Global Pensions Wrap: August 10 edition
From a California investment adviser pleading guilty to embezzlement, to the Turkish military's interest in British Steel - the global headlines from around the FT this week.
Public pensions bested by simple stock/bond mix in 2019
The week in numbers
A California investment adviser has plead guilty to embezzling more than $1.2m
AustralianSuper is to invest $1bn in India's first sovereign wealth fund
Americans aged 65 and over are appearing in court more often than their, parents who lived through the great depression
Fundfire: The breadth and depth of expertise involved in US public pension investment was outshone by a 'vanilla' fixed allocation to domestic bonds and equities over the last year, according to research from the Wilshire Trust Universe Comparison Service. Reported in the Wall Street Journal, the service found that a simple 60/40 portfolio generated returns of 9.1 per cent over the 12 months to June, far outstripping the 6.8 per cent returned by the country's public funds. This was the sector's worst performance since 2016, and saw the funds dip below their median projected long-term return rate of 7.25 per cent.
California RIA CEO admits embezzling pension funds
Fundfire: A California investment adviser providing consultancy services to public pension funds has plead guilty to embezzling more than $1.2m (£993,000) from a pension plan for his own employees. Sixty-five-year-old David Bonuccelli was the sole trustee of the fund belonging to his Sacramento-based real estate investment consultancy, David L Bonuccelli & Associates. Over a five-year period beginning in 2011, he transferred funds from the scheme to fund his own pension savings and ongoing expenses, before creating documents to disguise the payments as loans. In addition to a maximum five-year prison sentence, Bonuccelli could be fined up to $250,000.
AustralianSuper to allocate US$1B to India's infra fund
Ignites Asia: Australia's largest superannuation fund is joining a host of other international pension giants in seeding India's first sovereign wealth fund. AustralianSuper is to invest $1bn in the National Investment and Infrastructure Fund, The Hindu BusinessLine reports, along with an equal investment by the Ontario Teachers' Pension Plan. Each investment, in the NIIF's third round of fundraising, is split into a $250 million commitment and co-investment rights of up to US$750 million for future investments.
The boomers going bust: Why elderly bankruptcy is rising in America
FT: Diminishing pension provision is just one of a range of factors leading ageing baby boomers into problem debt at far higher rates than previous generations. Baby boomers aged 65 and older are appearing in court more often than their parents who lived through the Great Depression. Extensive lines of credit, student loans for themselves and relatives, sky-high healthcare costs and weak pensions are pushing a growing number into bankruptcy.
Turkish military pension fund unit in British Steel takeover talks
FT: An offshoot of Turkey's military retirement fund could be the next owner of collapsed British Steel, after last-minute talks opened with the UK government. The steelmaker can now boast takeover interest from both Ataer Holding, a subsidiary of the Turkish state scheme, and Liberty House, the UK industrial conglomerate led by India-born metals magnate Sanjeev Gupta. However, one person familiar with the talks said demands for undertakings by the UK government could breach EU state aid rules, creating a hurdle to the deal.
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