UK Pensions - A roundup of the best papers
Top Papers on UK DB and DC Pensions
In the list below, we round up some of the best papers on UK pensions from this year, and from recent months. Our list of the very best papers of 2019 will be announced on Monday in the Savvy Investor Awards 2019.
Increasing longevity and the persistence of low interest rates continue to build pressure on some UK schemes who are considering potentially radical solutions, such as buy-ins or mergers. Others, with more investment flexibility, are seeking higher returns from other asset classes with many increasing allocations to infrastructure, private equity or even less liquid investments.
One constant in the investment space over the last few years has been increasing pressure on management fees, with one report noting that in some cases, fees have fallen by over 10% in just over a year. This selection of papers explores a whole range of topics including fee pressure and the various approaches and methodologies schemes are using in order to either reduce costs or increase returns.
Should UK DB schemes buy in to the case for buy-ins? (LGIM, 2019)
LGIM suggests that buy-ins can be useful for schemes approaching maturity, but only if the right circumstances arise.
Patient Capital and Illiquid Investment: A Guide for UK Pension Funds (PLSA, 2018)
The Pensions and Lifetime Savings Association (PLSA) presents this guide which outlines via case studies, the approaches and experiences that some schemes have with Illiquid investments.
Responsible Investment as a Motivator for Generation DC (Franklin Templeton, 2019)
In this paper by Franklin Templeton, they outline ways in which responsible investing can be used to garner engagement with scheme members, many of whom will be amongst the first cohort relying principally on their defined contribution (DC) pension savings in retirement.
CPI liabilities: the wedge and the hedge (LGIM, 2019)
This paper by LGIM explores the issue of the potental mismatch that some defined benefit (DB) schemes face between assets linked to RPI and liabilities that are often linked to CPI.
What is CDC and how might it work in the UK? (PPI, 2018)
The Pensions Policy Institute (PPI) provides an in-depth examination of Collective Defined Contribution Schemes (CDC’s) looking at examples from around the globe and how these might fit in a UK pensions context.
UK DB Consolidation: One year on (Hymans Robertson, 2019)
Hymans Robertson examine recent consolidation activity amongst UK defined benefit (DB) pension schemes. A drive to lower costs, improve member security and reduce risks are some of the factors behind the wave of consolidation.
The new era of defined contribution investing for UK pensions (Capital Group, 2019)
Capital Group takes a look at the rapid growth in diversified growth funds (DGFs) within the UK defined contribution (DC) market since their introduction in the 2000’s and investigates some new iterations of DGF’s that DC schemes appear to be interested in.
Global Pension Risk Survey 2019: UK findings (Aon)
The biennial, 2019 edition of Aon’s Global Pension Risk Survey takes an in-depth look at the UK defined benefit (DB) market.
Investment guidance for UK DB pension schemes (TPR, 2019)
In their comprehensive guidance paper for trustees of UK occupational defined benefit (DB) schemes, TPR offers a wide range of suggestions in six seperate sections.
LCP UK Investment Management Fees Survey 2019
In the 2019 LCP Investment Management Fees survey, they find that fees have again decreased in most of the key asset classes used by UK institutional investors. The average fee for a ￡50m active global equity mandate has fallen by about 8bps, or 11% since 2017.
The winning strategy for the pension market in China (McKinsey & Company, 2019)
In this 42-page report by McKinsey & Company, they explore the changes required by China’s three-pillar pension system that will be necessary to meet the needs of their aging population.
The world's largest 300 pension funds (Thinking Ahead Institute, 2019)
The Thinking Ahead Institute provides a detailed analysis of the world’s largest pensions funds, whose assets totalled $18 trillion in 2018, slightly less than in 2017.
Appraising home bias exposure (FTSE Russell, 2019)
FTSE Russell examines, over a 12-year period, the impact of home bias investing in domestic equity markets by large pension funds. Data is collected and analysed for five markets, the US, UK, Japan, Canada and Australia.
Cash Flow Driven Investing: Moving Beyond a Corporate Defined Benefit Solution (Aegon AM, 2019)
Aegon’s paper on Cash Flow Driven Investing explores uses for this investment solution beyond its traditional home in corporate defined benefit (DB) plans that need to make regular benefit payments. Many other organisations have similar, regular cashflow requirements, including Insurance companies, endowments and even nuclear decommissioning trusts.
2019 Global Survey of Accounting Assumptions for DB Plans (Willis Towers Watson)
Willis Towers Watson 2019 Global Survey of Accounting Assumptions for Defined Benefit Plans outlines the assumptions made by major corporations for defined benefit (DB) plans around the world.
UK Pensions: The DC Future Book (PPI/Columbia Threadneedle, 2019)
This report helps investment managers understand the direction of travel of the UK defined contribution (DC) market. This year's edition takes a closer look at the way people draw down and spend their pension savings, and how this is evolving.
The future of Defined Benefit pension schemes in the UK (PPI, 2019)
PPI’s comprehensive report investigates the decline in, and growing readiness of, private sector defined benefit (DB) schemes to consider various ‘endgame’ scenarios, including bulk annuity purchases. Rising interest in alternative consolidation mechanisms, which involve the merger of schemes or the transfer of liabilities to third parties, are also featured.
Charging structures for UK pensions; an outcomes-focused analysis (PPI, 2019)
The PPI explores the issue of charging on workplace pensions, as charging structures and levels clearly impact member outcomes during retirement.
2019 Emerging Trends in UK DB Survey (Willis Towers Watson)
Willis Towers Watson delve into the current trends that are impacting UK defined benefit (DB) schemes, and canvass opinion about these issues amongst the key decision makers at DB schemes, including trustees.
ABOUT THE AUTHOR
Andrew Perrins is a former Actuary and Asset Allocator. After qualifying as an Actuary, he worked for 15 years in investment management, serving as Director of Asset Allocation for Abbey Life and for Chase Manhattan, before setting out on a more entrepreneurial path.
To contact him, email [email protected]