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Law & Regulation

The Weekly Wrap: January 10 edition

By Tom Dines | January 10, 2014

A round-up of pension and investment stories published across the FT group - from further proposed cuts to state welfare to the growing popularity of alternatives.

Pension funds beat actuarial targets

Week in numbers 

  • US pension funds saw funding ratios jump to 95% by the end of December 2013
  • The top 20 alternative funds in Europe and the US had inflows of $150bn over the past three years
  • UK employee pension contributions average 4-4.5 per cent, but could fall "considerably"

FT: Most UK pension funds are likely to have outperformed their actuarial assumptions over the past decade thanks to a rally in equity markets, according to State Street Investment Analytics. In the US, pension funds sponsored by S&P 1500 companies saw funding ratios rise to 95 per cent in December 2013, from 74 per cent the previous year.

George Osborne limits cuts options with pensions promise

FT: Chancellor George Osborne has committed to cut welfare by an extra £12bn a year after the next election, without touching pensions. The proposed savings would come from restricting housing benefit and council housing subsidies for richer people. The state pension would continue to rise by the highest of 2.5 per cent, CPI or earnings growth.

Blockbuster funds discover alternatives attract

FTfm: A few 'blockbuster' funds are attracting huge sums of investment into alternatives. The 20 best-selling alternative funds in Europe and the US captured inflows of $150bn (£91.2bn) over the past three years, a joint study by investment bank Brown Brothers Harriman and research consultancy Strategic Insight has found.

Proposal for switchable annuities 'unworkable' says industry

FT: The pensions industry has described pensions minister Steve Webb’s proposals for switchable annuities as “unworkable”. Webb wants to give retirees the power to switch annuities if they are unhappy with their decision, but industry figures have warned such annuities would be available at lower than conventional rates.

Pension savings to be hit by auto-enrolment

FT: Auto-enrolment could drive down average workplace pension contributions, according to a new report by the Association of Consulting Actuaries. Employee contributions average 4-4.5 per cent, but it is believed they will decline “perhaps quite considerably” as workers are signed on to schemes where employers pay the minimum required.

Most read on pensionsweek.com 

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Managers targeting auto-escalation face tailoring challenge
Scheme confidence drives LDI take-up 

This week's social media comment

In response to our LinkedIn post about Pensions Week becoming Pensions Expert, Ros Altmann, independent pensions expert, said: "Good luck with the rebranding – a very fitting name for an excellent publication. Looking forward to seeing the new look. All the best for 2014 to Pensions Expert."

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