NAPF Annual Conference & Exhibition 2012 – my highlights from twitter

  1. Alex_PQM
    Well, boys and girls, another fabulous #napf conference is over! Great fun and great to catch up with so many of you.
    Fri, Oct 19 2012 08:35:42
  2. redingtontweets
    Goodbye #loveliverpool thanks for a great 3 days and hosting the #NAPF #pensions conference – back in 2014 http://pic.twitter.com/sMeuqlXX
    Fri, Oct 19 2012 05:59:20
  3. greggmcclymont
    RT @henryhtapper: NAPF Conference Report (from our man not on the spot) http://wp.me/ppXQz-2ex via @henryhtapper
    Sun, Oct 21 2012 04:54:25
  4. JerryGandhi
    #NAPF #NOWPENSIONS end of another #pensions conference back to London http://pic.twitter.com/4MYUWnkE
    Fri, Oct 19 2012 06:42:32
  5. hymansrobertson
    And that was #NAPF 2012! We hope those who visited enjoyed it as much as us. Thanks to all who came over to our stand, great to meet you.
    Fri, Oct 19 2012 08:52:25
  6. avgigregory
    If you have not been to Liverpool recently, you must go! And well done #NAPF – great conference.
    Fri, Oct 19 2012 06:27:34
  7. NAPFnews
    Mark Hyde Harrison wraps up an amazing #napf conference.
    Fri, Oct 19 2012 05:02:01
  8. PensionsChris
    RT @robertjgardner: #ff and thank you @ProfBrianCox for a passionate talk on the wonders of life #exploration #curiosity #NAPF
    Fri, Oct 19 2012 06:46:32
  9. BenPalGuru
    Thought provoking NAPF conference over but the debate on many areas (charges, AE, small pots, public/private risk share) only just started.
    Fri, Oct 19 2012 10:35:16
  10. PinsentMasons
    Thanks to the #napf for another great conference. See you all next year! #napfconference
    Fri, Oct 19 2012 07:53:18
  11. robertjgardner
    Genius! @ProfBrianCox “thats how i feel about #financial advice” in response to #NAPF question “I struggle to understand maths & physics”
    Fri, Oct 19 2012 05:33:53
  12. FarahS2012
    Ladies and gentlemen @ProfBrianCox has entered the auditorium… #napf
    Fri, Oct 19 2012 03:55:50
  13. JoanneSegars
    Prof Brian Cox explaining life, the universe and everything at #napf Annual Conference
    Fri, Oct 19 2012 04:17:18
  14. Sarah_Palmer_
    @ProfBrianCox speaking at the #NAPF Annual Conference – brilliant inspirational speaker http://pic.twitter.com/4mkjCTid
    Fri, Oct 19 2012 06:59:47
  15. PensionsChris
    Had a wonderful conference, Brian Cox on a hangover was an inspirational challenge. Thanks to all that made it such fun #NAPF
    Fri, Oct 19 2012 06:50:20
  16. Trendymagnus
    RT @jonstapleton: The futurologist speaking at the #napf just fell off his chair on the stage. He should have seen it coming…
    Fri, Oct 19 2012 02:11:37
  17. DebiODonovan
    Magnus Lindkist, futurologist – collective thought tends to be pessimistic, individual thought tends to be positive #napf
    Fri, Oct 19 2012 01:23:41
  18. Dantp99
    #napf Think about the future in terms of positive unexpected events. Lindkvist – great thought provoker to start the day, funny too!
    Fri, Oct 19 2012 01:46:22
  19. DebiODonovan
    When most people think about the future they remix current headlines – Magnus Lindkvist, futurologist. Break free of prison of present #napf
    Fri, Oct 19 2012 01:55:37
  20. robertjgardner
    GENERATION Y – IN THEIR OWN WORDS #GenY #Pensions #Saving #SocialMedia #NAPF http://lnkd.in/WwTvzm
    Sat, Oct 20 2012 10:11:43
  21. EmployeeBenefit
    5 mins to kick off – are late night revellers still struggling to get out of bed for the early morning session? #napf http://pic.twitter.com/swVB5EJ0
