July 2020

29Jul

Jamaica. COVID Economic Task Force Favours Lifting Pension Investment Limits

The Pension Industry Association of Jamaica, PIAJ, says the COVID-19 economic task force’s recommendations about disaggregating the limits placed on debt and equity investments, as well as an increase in the limit for private equity investments for pension funds, are encouraging. “All our lobby efforts in relation to the liberalisation of investment limits were premised on private equity having its own limit and not aggregated with private debt, as is currently the case,” said PIAJ President Sanya Goffe. Those...

July 29, 2020
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28Jul

US. DOL’S ESG proposal would hurt retirement accounts

The Department of Labor lost an opportunity to encourage investors to support causes that they hold close to their hearts with a proposed rule regarding the investment choices they’re allowed in their retirement accounts. It’s a proposal that also could end up damaging Americans’ retirement security long-term if allowed to become part of the Employee Retirement Income Security Act. The June 23 proposal reaffirmed standard thoughts on fiduciary responsibilities that suggest only financial risk and returns can be considered...

July 28, 2020
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27Jul

Japanese Trust Funds Align with Global Trends on FX Settlement Risk

Trust funds in Japan have started focusing on mitigating FX settlement risk, to which they have long been exposed. This article explains the change in focus and the factors behind this. Following 2013 guidance from the Basel Committee on Banking Supervision (BCBS) recommending the use of payment-versus-payment (PvP) settlement and netting where appropriate, Japan’s Financial Services Agency (FSA), along with the Bank of Japan (BoJ), convened Japanese wholesale FX market participants to promote PvP settlement and assist the industry...

July 27, 2020
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24Jul

Canadian pension funds rebound in Q2 with 9.9% return

Canadian defined benefit plans posted positive investment returns in the second quarter, recovering all of the losses from the previous quarter, Northern Trust pension universe data found. For the quarter ended June 30, the median plan in the Northern Trust Canada Universe returned 9.9%, up from -7.1% in the first quarter, according to the findings released Thursday. Canadian DB plans benefited from the recovery following March's poor equity performance due to the economic impact of the COVID-19 pandemic. "Despite...

July 24, 2020
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22Jul

COVID-19 Relief Packages Help Fuel Ultra-Low Interest Rates

The European Insurance and Occupational Pensions Authority (EIOPA) has warned that the current ultra-low interest rate environment—which it said is being fueled by the COVID-19 pandemic and the resulting economic relief packages—represents a key source of systemic risk for insurers for the future. EIOPA said in a recent report that the COVID-19 pandemic and central banks’ response measures to alleviate the impact on the economic activity will contribute to the continuation of the low interest rate environment. It also...

July 22, 2020
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22Jul

US considers restricting ESG in pensions

The US Department of Labor (DOL) is considering imposing strict rules on how pension funds invest, which could see the scope for ethical and responsible investing limited. The DOL has proposed an amendment to the Employee Retirement Income Security Act 1974 (ERISA) "to confirm that ERISA requires plan fiduciaries to select investments and investment courses of action based solely on financial considerations relevant to the risk adjusted economic value of a particular investment or investment course of action." The...

July 22, 2020
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21Jul

US. What The Wild Stock Market Means For Public Pensions

As governments deal with paying for Covid-19 expenses amid falling tax revenue and shrinking budgets, there’s another big bill waiting for them: pension debt. And many could lean on taxpayers to help. Pension plans haven’t released their annual earnings yet, but a recent report from Moody’s Investors Service notes that “investment returns...have almost certainly fallen well short of targets.” The ratings agency estimates that when pension plans tally up their total performance between July 1, 2019 and June...

July 21, 2020
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17Jul

US. Public Pensions Face a COVID-19 Conundrum

Faced with depleting assets, and with state and local governments under fiscal pressure from the COVID-19 recession, public pension plan sponsors have some tough choices ahead of them in order to remain sustainable during economic uncertainty. However, there are widely differing views among economic scholars as to what the most prudent strategy is for state and local governments dealing with low returns on pension investments, aging workforces, and pressure to build portfolios to cover promised future benefits—as well as...

July 17, 2020
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16Jul

US. DOL Proposes New Rules for Selecting Retirement Plan Investments

If you are a member of the committee for your employer’s pension, 401(k), profit-sharing, or 403(b) plan, you should check out a set of proposed rules for selecting investments. If you have an outside investment advisor, as you probably should, they should be bringing these proposals to your attention. This process of the DOL’s presents a good opportunity to look at your plan’s procedures to assure that you and your advisor are both meeting your fiduciary responsibilities. The Notice...

July 16, 2020
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13Jul

Older South Africans are taking their wealth and pensions offshore

In the current precarious economic climate, South African residents over age 55, who invested in retirement annuities (RAs), preservation funds or pensions, are increasingly transferring their investments to living annuities with offshore equity exposure. Read also Greece’s supreme court rules for reimbursement of pension cuts Claudia Mendes, international financial planner at Sable International, considers the argument for going offshore. South African residents find themselves investing in a country that has a concentration of resource stocks and a volatile currency. With...

July 13, 2020
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