Good Governance = Ability to ACT

These are tough times for pension schemes, with market moves impacting both the asset and liability side of their balance sheets.  Should trustees rebalance their equity holdings as the market drops, use this opportunity to reallocate assets to alternative classes or remain on hold and wait for the turbulence to subside?

Without a plan, making these decisions in the depths of a crisis can often do more harm than good.  I believe Good Governance involves three key concepts, which combine to allow trustees to take appropriate decisions even in the heat of adverse market moves:

Good Governance = Ability to ACT, where:

  • A = AGILITY to make and implement decisions
  • C = CONTROL, provided by a robust pension risk framework
  • T = TRANSPARENCY on both assets and liabilities
  • Agility allows decision-makers to act swiftly whenever the need arises.  Pension schemes, as long term investors, need to be nimble when  attractive long term opportunities arise – this may involve adding to risk, reducing risk or re-allocating risk in a short space of time.  Before making any decision, trustees must ensure they are in Control…
  • Control comes from setting a robust framework to monitor and manage a pension scheme’s risk.  Ideally this framework would be in place BEFORE any market turbulence. At Redington, we help our clients put together a Pension Risk Management Framework (PRMF), within which agile decisions can be made.  To be in control, you need Transparency…
  • Transparency is required on both assets and liabilities to allow an up-to-date funding level to be reported.  On the liability side, this involves accurate actuarial analysis around future payments to retirees.  On the asset side, it involves regular and timely updates on pricing of investments.  Transparency is particularly important during times of market stress.

per mare per terram

One week to go until I take on the challenge of a lifetime. I am both excited and anxious about next Saturday’s trip to RNAS Yeovilton and “Escaping the Dunker”. A sincere thank you to those who have sponsored me so far – I will post the photos/videos next week. This next week I would be extremely grateful to anyone who can help me raise the final £3,600 to reach my £10,000 fund raising target. Please forward, share, RT on twitter to anyone who might be interested insupporting this cause.

What will I be doing on Saturday 17th September 2011?

Meet at RNAS Yeovilton followed by training at the Underwater Escape Training Unit. Then I will be strapped into a fuselage alongside my fellow Commando Spirit recruits and required to escape from a somewhat  frighteningly realistic simulation of a helicopter crash at sea, in the dark, upside down, using the correct procedure.  I’ve been assured it does not take physical strength – what it tests is courage, determination, fortitude and teamwork, as well as the ability to follow instructions and stay calm!

Why the Royal Marines Charitable Trust Fund?

The Royal Marines Charitable Trust Fund helps Royal Marines and their families when they need it most.

  1. They aid the wounded and injured.
  2. They give quality of life to those returning from operations.
  3. And when the worst happens, they support the families of those who die in service.

Many thanks from me, Commando Spirit (@CdoSpirit) and the Royal Marines Charitable Trust Fund.

Rob

Thank you for everyone’s kind and gernerous support – Just Giving Page.

Social Media And Pensions 2.011

“It’s up to us to intimately understand how social media impacts the bottom line and how we can steer experiences, conversations, and action in our direction, while delivering value.  Without engagement, we cannot compete for relevance.  Without relevance, we cannot compete.”Brian Solis, Social Media Guru

Social media has taken the world by storm with over 1 billion users.  700 million people are registered on Facebook and a new member joins LinkedIn every second!  It began as a way for individuals to share their thoughts and update friends/family on events in their life but is now challenging traditional business models.

Social Media 2.0 enhances the personal aspect, bringing in a professional side too.  Top consumer brands spend an increasing portion of their marketing budget on these digital platforms as research shows that social media conversations affect reputation, credibility, sales and, ultimately, profitability.  Current relationships can be developed and new ones found without the need to leave your computer – the whole world is literally at your fingertips!

I have been exploring this uncharted social media for about 5 years. As co-founder of Mallowstreet, an online social network for the pensions’ community, I truly believe in its power to engage stakeholders and transform the way we deliver information and ideas. 

In a business sense, creating a notable online presence helps to build trust with current and potential clients.  It allows you to leverage your personal brand to promote your professional one.  It also allows groups of otherwise unconnected individuals to gather and share in the wisdom of the crowd, through posting of ideas and 2-way discussions.

My approach to social media is one of giving – I believe we can all contribute as individuals in a way that adds value to the whole. With pensions’ dialogue and debate so prominent in society, this new media offers a great opportunity to engage with others in the industry as well as engage and educate non-pensions’ folk.

 Let me describe how I use social media on a day-to-day basis:

 – Facebook    – Stay in contact with friends and family

–  Small and personal number of ‘Friends’

–  Follow a number of business pages to receive automatic news updates, such as TED, Economist, Harvard Business Review

–  Set-up “Redington” business page to promote services and share knowledge

 –  LinkedIn     – Connect with people after a meeting or conference

–  Participate in online pension forums and discussions

–  Use Q+A section to tap into a deep well of expert knowledge

–  Share my posts from other social media platforms

 –  Twitter         – Allows serendipitous reading of interesting topics

– Share my thoughts and post articles or links for others

–  Use of hashtags, such as #Pensions to identify relevant stories

–  Follow news channel tweets to save time trawling through websites

–  Develop deeper relationships through re-tweets, mentions and messages

Twitter hashtags were popularised during the San Diego forest fires in 2007 when Nate Ritter used #sandiegofire to identify his updates related to the disaster. 

