from 12.6% at the end of 2011.
UK assets under management are split in favour of actively managed funds, which accounted for 78.1% of the market, with the remainder in passively-managed funds. The percentage in actively managed funds increased by 0.2 percentage points between December 31, 2011 and December 31, 2012.
Occupational pension fund managers will be crying into their beer tonight. Mark Carney, the Bank of England governor, has in effect ruled out an increase in base interest rates for another three years. And without a rate rise, pension fund deficits are only going to get larger.
There will be the benefit of a stock market rally that, at least in the next couple of years, will push up the value of pension fund assets. But pension funds have tended to be shy of buying a slice of corporate Britain in favour of lending it money.
Wie es scheint, plant Norwegens Politik einen Review des 740 Milliarden US-Dollar schweren Staatsfonds, der offiziell "The Government Pension Fund Global" heißt. Die Idee stammt von den Konservativen, die vor den Wahlen im nächsten Monat in den Umfragen führen und nun nach einem wettbewerbsorientierteren Modell suchen, um die Erträge der Generationenanlagen zu steigern, berichtet die Nachrichtenagentur Bloomberg. Das langfristige Renditeziel des Fonds von vier Prozent ist angesichts des Niedrigzinsumfelds immer schwerer zu erreichen.
Die norwegische Regierung zieht Mittel aus dem Fonds heran, um das Budget abzufedern, dabei darf der Mittel-Anteil aus dem Staatsfonds aber nicht mehr als vier Prozent ausmachen. Infolge des gestiegenen Fondsvermögens steigt dieser Betrag kontinuierlich, hat der Fonds seine Größe doch seit 2005 vervierfacht und sollte nach Schätzungen der Regierung bis 2020 noch um weitere 50 Prozent schwerer werden.
The Washington Post Company is best known for its flagship newspaper title sold today to a company controlled by Amazon founder Jeff Bezos, but it makes its big money from less prominent sources: A for-profit education business, cable television, and local TV channels.
But while all these assets have their merits, here is one asset that gets must less attention, from the company’s 2012 annual report: That’s a pension plan that owes its recipients just under $1.47 billion, but has $2.07 billion in assets — in other words, it is overfunded by a cool $604 million.
The pension fund for Japan's civil servants is considering changing its ultraconservative investment strategy to allow more of its $80 billion to go into stocks and less into domestic government bonds, people familiar with the matter said.
The move by the Federation of National Public Service Personnel Mutual Aid Associations, which covers 1.24 million active and retired public servants, follows a shift towards riskier investments by Japan's Government Pension Investment Fund, the world's biggest pension fund with $1.2 trillion in assets.
Prime Minister Shinzo Abe is pushing public funds to increase returns as part of measures to revive the economy's fortunes. His growth strategy seeks to mobilize Japan's enormous public savings, such as GPIF and the civil servants' pension fund.
The Artist Pension Trust (APT), a financial services, art lending, and management company which aims to provide retirement security for artists, will begin the first-ever sales of its massive 10,000-work collection, starting in September. All of the art world will be closely watching to see whether this model — and its first major test of the art market — will work.
When artworks are sold, each artist receives 40 percent of the net proceeds of the sale of the work, 32 percent of net proceeds accrue to the collective benefit of all participating artists in the specific trust (each trust has 250 artists). “This allows each participating artist to collectively participate in the commercial success of the other 249 artists.” The remaining 28 percent of the net proceeds are retained by APT to cover all management and operating costs.
UK pension fund returns have outperformed increases in UK retail prices and wages significantly over the past 50 years, a study by UBS Global Asset Management has found. Between 1963 and 2012, the average fund returned slightly above 10 per cent – 4.2 percentage points ahead of retail price inflation and 2.6 percentage points above wage inflation, UBS’s latest annual pension study reveals.
“Essentially, the whole point of the DB pension market is to collectivise risk and to allow a population of investors to take risks that perhaps on their own they wouldn’t be comfortable taking,” he says. The findings also support the widely held – and hotly pursued – view that equities perform better than bonds over the long term. The report showed that UK equities produced an average return of 11.8 per cent annually in the 50 years to 2012.
Figures for 2011, however, were not particularly stellar, with pension fund returns falling to 3.6 per cent and slumping behind retail price inflation. Despite this stall, returns bounced back in 2012, hitting 8.4 per cent. For the 10 years to 2012 the average UK fund returned 8.3 per cent – slightly lower than the return over 50 years.
The UBS study also highlighted the growing interest in “smart beta” strategies, which are intended to provide better risk and return trade-off than normal market cap weighted indices. Appetite for such strategies, finds the report, is expected to continue to grow. But it warns that the merits of such products “seem quite variable” in some cases.