    Fri, Oct 19 2012 01:10:55
  22. Alex_PQM
    “@Alex_TR: awesome #NAPF event last night! http://pic.twitter.com/IcJFRwRY”
    Fri, Oct 19 2012 08:21:40
  23. ferrierpearce
    Donna and Naj looking glamorous at the #napf gala dinner last night. http://instagr.am/p/Q9P3DKJsVb/
    Fri, Oct 19 2012 01:21:54
  24. robertjgardner
    Well done! @EscalaOfficial for a wonderful evening at #NAPF gala dinner. #liverpool cathedral http://pic.twitter.com/LrlBCgAM
    Fri, Oct 19 2012 01:23:33
  25. PQM
    Another excellent #napf conf over. Thanks to everyone who came to see us & to the great bunch of ppl who spent the Gala Dinner at our table.
    Fri, Oct 19 2012 08:39:47
  26. redingtontweets
    “@EscalaOfficial: Our view from stage for tonight’s gig!! X http://pic.twitter.com/YC5tOqrl” #napf #liverpool cathedral
    Thu, Oct 18 2012 15:56:40
  27. robertjgardner
    The stunning Liverpool Cathedral ready for the #napf gala dinner http://pic.twitter.com/y05Oa8T0
    Thu, Oct 18 2012 11:49:23
  28. BW_LLP
    RT @BarneyStorey: Great to meet @Simon_Rusling @BW_LLP stand today at the #NAPF conference http://pic.twitter.com/8IxxlafR and the lovely people I met 🙂
    Fri, Oct 19 2012 02:00:18
  29. PinsentMasons
    Our very own Robin Ellison came a close second in this morning’s balloon debate. Thanks to all who voted for him! #napf #napfconference
    Fri, Oct 19 2012 02:40:36
  30. EscalaOfficial
    RT @robertjgardner: Well done! @EscalaOfficial for a wonderful evening at #NAPF gala dinner. #liverpool cathedral http://pic.twitter.com/LrlBCgAM
    Fri, Oct 19 2012 03:09:55
  31. NAPFnews
    Congratulations to the BBC, BASF, E.ON and Age UK for getting the Pension Quality Mark http://ow.ly/eAeNy #napf #pensions
    Thu, Oct 18 2012 09:55:04
  32. redingtontweets
    RT @robertjgardner: #NAPF time for #PINTEREST FOR #PENSIONS – WHAT TYPE ARE YOU? http://blog.redington.co.uk/Articles/Robert-Gardner/June-2012/PINTEREST-FOR-PENSIONS-WHAT-TYPE-ARE-YOU.aspx via @redingtontweets
    Thu, Oct 18 2012 11:21:38
  33. actuarialpost
    NAPF Guide: Custody made simple for #pension funds http://bit.ly/WJYu3u
    Fri, Oct 19 2012 08:00:22
  34. eFinancialNews
    I don’t like it when you call me pensions… Is the industry going through an identity crisis? http://ow.ly/eBtJo
    Fri, Oct 19 2012 05:01:28
  35. Jon_FPtweets
    RT @ferrierpearce: Rachel and Michael go behind the scenes at the @engagedinvestor #napf videos http://instagr.am/p/Q7fvgipsTl/
    Thu, Oct 18 2012 09:18:27
  36. RiskMarketNews
    NAPF chairman blasts Solvency II proposals (Financial News) http://bit.ly/RE9aw3 #insurance #reinsurance
    Thu, Oct 18 2012 06:31:41
  37. robertjgardner
    Loving the new @NAPFnews #NAPF app http://pic.twitter.com/3F0ZKbIe
    Wed, Oct 17 2012 08:00:31
  38. Dantp99
    RT @SophieBaker_FN: My highlight of the conf so far: Bernardino on Eiopa: “We’re not a bunch of lunatic, crazy guys in Frankfurt – we know about pensions” #napf
    Thu, Oct 18 2012 08:48:49
  39. eiopa_europa_eu
    Speech by Gabriel Bernardino at the NAPF Annual Conference, Liverpool: http://bit.ly/GJZygw
    Fri, Oct 19 2012 02:22:01
  40. rossanderson_1
    RT @pensionsmcqueen: Bump into strangest people at #napf conference … thanks @sallyGunnell http://pic.twitter.com/MkmXEwXa
    Thu, Oct 18 2012 09:36:29
  41. NAPFnews
    A new guide ‘custody made simple’ launched by #NAPF and sponsor HSBC today http://ow.ly/eA9Ny
