Best Pensions Paper 2018 (UK and Europe)
Hymans Robertson / Nomura collaboration wins best paper
The winning paper argues that the LDI-era in UK pensions risk management may be coming to an end, and examines the impact this may have on UK bond yields.
The authors draw upon academic data and survey evidence to understand the drivers of bond yields. They describe UK gilt yields as having both a "global real yield" component and a UK-specific "idiosyncratic" component. The authors show that LDI-strategies and the associated demand for long-dated gilts has suppressed UK bond yields over an extended period. However, they warn that this era may be coming to an end; investors should be wary of holding UK fixed income securities as the supply-demand imbalance unwinds.
WINNER: HYMANS ROBERTSON / NOMURA
The Age of Peak LDI (Hymans Robertson/Nomura)
Over the last fifteen years, liability-driven investment (LDI) strategies have been a major feature of the UK defined benefit pension scheme landscape. However, in this fascinating 28-page paper, the authors discuss the history of pensions risk management in the UK and argue that the era of LDI implementation may be approaching a natural conclusion, being likely in the author's view to last no longer than another 2-3 years.
HIGHLY COMMENDED
UK Pensions De-Risking Report 2018 (Willis Towers Watson)
This 21-page report by Willis Towers Watson examines the key themes in the longevity hedging and bulk annuity market over the coming 12 months.
The DC Future Book (PPI/Columbia Threadneedle, 2018)
(For compliance reasons, this paper is only accessible in the UK)
Produced by the Pensions Policy Institute in conjunction with Columbia Threadneedle, the DC Future Book is a blockbuster 84-page report which surveys all aspects of the UK DC landscape, both in terms of how it looks at present and how it may evolve in the future.
2018 UK Pension Strategy Survey (Willis Towers Watson)
(For compliance reasons, this paper is only accessible in the UK)
Willis Towers Watson presents the findings of a survey of nearly 200 pensions funds, in order to better understand their benefit strategy. In particular, the report focuses on the future direction of DC pensions and the plan design challenges for DB schemes.
Annual Risk Transfer report (Hymans Robertson, 2018)
(For compliance reasons, this paper is only accessible in the UK)
With UK bulk annuity transaction volumes in 2018 having smashed previous records, Hymans Robertson presents an in-depth report on the risk transfer market. The report includes an overview of bulk annuity insurers, a review of trustee insights, a focus on the changing regulatory landscape, an update on longevity trends and an analysis of UK DB scheme demand.
Global Pension Asset Study (Willis Towers Watson, 2018)
Willis Towers Watson's annual Global Pension Assets Study provides a wealth of statistics, covering 22 major pension markets and examining in detail the seven largest (US, UK, Switzerland, Netherlands, Japan, Canada, Australia) which between them comprise over 90% of total pension assets. The report also looks forward to the next 5-10 years, forecasting the likely shifts in pension fund policy and the key issues they will be discussing.
ABOUT THE AUTHOR
Andrew Perrins is a former Actuary and Asset Allocator. as an Actuary, he worked for 15 years in, serving as Director of Asset Allocation for Abbey Life Chase Manhattan, before setting out on a more entrepreneurial path.
To contact him, email [email protected]