Detroit’s pension shortfall accounts for about $3.5 billion of the $18 billion in debts that led the city to file for bankruptcy. How it handles this problem — of not enough money set aside to pay the pensions it has promised its workers — is being closely watched by other cities with fiscal troubles.
The city’s emergency manager, has called for “significant cuts” to the pensions of current retirees. His plan is being fought vigorously by unions that point out that pensions are protected by Michigan’s Constitution, which calls them a contractual obligation that “shall not be diminished or impaired.”
The average pension benefit in Detroit is not especially high. The average annual payment is about $19,000, said a spokesman for the pension funds. And it is about $30,000 for retired police officers and firefighters, who do not get Social Security benefits, he said. Some retired workers get larger pensions, though: about 82 retirees who either worked many years or had high-salaried jobs are paid pensions of more than $90,000 a year, he said.
The $3.5bn in pension fund liabilities that Detroit included in its bankruptcy filing last week may be significantly understated because of a combination of overly optimistic assumptions and questionable investments, according to Kevyn Orr, the city’s emergency manager, and those who work with him.
The BBC’s pensions bill has soared to £2 billion, leaving licence fee payers having to stump up to meet the increasing costs that include six-figure payouts to bosses.
One 55-year-old executive who took early retirement is receiving an annual pension of £200,000, in addition to a £750,000-a-year salary from his new job, an analysis of pensions deals at the corporation have revealed.
The increasing burden of generous deals has contributed to a £600 million rise in the BBC's pension fund deficit over the past year to more than £1.7 billion, amounting to nearly half its yearly revenue from the licence fee.
One of the most valuable exercises you could do as an expat is to trace any lost pensions you are entitled to back in the UK. It is relatively easy to do, and one in five people who use the government’s free tracing service find a lost pension, which can be worth thousands of pounds a year. Many expats who have worked in the UK before emigrating lose details of what company pensions they have built up because they haven’t told their former employers their overseas address. Others simply forget about retirement plans they paid into during previous jobs.
The government’s Pension Tracing Service (www.gov.uk/find-lost-pension) contains information on more than 200,000 pension schemes and provides details of the pension provider for you to re-establish contact. The schemes covered include not only company pensions, but personal pensions too. You can trace them online, making it easy for Britons living and working overseas to make a claim.
The UK’s pension fund market has been radically redrawn in the aftermath of the financial crisis, with a swath of prominent managers registering big falls in assets under management.
Among those that have lost ground are UBS, the world’s largest wealth manager, Goldman Sachs Asset Management, Aberdeen, AllianceBernstein, Fidelity, Henderson and Threadneedle, which have seen UK pension asset declines ranging from 10.5 per cent to 86 per cent since 2006.
Many of these houses specialised in active equity management and have lost out as low-cost passive investment vehicles have grown in popularity. De-risking has also prompted many pension funds to cut back on their holdings of UK equities in favour of bonds or lower-risk liability driven investment (LDI) strategies.Global alternatives survey Pension funds press forward on alternative route.
The 2013 Global Alternatives Survey by Towers Watson, the consultancy, in association with FTfm, shows pension fund assets held by the top 100 asset managers that deal with pension funds increased by 8 per cent, from $1.23tn in 2011 to $1.33tn in 2012. This compares with a slight fall of less than 1 per cent from $3.14tn to $3.11tn in alternative assets held by the top 100 managers who deal with all kinds of investors.Craig Baker, global head of investment research at Towers Watson, says the continued movement by pension funds into alternatives was a continuation of a trend that started many years ago. He points out that in 1995 pension funds allocated only 5 per cent of their assets to alternatives. That figure has now grown to 19 per cent, according to the consultancy’s latest global pensions asset study.
The European Commission must scrap the idea of mandatory capital requirements for pension funds, Britain's pension industry said, after a study found UK business could be hit with a 150 billion pound bill if they were introduced.
The Commission has championed capital rules such as Solvency II for the insurance industry - which requires companies to hold enough funds to pay out for a once-in-200-years catastrophe - in a bid to prevent a repeat of the financial crisis.
Recent proposals from Steve Webb, the UK’s pensions minister, to pool employer-sponsored defined contribution pension schemes in an attempt to improve retirement income could be fraught with risk for members.
The approach, which would be similar to collective defined contribution (CDC) schemes, already well established in the Netherlands, would pool the schemes of big employers. This would create economies of scale, reducing costs and fees along the investment chain.
The proposals come as many trustees face a yawning gap between assets and liabilities and many defined benefit (DB) pension schemes are closing.