    Thu, Oct 18 2012 09:13:53
  42. greggmcclymont
    RT @OwenWalker0: @greggmcclymont : The govt has no plans to pursue scale – small pots and aggregators – despite clear detriment to savers #napf
    Thu, Oct 18 2012 07:53:22
  43. AccountingWEBuk
    Gregg McClymont, shadow pensions minister, at #napf conf http://twitpic.com/b57a1w
    Thu, Oct 18 2012 04:13:08
  44. nestpensions
    RT @NAPFnews: 90% think a pension should come with their job, Segars tells #napf
    Thu, Oct 18 2012 09:03:55
  45. Fanfaronade
    Have been really heartened at focus on scale at this year’s #napf. Segars: “We need a smaller number of better governed pension schemes.”
    Thu, Oct 18 2012 08:59:48
  46. PQM
    Highlight of the #napf conf for PQM – the #pensions minister telling the delegates PQM is ahead of time. Thanks for a great compliment!
    Fri, Oct 19 2012 09:04:13
  47. NAPFnews
    Steve Webb: RBS started auto-enrolment in July 12 and started with 86% scheme mbrship – mbrship grown to 93% #napf
    Thu, Oct 18 2012 09:15:16
  48. PinsentMasons
    Robin Ellison is speaking in tomorrow’s Balloon Debate. Have you got your balloon yet? #napf #napfconference http://pic.twitter.com/isnLAixP
    Thu, Oct 18 2012 05:14:20
  49. PinsentMasons
    A great talk from a Pensions Minister who has really taken his brief to heart #SteveWebb #napf #napfconference
    Thu, Oct 18 2012 09:08:44
  50. hymansrobertson
    RT @robertjgardner: @hymansrobertson thanks for great silhouette by Sarah #NAPF #napfconference http://pic.twitter.com/Mh91Ohnd
    Thu, Oct 18 2012 03:24:13
  51. dwppressoffice
    Steve Webb about to address #NAPF conf where he will set industry twin challenges on charges post auto enrolment & defined ambition pensions
    Thu, Oct 18 2012 09:02:48
  52. NAPFnews
    Steve Webb at #napf conference says that Govt committed to the policy that the norm will be every pound you save is a pound you keep
    Thu, Oct 18 2012 09:45:29
  53. LT_AHC
    Tony has left his ‘Dear Steve’ message – come along to Stand 521 to leave your message for the Pensions Minister! #napf http://pic.twitter.com/02ZnRbFx
    Thu, Oct 18 2012 01:35:11
  54. ProfPensions
    NAPF unveils six founding investors in PIP with £100m commitments http://dld.bz/bQedH
    Thu, Oct 18 2012 08:24:02
  55. Simon_Rusling
    RT @BW_LLP: After having @DaniKing1 on our stand at #ppshow we now have @BarneyStorey on our stand (430) today at #NAPF. http://pic.twitter.com/OFiP9I7n
    Thu, Oct 18 2012 01:57:03
  56. AccountingWEBuk
    #napf Wendy Taylor, HR manager for Morrisons http://twitpic.com/b562av
    Thu, Oct 18 2012 01:23:08
  57. AccountingWEBuk
    #napf Tim Jones: employers will need 18mths to get ready for auto enrolment http://twitpic.com/b560av
    Thu, Oct 18 2012 01:16:12
  58. AccountingWEBuk
    Martin Lewis, money saving expert, at #napf conf http://twitpic.com/b508iz
    Wed, Oct 17 2012 08:53:51
  59. AccountingWEBuk
    Alan Rubenstein on the new PPF levy #napf http://twitpic.com/b4zj99
    Wed, Oct 17 2012 07:39:43
  60. AccountingWEBuk
    Mandelson at #napf “we need to be looking to our long term interest & not short term opportunism http://twitpic.com/b4ywvg
    Wed, Oct 17 2012 06:38:10
  61. PenFundsonline
    We’re ready for the Chairman’s speech at the #napf conference http://pic.twitter.com/pCjMCvAw
    Wed, Oct 17 2012 05:37:07
  62. AccountingWEBuk
    #napf Mark Hyde Harrison, chairman http://twitpic.com/b4yge5
    Wed, Oct 17 2012 05:53:12