 In 2011, the annual pensions conference suggested using #Pensions2011, which led one actuary to suggest receiving CPD points for following #Pensions2011 on Twitter!

Don’t be caught off-guard, make sure you research the pros and cons of this key communication, networking and collaborating tool.  There is no set of instructions on how to use social media for your business or personal pleasure.  It can only deliver success through experimentation and regular participation.

With the development of 3G networks, the cost of being online has fallen dramatically.  With networks and networking available 24/7/365, the cost of staying offline may rise even more dramatically!

Of course, it’s not all about #Pensions and #SocialMedia.   #Tennis provides me with the latest news on my other favorite subject! 

Please feel free to follow me on Twitter (@robertjgardner) or connect with me on LinkedIn.

 – Just published in the Actuary September 2011 – “Pensions networking”

 Hyperlinks used in article 

Tapping the illiquidity premium in water

The age of austerity has inadvertently created countless win-win opportunities for UK pension schemes as managers of infrastructure seek to tap into sources of long-term funding. With long-term liabilities, pension schemes have always been the ideal owners of infrastructure assets. They can take advantage of the ‘illiquidity premium’ that comes with being prepared to tie money up for a long period. But this will only work if they avoid the leveraged, private-equity approach to buying infrastructure, common before the 2008 crisis, where assets are purchased with up to 10% equity and 90% debt. This model led to high internal rates of return in the good times but underperformance in the credit crunch.

Instead, by using un-geared equity investments, pension funds can hope to partner with the underlying infrastructure entity, such as a water company or a power utility, providing long-term capital in return for long-dated secure inflation linked cash flows. As financial markets continue to deleverage, UK pension schemes have the potential to fund the full spectrum of UK infrastructure needs – from social infrastructure, like care, education, health and housing, through to economic infrastructure such as roads, railways, ports, and utilities. The classic example would be Cambridge Water, which has just been sold by Cheung Kong Infrastructure Holdings Limited to HSBC Bank for £74m. The sale was a regulatory requirement, allowing Cheung Kong to buy Northumbrian Water. HSBC are simply warehousing the asset until a buyer is found. This presents a unique opportunity for a UK pension fund to acquire one of the UK’s most efficient water companies. Cambridge Water provides essential fresh water services to over 300,000 people in Cambridgeshire. Its activities are regulated by Ofwat and its prices may be increased in line with the agreed price review, based on a formula related to the retail price index, plus or minus a sum relating to its level of efficiency. Cambridge Water is permitted to earn a secure inflation linked return on its regulatory capital value of £64.64m. At its March 2011 year-end, revenue was approximately £20m, with £7m in profits before tax. In sum, this is an ideal asset for a pension scheme looking for secure, long-dated inflation-linked cash flows, but with a significant real return above long-dated inflation-linked gilts. The attractiveness of Cambridge Water is that its small size of £74m makes it a palatable acquisition for one of the top 25 UK pension schemes by assets, as it will represent a capital investment of less than 1%. It’s well run and has no external debt apart from its revolving credit facility to cover working capital.

 This is the time for pension schemes to step out into the limelight and be the 21st century social capitalists. With investments in existing and new infrastructure developments under long-term partnerships, they can combine profit to pay their scheme members with general welfare for our society, which has never been in greater need of infrastructure funding.

NAPF Investment Council – I am standing for election and would love your support

As a member of the NAPF investment council, I will endeavour to make a valuable contribution to getting better outcomes for both defined benefit and defined contribution members.

I have spent the last 8 years developing, creating and implementing investment solutions to meet the ever changing regulatory, governance, and (financial) market conditions. In 2003 I was involved with the first derivative LDI transaction with Friends Provident whilst working at Merrill Lynch which remains one of my career’s most valued achievements. In 2006, I followed my passion and setup up Redington, alongside my business partner, aspiring to become a well respected and progressive investment consultancy. Whilst at Redington I have worked with both small and large clients and gained an invaluable insight into the multi faceted challenges (especially investment) facing the pension industry today.

I am passionate about fostering solutions such as investing in social housing and un-leveraged UK infrastructure assets to source long-dated inflation linked cash flows.  I believe the NAPF council is the right forum for discussing the utilisation of such solutions, and think my experiences will bring forth a unique, yet collaborative perspective of many trustees and corporate clients whom I have been fortunate to work with.

Redington’s 5th birthday party! Brazilian Sunset Party

If it’s a night of Brazilian fun you’re looking for, then Redington’s 5th birthday party has it all!

