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Global Pensions Update: Apr 2022

Pension Endgames, Plan Flexibility and Decumulation Strategies

A robust performance by most asset markets in 2021 finds many DB schemes either at or close to fully funded status, affording those approaching the endgame the luxury of considering, for the first time in years, whether to opt for a CDI approach or to continue with a diversified growth strategy. Flexibility of retirement options for Australian plan sponsors may need a rethink, with some funds mismatched in illiquid assets while continuing to offer members the opportunity for switching and early release. Meanwhile, the vexatious issue of decumulation and quite what is the right investment strategy to accommodate it remain prime considerations. Climate risk remains well up the pension agenda, with trustees needing to consider climate risk scenario planning as well as investment process and strategy.

lawn-bowls-endgame

Retirement Bonds: Safe assets for retirement planning (EDHEC-Risk Institute)

EDHEC-Risk Institute looks at the problem of decumulation – essentially finding a spending rule and an investment strategy that support the desired lifestyle for as long as needed.

Endgame Portfolios: Making the most of CDI (LGIM, Mar 2022)

For compliance reasons, this paper is NOT accessible in the United States and Canada

LGIM considers whether full cashflow matching for pension endgames is the right approach and how credit portfolios need to be structured for maximum efficiency.

Super Funds, Master Trusts & Member Switching, A New Framework (PGIM IAS, 2022)

A new PGIM IAS framework tackles several problems faced by Super Funds and Master Trusts when investing in illiquid private assets, while still offering scope for member switching and early release.

Next Issue no. 8: The future of defined contribution (Nuveen, Mar 2022)

Nuveen's 'next' publication focuses on key issues that impact defined contribution investing, including guaranteed income in 401(k) plans, the upcoming Department of Labor ruling on ESG, and the impact of cryptocurrency on DC plan menus.

Amundi Pension Funds Letter no 14 (Amundi, 2022)

For compliance reasons, this paper is NOT accessible in the United States

Amundi's latest Pension Funds Letter takes a deep dive into China, its investable markets and what recent policy changes imply for the economy. They also take a look at global pension funding ratios.

Pension Fund Trustees and Climate Scenario Analysis (Invesco, 2022)

For compliance reasons, this paper is only accessible in certain geographies

Invesco explores the role and obligation that trustees have in setting and disclosing scenario analysis relating to the risks and opportunities presented by climate change.

Pensions Investment Trends: Technology innovation's importance (SimCorp, 2021)

SimCorp presents a survey of Investment and IT decision-makers at public and private pension funds which finds that funds struggle to cope with mounting data and increasing operational complexity, particularly related to integration of ESG and illiquid markets data.

Herd Behaviour of Dutch Pension Funds in Sovereign Bond Investments (2021)

The authors of this paper examine herd behaviour by Dutch pension funds in sovereign bond markets during the European debt crisis.

U.S. DB Pension Review (GSAM, 2022)

Goldman Sachs Asset Management's 20th Pension Review focuses on the 50 companies in the S&P 500 with the largest pension schemes and outlines the key issues and challenges affecting U.S. corporate DB plan sponsors.

Global Perspectives on Responsible Pensions Investing (Aon, 2022)

Aon's survey of Responsible Pensions Investing intentions finds that investors continue to rethink policies and process, while also repositioning portfolios to be more resilient and impactful.

The Future Cost of Inflation on Retirement Portfolios (Manulife IM, Mar 2022)

For compliance reasons, this paper is only accessible in certain geographies

Manulife IM indicates how significant the impact of rising prices can be on investors’ retirement intentions, while also suggesting changes that may increase the chances of these investment goals being achieved.

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