Lessons in Polar Exploration for Pensions Risk Mangement

In 1911 two men began ambitious expeditions to the South Pole. Despite facing similar conditions during their 1,400 mile journeys, Roald Amundsen secured victory for his team while Robert Falcon Scott and his team suffered defeat and untimely death.
Both men and their teams contended with hostile conditions: freezing temperatures, gale force winds, fierce terrain and no safety nets. Both teams were thousands of miles from help, and without any access to communication. The conditions may have been similar; the two teams’ outcomes were not. Ultra-low gilt yields, Eurozone and regulatory headwinds, Middle Eastern hostilities and lack of sustainable economic solutions mean that pension schemes face a similarly uncertain and unknown climate.
What lessons can we draw from the past to facilitate pension schemes’ success in this new world? How can they create a more certain outcome in an uncertain economic environment?
1. Preparation
Amundsen did not take the task lightly. He spent months training with Eskimos in order to learn key survival skills in the run up to the expedition. He studied the conditions and mapped out the risks. As a result of this research, he began his journey at the Bay of Whales, reducing the distance by 60 miles. He also chose to use dogs instead of modern equipment, knowing that dogs were proven on this terrain (and would be useful as food, if needed!). Given the danger of extreme cold, Amundsen carried four thermometers in case any were broken.
Scott, meanwhile, simply repeated the route of his previous attempt in 1907 with Edmund Shackleton; he started his expedition from the usual spot, McMurdo Sound, and therefore travelled further and tackled tougher terrain. He brought motorised sleds which soon broke as they had never been tested in Polar conditions, and ponies that soon died. Scott was equipped with just one thermometer, which broke shortly into his journey, thus rendering his team ignorant of rapid falls in temperature.
Lessons for Pensions – Following in the footsteps of the successful Amundsen team, a robust Pension Risk Management Framework should be adopted before the journey (to full funding) begins. This involves knowing and quantifying, as much as possible, risks on both the asset and liability side of the pension scheme. Trustees can then map a clear path to meet their ‘Endgame’ strategy whilst minimising the risk placed on the scheme, its members and sponsor.
2. Discipline
Amundsen knew exactly how much distance needed to be covered to complete the journey on schedule. He focused his team on travelling between 15 and 20 miles each day, ignoring calls to cover more ground when the weather was fine and to bunker down when the going got tough. “It has been an unpleasant day – storm, drift, and frostbite, but we have advanced 13 miles closer to our goal,” he remarked in his journal. Even when they were within 45 miles of their target and enjoyed pleasant conditions, Amundsen stuck to the plan and travelled just 17 miles. His discipline paid off as the winning team reached the South Pole on 14th December 1911 having averaged 15.5 miles per day! And arriving safely back on the 25th January 1912 as he planned to from the outset.
Scott’s team reached the South Pole on 17th January 1912 but all died on the way back . They lacked the discipline of their rivals, exhausting themselves when the weather was clear and sitting in their tents when conditions were unpleasant. Some days they travelled 45 miles, on others zero. “I doubt if any party could travel in such weather,” Scott wrote in his infamous diary. It was not so much the conditions as exhaustion and hunger to blame for the defeat.
Lessons for Pensions – For many underfunded schemes, a return to 100% funded status in the next couple of years is unlikely. Instead, a realistic target date should be set with asset allocation based on even-more-realistic return assumptions and clearly articulated risk budgets. Should investment returns turn out better than assumed, trustees should not be afraid to ‘bank’ the excess return by allocating to lower risk/lower return assets. De-risking may provide a self-imposed discomfort in the short-term but, in the long-run, it may prove crucial to the survival of both pension scheme and sponsor.
3. Paranoia
Amundsen did not leave anything to chance. His healthy paranoia meant that his team carried enough food to survive missing a few supply depots. They also placed black stones for a kilometre around the depot, just in case weather conditions threw them off course. This combination of preparation, discipline and paranoia were key to Amundsen’s success.
Scott’s team died, tired and hungry, on the way back within a short distance of a supply depot. Despite taking three times as many men as Amundsen, this group carried one-third the amount of food – not enough to miss even a single supply depot.
Lessons for Pensions – Plan for the best, prepare for the worst. Unknown unknowns are difficult to predict and protect against; however, thanks to advances in financial modelling and quantitative analysis, we can turn some of these into known unknowns. Schemes should stress-test their portfolios against extreme scenarios before any of these scenarios arise. It is far easier to escape the herd before the herd starts stampeding! Moreover, given tighter regulations and plans for central clearing, schemes must carry enough liquid, ‘safe’ assets not only to pay members’ benefits but also to meet collateral and margin requirements.
As Amundsen remarked:

