The Weekly Wrap – May 20 edition
A round-up of the pensions industry stories published across the FT Group in the past week, from Andy Haldane's pension confusion, to saver disengagement as auto-enrolment rolls out.
The week in numbers
• 1.5m people do not know where their pension pot is invested
• Hedge fund fees are up to 36 times higher than passive investments
• The £122.2bn New York State Common Retirement Fund is prioritising use of renewable energy
BoE’s Andy Haldane admits to pensions bafflement
FT: Andy Haldane, chief economist of the Bank of England, has said that the British pensions system is so complicated that even he struggles to understand it. In a speech at the New City Agenda annual dinner on Wednesday, Haldane said he is “moderately financially literate” but due to the system is “not... able to make the remotest sense of pensions”. He said that growing freedom and individual responsibility combined with a lack of knowledge would become an increasingly pressing problem.
New York pension fund pushes for renewable energy use
MandateWire US: Retailers Best Buy and Nordstrom have agreed to increase the use of renewable energy in their operations and supply chains, following a shareholder proposal from the $178.3bn (£122.2bn) New York State Common Retirement Fund that they "set measurable goals for increased use or production of renewable energy by December 2016". The NYSCRF owns shares in Best Buy and Nordstrom valued at $32m and $18m respectively.
Pension saver disengagement spikes as AE rolls out
FTAdviser: Levels of disengagement among members of workplace pension schemes have soared since the introduction of auto-enrolment. Research from Aviva shows 1.5m people (15 per cent of people in workplace defined contribution schemes) do not know where their pension pot is invested – up from 9 per cent in 2012-13, when auto-enrolment was first rolled out.
Buffet backed by pension money
FT: Todd Combs and Ted Weschler, former hedge fund managers and Warren Buffett's investment protégés, were able to make bigger bets due to a takeover of the largest pension funds of Berkshire Hathaway's subsidiaries. Expanded firepower enabled Combs and Weschler to purchase a $1bn (£685m) stake in Apple and widen Berkshire's investment activities in technology.
Savers pay high price for hedge fund investments
FT: Some of the UK's largest pension schemes paid out £2.85bn in fees to hedge fund mangers last year, research from SCM Direct has found. Many of the 4.8m savers were charged up to 36 times more than lower-cost alternatives, such as index funds while receiving as little as a third of the performance. The report said: “People’s hard-earned money is being depleted in hedge funds while managers earn millions.”
Most read on pensions-expert this week
In-house management and infrastructure dominate LGPS pooling debate
Sainsbury's marks down deficit by £262m
Select committee joins call for mastertrust regulation
Save or suffer: How to futureproof the UK’s retirement plans
The psychology behind pension communications
Social media comment of the week
Just one problem with being near the front at the awards #beingabusedbythecomedian #pipa2016
— Ian McQuade (@IanMuseTweets) May 18, 2016