July 2023
23Jul

Defined benefit pensions with Liability Driven Investments

By Work and Pensions Committee The economic uncertainty experienced in the UK in September 2022 brought to the fore risks associated with the use of Liability Driven Investment (LDI) strategies by pension schemes. LDI strategies aim to reduce volatility in scheme funding levels by investing in assets whose value moves in the same direction as that of the scheme’s liabilities. Leverage allows schemes to do this in a capital efficient way, freeing up capital that they can invest in ways...

July 23, 2023
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December 2021
24Dec

UK. Experts predict busy 2022 for pensions industry

Pension professionals have predicted a busy and challenging year for the pensions sector in 2022, with many issues continuing into the New Year alongside new initiatives for the industry to contend with. With hope that the pandemic will subside, many commentators pointed to the increased focus on environmental, social and governance (ESG) factors in 2022. “2022 will see the continued rise in the incorporation of key ESG issues, including but not limited to climate change, into defined contribution (DC) investment design,”...

December 24, 2021
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July 2021
08Jul

Delay the Pension Age or Adjust the Pension Benefit? Implications for Labor Supply and Individual Welfare in China

By Yuanyuan Deng, Hanming Fang, Katja Hanewald, Shang Wu We develop and calibrate a life-cycle model of labor supply and consumption to quantify the implications of alternative pension reforms on labor supply, individual welfare, and government budget for China’s basic old-age insurance program. We focus on urban males and distinguish low-skilled and high-skilled individuals, who differ in their preferences, health and labor income dynamics, and medical expense processes. We use the calibrated model to evaluate three potential pension reforms: (i)...

July 8, 2021
Aging, Articles, Labor Market, Pension design, , , , , ,
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May 2021
13May

Netherlands: Postponement of pension reforms

Last year, social partners and the Dutch government reached an agreement on pension reforms in the Netherlands. The agreement’s aims - amongst others – is to abolish defined benefit schemes and to prescribe flat rates for defined contribution schemes. It was expected that the reforms would enter into force through an accelerated legislative approval process from 1 January 2022 (with a transition period from 2022 to 2026). However, since the legislation took more time than expected to be prepared,...

May 13, 2021
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April 2021
26Apr

UK. Private sector DB disappearing ‘more rapidly than thought’

Private sector defined benefit schemes are closing more rapidly than realised, meaning the incomes of newly retired workers are set to fall at a much more dramatic rate in the coming decades than had previously been thought, according to consultancy LCP. A report from the firm found in the private sector the decline of traditional final salary-type pensions is more rapid than previously assumed, while the rise of new ‘pot-of-money’ workplace pensions will take longer to make a real impact than...

April 26, 2021
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01Apr

Evaluation of Four Decades of Pension Privatization in Latin America, 1980-2020: Promises and Reality

By Carmelo Mesa-Lago The author of this book has published other 40 on social security since 1968, dealing with pensions, health care, and social assistance, in seven languages and in 34 countries. His new book is a product of many works in the last 30 years, which have been integrated, updated, and expanded under a new methodological framework. The book thoroughly documents the effects of the privatization of pensions in nine countries in Latin America from 1980 until the present:...

April 1, 2021
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March 2021
23Mar

Lessons defined benefit plans can learn from last year

The 2020 funded status of the 100 largest corporate defined benefit (DB) plans by assets rose only slightly as double-digit equity returns were offset by a decline to record-low discount rates, according to a proprietary analysis conducted by J.P. Morgan Asset Management. The report, written by Michael Buchenholz, head of U.S. pension strategy, institutional strategy and analytics, reveals the benefits that came from rebalancing liability-driven investing (LDI) portfolios during the market volatility of last year. He first points out that...

March 23, 2021
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18Mar

US Corporate Pension Funded Ratio Climbs to 92.9% in February

Funding for the 100 largest US corporate pension plans, as tracked by the Milliman 100 Pension Funding Index, improved by $67 billion in February as the plans’ aggregate funded ratio rose to 92.9% from 89.7%, thanks to a 26 basis point increase in the monthly discount rate. It was the fifth straight month funded ratios have improved. Read also U.S. Participants don’t know what is happening to their fees A paltry investment gain of 0.13% during the month led to a...

March 18, 2021
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01Mar

UK. Pension risk settlements reached record high of over £54bn in 2020

The UK pension scheme risk settlement market hit a new record-high figure of over £54bn in 2020, and 2021 could be even bigger, according to analysis from Aon. The provider said it was possible to conclude that 2020 had broken the £52bn total achieved in 2019 now that all information on deals was available, while it cited “early indications” in its forecast that the new year could be worth even more. It also noted that the feat had been achieved despite...

March 1, 2021
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February 2021
23Feb

British Airways defers £450m of pension payments as Covid cuts flights

British Airways has struck a deal to delay £450m of pension deficit contributions as the company struggles through Covid travel restrictions that have left most of its planes grounded during the pandemic. The carrier’s owner, International Airlines Group (IAG), has also reached a final agreement over a £2bn loan that will give the company a larger financial cushion until Covid restrictions are eased. BA, which usually pays £37.5m a month into the New Airways Pension Scheme (NAPS), has struck a deal...

February 23, 2021
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