Victory awaits him who has everything in order – luck people call it.

Defeat is certain for him who has neglected to take the necessary precautions in time; this is called bad luck.
So, are you an Amundsen or a Scott?

REDINGTON CELEBRATES 6TH BIRTHDAY (16th May 2006)

6 years ago today, Dawid Konotey-Ahulu and I incorporated Redington as a company with one mission: To shape and influence the future of pensions. In our original business plan to the FSA we stated that we wanted to do to pensions what Jamie Oliver had done to school food!

Redington started life in Dawid’s attic and the first few months involved opening bank accounts, buying furniture from IKEA and computers from Dell. The major priority was to complete our FSA registration and to build Redington’s brand. We decided to name the company after an outstanding British Actuary – Frank Redington – whose centenary was being celebrated at the Actuarial Society at Staple Inn on 10th May 2006. Frank’s ‘Immunisation Theory’ heavily influenced our ‘3 Lenses‘ approach to risk management and asset allocation, always striving to create more certain outcomes for our clients. For Defined Benefit pensions this means reaching full funding with the minimum level of risk.

In May 2006, 10 year gilt yields were above 4.5% (and rising), nobody could have predicted that six years on that same yield would be below 2% (and falling). As we continue to build and grow a sustainable business to help our clients with their investment and risk management needs, we are proud to be known as Progressive, Proactive and Creative and our passion for pensions is greater than ever. And it needs to be in these uncertain times! When Dawid and I left Merrill Lynch, we wanted to start a culture with smart, ambitious, passionate, fun and friendly people. We believe we have succeeded and look forward to the next 6 years, wherever gilt yields may go. A huge THANK YOU must go to Frank Schinella, our first client at the Royal Mail (and still a client today), and all of our clients who we are honoured to work with. And of course, a massive THANK YOU to all of my colleagues who work tirelessly and diligently in our pursuit of better outcomes for our clients. We very much look forward to celebrating Redington’s 6th birthday with friends and family on Thursday 14th June.

Hope to see you there!

Splash out on an illiquid asset and get some real returns…

Last year I talked about a potential opportunity for UK pension funds to buy Cambridge Water  on an unleveraged basis in order to secure, long-dated inflation-linked cash flows, with a real return significantly above that provided by long-dated inflation-linked gilts. The idea being that as financial markets and economies continue to deleverage, UK pension schemes have the potential to fund the full spectrum of UK infrastructure needs – both in social infrastructure; for example care, education, health and housing, as well as economic infrastructure such as roads, railways, ports, and utilities. The idea has even now found favour with our politicians! Two of our clients saw the opportunity to partner with Cambridge Water, providing long-term capital in return for these long-dated secure inflation linked cash flows, and mandated Redington to approach HSBC. Subsequently we therefore put in an unleveraged bid for the asset. Unfortunately in October Cambridge Water was sold to South Staffordshire Water which is owned by Alinda Capital Partners, the world’s largest independent infrastructure firm. Since then, however, Redington has received a flood of enquiries asking about the Cambridge Water deal and the rationale for its investment profile i.e. combination of inflation linked cash flows with an attractive real return.

