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!


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 –

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

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



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 (

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.

RedMaze – can you run the risk?

Help get your scheme to full funding on your daily commute in RedMaze.

The game injects a bit of entertainment to your daily travels and adds a little light relief to the pensions situation.

In a brand new twist of an arcade classic, navigate your way through the mazes, collect all the contributions and avoid the “Risk Raiders”.

  • Can you run the risk of equity bears, inflation, longevity and interest rate doves?;
  • It’s not always doom and gloom – tides can turn and conditions can change in your favour;
  • Collect special contributions and turn the equity bear into an equity bull, morph the interest rate dove into an interest rate hawk, nullify inflation and say goodbye to grandpa Joe…

 It’s easy to get lost in the pensions maze…but that’s why it’s important to know your goals, understand your risks, plan a strategy and have a robust framework. 

Get in touch to find out more.

Available now for the iPhone. Free to download on the App Store:

Redington App

As advocates of social media, we’re always looking for more efficient ways of spreading information, educating the community and disseminating our ideas.

The Redington App lets users stay up-to-date with the latest pensions thinking on the go, with access to RedVision, our weekly analysis of financial markets and RedViews, cutting-edge ideas on pensions risk management developments in the industry.

The content is all available at the touch of a button.  Regular weekly updates are available with wifi connection.

Free to download from the App Store now:



Dear Father Christmas – A Wish List for 2011

 ‘Twas the night before tri-annual funding, and all through portfolio, not an asset was falling…but then I woke up!

Father Christmas, I wish for many things in my stocking this year: higher yields, lower inflation, rising markets and stronger sponsors.  But in the meantime, this Christmas, I’m asking for: new investment opportunities, a better understanding among ourselves of why we should all save for retirement as well as an industry that embraces a new era of collaboration and communication.

Pension Funds – Social Capitalists

The financial crisis brought with it the need for new sources of long-term funding. The new age of austerity has inadvertently created countless win-win opportunities for long-term investors and those that requiring funding. Because their liabilities are long-term, pension funds are ideally suited for accessing significant illiquidity premia. They can provide patient long-term capital for a huge variety of undertakings. They can fund roads, railways, ports, hospitals, social housing, clean energy and many other projects that bring huge benefits to society.

Pension funds can not only earn handsome and secure returns this way. Society as a whole profits when money is readily available for such projects. If only they find the courage and vision, pension funds can be social capitalists – combing profit and general welfare.

Communication – Making Informed Decision

There is a lack of communication between the pension industry and the wider population.  Most members of Generation Y have a rather relaxed attitude to pensions. Their motto is: spend today and save tomorrow. They will only put something into their pension pots if some money happens to be left by the end of the month. Even those who save money month in, month out are more likely to aim for the new golf clubs or the funky holiday getaway than a decent pension.

The chance that this behaviour will secure you a comfortable retirement is just as high as the success chances of England’s recent World Cup bid. Bad preparation cannot be made good by some showy performance right at the end – and we shouldn’t hope for a royal prince, the prime minister or David Beckham being there to help us sort out our pensions. People on the street need to understand how important it is to save for retirement. And this is much more challenging to get across than explaining how to set up the monthly withdrawal from their bank accounts.

Collaboration – Getting Everybody Onboard

The pensions industry is in desperate need of more and better collaboration.  Even with the rise of technology, social media and flashy gadgets like the iPhone I’ve noticed that the pensions industry remains unconnected.  Trustees tell me they want access to their peers and experts, while actuaries tell me they wish they had a forum to facilitate engagement.  We need to bring together all the people that make up the industry: trustees, sponsor, industry experts, academics, investment consultants, actuaries, lawyers, bankers, asset managers to name but a few. Only through wide-ranging and honest dialogue and debate in 2011 will we be able to find the most creative, innovative and robust solutions for both legacy DB and newer DC schemes.

So Father Christmas, can you help fill everyone’s stockings this year?  Happy New Year!


Mind the Generation Y Pension Gap


By 2025, Generation Y will hold the Office of the President of the United States, Number 10, and will make up the largest percentage of the UK’s working population. 

But who and what is generation Y?  Why are the implications of their financial behavior so important for Britain’s future?