We invite you to step into Temple Place welcomed by the enchanting Brazilian singer Leandra Varanda and her band.  They will greet you with a classic mix of Brazilian music – samba, bossas,  and forró.  As if that wasn’t enough, the Hula Hoop Goddess  Lisa Lottie  will put on her amazing signature Hula Hoop act! If you fancy a dance our Brazilian DJ will pump out some old school grooves and Latin beats. Brazlian Samba dancing girls will help get the crowd on the dance floor, before the evening really heats up with some Fire  Capoeira.

It’s an evening you just wouldn’t want to miss!

Rob

p.s. I have also invited  the Royal Marines to be on hand to tell you more about my fund raising for my Commando Spirit Challenge – Escape the Dunker.

Commando Spirit – Nothing Impossible!

MallowStreet Conference
MallowStreet Conference
Commando Spirit

As you heard last week at the mallowstreet exchange I have volunteered to take on a challenge of a lifetime and face the formidable “Dunker” this September – A terrifying underwater escape exercise all Royal Marines face as part of their arduous training to gain their green beret.

I am asking you to do one or both of the following to support me and Commando Spirit in my efforts:

  • Donate Now. Visit my JustGiving page and make a (very) generous donation towards my £10,000 fund raising target and the Commando Spirit Series’ mission to help raise £6m by 2014 in order to help the Royal Marines in their time of need.
  • Escape the dunker with me at Royal Naval Air Station (RNAS) Yeovilton on Saturday the 17th September and help raise even more money to support our Royal Marines and their families in need. Register at Commando Spirit.
  • Excellent news – Mark Rowlinson (@markjrowlinson) has agreed to Escape the Dunker and I know a few others were very keen to join the action.   
  • A few photos taken by Bob Owen – Royal Marine photographer – on.fb.me/jK0j5d

So what will I be doing in September 2011?

Well, I will be trained at the Underwater Escape Training Unit and then I will be strapped into a fuselage and required to escape from a somewhat  frighteningly realistic simulation of a helicopter crash at sea, in the dark, upside down, using the correct procedure.  I’ve been assured it does not take physical strength – what it tests is courage, determination, fortitude and teamwork, as well as the ability to follow instructions and stay calm!

As Commando Spirit Ambassador and former Royal Marine says:

 “I vividly recall my first experience in the dunker – my racing heartbeat and clammy palms as the waters rose around me. Although 100% safe it is nonetheless a great test of mettle, and a life enhancing experience for those who take part. You’ll turn up trembling and swagger out beaming, ready to take on the world” 

Why the Royal Marines Charitable Trust Fund?

The Royal Marines Charitable Trust Fund helps Royal Marines and their families when they need it most.

  1. They aid the wounded and injured.
  2. They give quality of life to those returning from operations.
  3. And when the worst happens, they support the families of those who die in service.

The RMCTF has the widest purposes of almost any service charity – quite simply, the Royal Marines Charitable Trust Fund will help when others cannot.

Enchanting GenY to Plan, Save, Retire = Games + Social Media

56 Sage Street
56 Sage Street
GenY Plan Save Retire

Dear Sophie –

I was delighted to read Keyur Patel’s article about banks’ relationships with the ‘Generation Y’. Storytelling is often used to educate young people to strive for greatness, inspire change and motivate action.  I believe that if done properly and mindfully games can be the 21st century equivalent of Aesop’s fables.

I agree with Keyur there should be more engagement through mediums such as gaming to help educate Generation Y in the principles of finance. Check-out 

 www.56sagestreet.co.uk/.

To win in this game, you are required to do as many paid jobs as possible, whilst keeping a close eye on your ‘energy’ and ‘appearance’. However the game is not just about making money, it’s also about making the best decisions and using money wisely to progress through the City. Some jobs pay well, while others will have other benefits, such as boosting your reputation. Finally, using Facebook Connect, players can share their progress and spread the game.

I believe using social media technologies to connect and communicate with Generation Y  is essential to helping them Plan, Save and Retire.  With the demise of final salary pensions, Generation Y will only save enough money today if we make pensions engaging, interesting, intuitive and FUN!  This can be achieved by embracing the use of games on smart phones and social media.

Robert Gardner is a pension consultant at Redington and an advocate of social media.

The 4th Utility – superfast broadband network

FTTH

FTTH

Will next generation “Fibre to the Home” (FTTH) networks be the 4th Utility?

Will low cost, unlimited capacity digital networks be tomorrow’s world?

Who will be the utility providers of this 4th Utility?

Who will be the providers of capital to fund these projects?

Note our Universities already have JANET the UK’s education and research network (www.ja.net/index.html).

Fujitsu unveils plans to bring fibre to 5 million homes and businesses in rural Britain

 London, 13th April 2011 — Fujitsu, one of the world’s largest technology and communications companies, today announced plans to work in collaboration with Virgin Media, TalkTalk and Cisco to deliver next generation internet services to 5 million homes in rural Britain.

The collaboration and subsequent Fujitsu build of a new superfast, fibre optic broadband network is a ground breaking and innovative alternative to BT Openreach and provides an opportunity for any community or local authority looking to access a proportion of the £530 million earmarked by the UK Government to drive investment in superfast broadband in rural communities.

www.fujitsu.com/uk/news/pr/fs_20110413.html