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The Weekly Wrap: April 17 edition

By Lisa Botter | April 17, 2014

A round-up of pensions and investment stories published across the FT Group – from debt-stricken Detroit brokering a deal for its retired police and firefighters, to concerns over a fall in Eurozone inflation. 

Detroit agrees to full pension deal with retirees

Week in numbers 

UK annuity market could decline by as much as 75%

£3.8bn of inflows into fixed income in Q1 2014

£486m pledged to shore up Detroit's pension gap

FT: Detroit has struck a deal that will keep intact the pensions of most of its retired police and firefighters, as mediators navigate the biggest municipal insolvency in US history. The deal is contingent on the $816m (£486m) of state and charitable foundation funding that has been pledged to shore up the city’s pension gap. 

Annuity sector faces 75% fall after Budget reform to pensions

FT: A survey by consultancy PwC found the UK annuity market could decline by as much as 75 per cent because of pension changes announced in the Budget. More than half of the 1,200 people surveyed still want to buy financial products at retirement, but only 16 per cent intend to invest their pots in an annuity. 

HMRC guidance on cancelled annuities welcomed

FT: Newly retired pensioners who have backtracked on their decision to buy an annuity due to changes announced in the Budget will not be penalised, HM Revenue & Customs have said. This addressed concerns that the rules would prevent annuity providers from returning tax-free lump sums without incurring unauthorised payment charges. 

Eurozone inflation falls to lowest level since 2009

FT: Eurozone inflation in March dropped to its lowest level in more than four years, putting pressure on the European Central Bank to act. Mario Draghi, the ECB’s president, signalled on Saturday it was getting ready to intervene with new unconventional monetary policy actions in a bid to fight low inflation.

Pension schemes urged to take on more credit risk

MandateWire: MandateWire data show fixed income investments attracted inflows of almost £3.8bn in the first quarter of 2014, as European pension funds are being encouraged to invest in lower-rated corporate bonds and alternative credit opportunities in the hunt for returns in a low-yield environment.

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