Good news for the New Year!  Veolia Group has just announced that it is in the process of appointing advisors and banks for the sale of its three UK water assets.

Veolia Water UK Plc is the holding company for three separate water companies, serving 3.5million customers:

  1. Veolia Water Central, previously Three Valleys Water and by far the largest of the three companies,
  2. Veolia Water East, previously Tendring Hundred Water Services,
  3. Veolia Water Southeast, previously Folkestone and Dover Water Services.

Veolia Environnement SA is the ultimate parent company and has owned the three water companies since 1987. Following a number of profit warnings and a ratings downgrade the Veolia Group is in the process of selling a number of assets in order to reduce its net debt.

Based on prices achieved in recent sales of water companies, e.g. Northumbria Water, Bristol Water and Cambridge Water, the likely sales price will be between 125% and 130% of the regulated asset value equating to an enterprise value of £1.15 – £1.2billion for the combined group. This would likely consist of an equity investment of c.£500m and debt requirement of c.£700m (£500m excluding existing bonds).

For interested Pension Funds there is therefore a window of opportunity to approach Veolia Environnement to discuss the purchase of the individual water companies or to form a consortium to bid for “Central” or even the combined group. The two smaller companies, “East” and “South East” would provide an attractive opportunity for a pension fund to make a 100% acquisition of a UK water only company for an enterprise value of £80-90million i.e. similar in size to the Cambridge Water deal. Note: a pension fund investor will benefit significantly from the growth in regulated asset value, both from additional capex spend and RPI indexation. This is a major driver in long term value of regulated water companies. Veolia Environnement is expected to launch a formal sale process during January and the process is likely to be a two or three stage process lasting 8-10 weeks with access to vendor due diligence reports.

Hopefully Santa has answered my wish list for 2012 by providing pensions funds some (three-in-one) opportunities to act on.

DEAR FATHER CHRISTMAS: A WISH LIST FOR 2012

Dear Father Christmas,

Last year I asked for the following things in my stocking but fear you read my letter upside-down: higher yields, lower inflation, rising markets and stronger sponsors. However, thank you for providing opportunities for pension schemes to become social capitalists and also for improving the communication and collaboration across the industry.

This year, I have left tennis lessons with Rafael Nadal off the list to make room for much smaller gifts:  a Eurozone resolution, lower volatility and the agility to act on opportunities.

Eurozone Resolution
Every year as we await your arrival there are many men dressed up as Father Christmas handing out gifts from their shopping centre grottos.   So it was a nice surprise to see you dressed up as many men to deliver an early Christmas present to the Eurozone this year – €489billion of 3 year loans to 523 banks.  This extra liquidity will certainly buy time for governments to find a solvency solution, such as reviving growth or reducing spending or (somehow) both.
Restoring confidence in the Eurozone will really help UK pension schemes who have been impacted by the rise in UK government bond prices.  This letter may arrive too late for your elves to produce a full Eurozone solution, but perhaps you could provide UK schemes with an opportunity to hedge their liabilities at more attractive prices in the coming year.

Lower Volatility
Economic uncertainty has led to a sharp rise in volatility since you last visited us.  This extra risk has not always been rewarded with increased returns as one would expect.  This means more and more pension schemes are flying below their flight plan to full funding at a time when their sponsor may also be impacted by the ongoing market turbulence.
Please could you bring us some certainty and deliver us from volatility!

Act on Opportunities
One effect of increased volatility has been that pension schemes are looking beyond traditional assets for new sources of enhanced and/or long-term returns.  Having provided some win-win opportunities in 2011, such as the UK’s National Infrastructure Plan, the next year must see delivery of cash-for-projects.
For pension schemes to fill the infrastructure funding hole left by banks and governments, it will require co-operation between a number of parties as well as a thorough understanding of the risks and rewards involved.  Please can you sprinkle some Christmas spirit over these discussions and provide decision-makers with the Agility, Control and Transparency needed to fulfill the country’s infrastructure wish list!
If there is room in your sleigh, I would really appreciate those tennis lessons I mentioned earlier.

Very best wishes,

Robert, aged 33

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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.

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”

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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.