RSS feedPensions
’[SFTW] No more Shelling out for pensions
So even Royal Dutch Shell has decided that the oil business is hard enough, without running a life assurance scheme for employees on the side. There is now not a single company in the FTSE100 index which offers a final salary pension scheme to new employees.
Piling on the government gurantees
Government guarantees for financial institutions are a financial crisis thing, right?
Wrong.
As the above chart from a new OECD paper (by Sebastian Schich and Byoung Hwan Kim) shows, guarantees were proliferating well before the credit crunched years of 2007 to 2008.
The United States of pension shortfalls
Illinois pension bond sale – not a disaster
From the WSJ on Wednesday afternoon, provisional details of Illinois’ delayed $3.7bn pension bond sale:
Initial indications on the deal Tuesday showed $6.1 billion in orders, with around a fifth of those coming from international investors,
Charts du jour, muni edition
Worried about public pensions liabilities? Well, look away now.
In a report out Wednesday, The Center for Retirement Research at Boston College tried to isloate the factors that influence (1) the spreads on municipal bond yields,
The Puerto Rico pensions debacle
And you thought that Illinois pensions were enough to keep the SEC busy.
From Bloomberg on Friday:
UBS AG may be sued by the U.S. Securities and Exchange Commission over the sale of mutual funds that bought $1.5 billion in bonds Switzerland’s largest bank had underwritten in Puerto Rico.
A pause in the muni madness
Another day, another report of municipal bond outflows from mutual funds. From Reuters on Wednesday:
The mass exodus of cash from municipal bonds accelerated to a record outflow of an estimated $5.7 billion in the week ended Jan.
Space, time and public pension black holes
Mad, bad, and dangerous to know — the response from states to the idea of Congress pre-emptively legislating for their bankruptcy.
In Monday’s Wall Street Journal, EJ McMahon of the Manhattan Institute adds to the criticism,
Sovereigns and pensions, oh dear
Marc Ostwald of Monument Securities has a good riff off of the news that Ireland’s national pension fund will indeed be repurposed to buy Irish government bonds:
While many will argue that this is just more ‘unsound finance’,
Deutsche on the liquidity trap – and the last hurrah
Quantitative Easing v2.0 is almost entirely expected, at this point.
But it’s also something else, according to Deutsche Bank. It’s one last chance to avert a real liquidity trap and — intriguingly — to avert a retirement industry crisis.
Let them eat Irish bonds
Here’s an, erm, simple solution to the problem of Ireland’s ballooning deficit and pension funds rocked by ultra-low bond yields; just have them buy Irish bonds:
(Reuters) – Ireland’s pension industry is seeking a change to regulations that would allow it to price annuities based in part on Dublin’s government bonds,
QE and exploding pensions, again
Citi is back with another take on low bond yields and pension accounting.
And before you fall asleep (wake up!) this is an update of Citi’s March 2009 note on quantitative easing and exploding pensions.
We are all ostriches now
More on global demographic time-bombs, this time from Deutsche Bank, which has stumbled upon a potential answer: mass migration from the developing to the developed world.
Writing in the latest edition of Deutsche’s Long-Term Asset Study,
Linkers in a cold climate
Oh, not more UK inflation-indexing shenanigans.
Courtesy of Barclays Capital, here’s a quick update on the RPI-to-CPI indexation imbroglio that’s broken out in the UK linker market lately.
Bidding RIP to RPI and shifting pension liabilities to CPI instead — as the government outlined in the June budget and is now consulting upon — has rather worried the market in UK RPI-linked bonds.
Geriatric asset prices
BIS analyst Előd Takáts is worried about ageing. And not in a personal way, either.
In a caveat-heavy but very interesting Bank for International Settlements working paper, the economist seeks to investigate how ageing populations will impact asset prices — specifically,
Groaning under the UK pensions rock
Pensions. Boring, deathly things that people generally try to put off thinking about.
Unless when they weight down listed UK companies even more than usual, that is, which – thanks to trends in pensions accounting analysed by Citigroup on Monday — is looking a tad likelier.
New (inflation swap) derivatives in town
RIP RPI?
As part of its emergency Budget, the UK government wants to switch public sector pension pay-outs from being based on the Retail Prices Index (RPI), to the Consumer Prices Index (CPI). CPI has generally been lower than its RPI-cousin,
Does Moody’s fancy itself an auditor?
Repo 105 and the role played by Ernst & Young has once more focussed attention on the small world of international accountancy.
Inevitably, the allegations against the firm — as detailed by the FT – invoked ‘dark memories of Enron’ and other instances of creative accounting.
VaR and piñata pensions reform
Here’s something you may have missed down Mexico way.
From the Wall Street Journal:
[Mexico's pensions regulator] Consar also approved modifications to the [Mexican pension funds} Afores’ risk control methodology in order to avoid forced asset sales during periods of extreme market volatility in order to comply with value-at-risk limits.
British Airways pension fireworks
We knew British Airways statement on its pensions deficit would be interesting.
We didn’t know it would be this interesting.
The UK airline revealed on Monday morning that following an actuarial review by its pension trustees,
BA and BT’s promiscuous pensions
As the market waits with bated breath for an update on British Airways’ triennial review of its pension scheme, we note some parallels with another leviathan of UK corporate pension deficits — BT.
The telephone company released its second-quarter earnings last month,
British Airways defies financial gravity
Hidden away in British Airways’ half-year results is this tidbit:
That means British Airways NAPS pension liabilities now stand at a whopping £2.66bn — more than twice the £1.17bn reported at the end of last fiscal year.
Baby Boomers working longer, for less
The deep recession in the US has accelerated a trend toward late retirement, according to BNP Paribas analyst Julia Coronado.
In the second installment of her series on how the financial crisis has changed the retirement landscape for the Baby Boomers,
Oye, Baby Boomers: don’t retire, if you can possibly avoid it
Julia Coronado, senior US economist at BNP Paribas, this week issued the first in what promises to be an insightful series of notes on how the financial crisis has affected the baby boom generation.
First order of business:
British Airways pension tension
As FT Alphaville noted last week, the percentage of British Airways’ shares on loan has been climbing, making it the short-sellers’ favourite airline.
One theory behind the rise is that the carrier’s pension deficit will not make for happy reading when its trustees publish the results of their triennial revaluation sometime in September.
Pensions, searching for their place in the accounting world
What’s this? Now the even the pension trustees have gone all theoretical on market prices.
From the Marathon Club, comprised of trustees and senior executives representing pension schemes with £179bn of assets,
Executive pension costs revealed
Britain’s biggest companies are paying an average 70 per cent of executives’ pay to fund the final salary pensions of their top officials, making them hugely more expensive than the pensions of ordinary employees,
British Airways’ cash conundrum
Airlines are like grocery stores.
They have particular goods they need to sell before certain dates and at fairly fixed operating costs. The plane is going to leave with 100 people on board, or 50. It is up to the airline to fill enough seats — at high enough prices — to cover costs.
Britain’s exploding pensions, redux
We’ve written about the relationship between corporate bonds and pensions fund a couple of times before, but now is probably a good time to revisit the issue, given that the credit team at Dresdner/Commerzbank have just published a pensions special.
Aon UK cuts pension payments
The British arm of one of the world’s biggest insurance brokers is cutting its contributions to its workers’ pensions by up to half, the FT reported. Aon said it believed it was the first large company in the UK to cut payments to its workers’ defined contribution schemes,