Alternatively known as the ‘Millennium’ or ‘iPod Generation’, Y-ers are the generation born between 1976 – 1991



Saving for Tomorrow?

More than previous generations, Generation Y is loaded with debt and the concept of savings (especially for retirement) remains elusive.

Generation Y grew up in an era of nearly unprecedented prosperity and economic growth. Many still live with their parents spending a large chunk of their disposable income on instant gratification and avoiding any real financial responsibilities.  Unaccustomed to compromise and unphased by authority, they are slow to conform and indeed seem to take pride in their “short-termism”. With the exception of the lucky few, Generation Y have no access to defined benefit pensions and it they have any retirement savings at all, chances are it’s in the form of an paltry contract based defined contribution scheme – where the individual, rather than their employer bear all the associated investment risk. 

Until now, the pensions industry has has focused on the needs of Generation X (those individuals born 1961 to 1991), who are fast waking up to the reality that as fast as they save, their nest egg is busily being depleted by both KIPPERS (kids in parents pockets eroding retirement savings) and their retired Babybooming parents – who, thanks to the wonders of modern science, are now living, on average, at least 7 years longer than before.

But generation Y cannot be ignored for too much longer.. 

..In less than 15 years, they will generate the biggest slice of the Treasury’s tax receipts, and by 2050, make up the largest proportion of those in meaningful employment. Therein lies the crux of the matter.  No matter how you approach the sums, the figures don’t add up.  To finance state pensions, the government robs Peter to pay Paul, so that the National Insurance contributions from hardworking Gen X-ers and Gen Y-ers go straight out the door in the form of state pensions for the Babyboomers, who are now living on average until 78.  In 1908 when the UK first introduced pensions average UK life expectancy was 50.


Blame the Babyboomers?

It is important to put the problem in context.  Babyboomers had the ‘luxury’ of 40 years to save for retirement, benefitting from globalisation, freely available (and cheap) capital and an unprecedented housing boom. 

Fast forward to 2010 – Generation Y faces a markedly different future. Accumulating debt throughout their twenties, due to either the costs of further education or the era of cheap credit, few generation Y-ers are in a position to accumulate wealth for their retirement until their late twenties, or even early thirties!  They face the unenviable task of condensing 40 years of wealth production into about 25 years in uncertain economic environment and are shut out from the golden plated defined benefit pensions their parents and grandparents will receive. 

For the government of tomorrow the future looks grim, as every generation continue to live longer than before, escalating government-financed pensions and spiralling healthcare costs coupled with insufficient pension pots are set to tip its books permanently into the red.


Is Generation Y doomed to a future of geriatric poverty? 

Well, not necessarily.  The Government has already taken the first tentative steps towards balancing its books. With the backing of all the mainstream political parties it recently took the bull by the horns and is phasing male state retirement age to 68 by 2046, although I am happy to take bets that by then the national retirement age will be linked to the population’s actual longevity statistics – pushing the retirement age far higher. 

In 2012 the Government will introduce NEST (the National Employment Savings Trust) previously known as Personal Accounts.  This initiative is part of the Government’s broader pension reform strategy which will significantly change the way people save for their pensions and retirement in the UK.  Compulsory for all employers with five or more employees, NEST (in its current framework) will automatically take 4% of employees’ pre-tax earnings, a 3% employer contribution, and 1% in tax relief, to provide a ‘whopping’ 8% of annual salary pension’s contribution.  NEST tackles inertia and reluctant investment through auto-enrolment, introducing the concept of libertarian paternalism, “nudging” the youth of today into making better choices, without losing the right to choose.

Yes, these are all steps in the right direction, but pensions contributions under NEST (8% of annual salary), falls someway behind the 20 – 25% of annual salaries that corporate used to fund the now elusive gold plated defined benefit provisions.


All I Really Need to Know I Learned In Kindergarten

We need to do more, younger.

With the oldest average aged population on the planet, Japan recognised sometime ago that it was imperative to educate Generation Y about the importance of saving for retirement.  All school age children (aged 11 – 18) are taught about pensions and saving by local Municipality Officials.  In addition, all nationals aged between 20 – 59 are required to en-roll in the national pensions plan. 

By contrast, in the UK such education is not compulsory, only featuring superficially in schools PSHE lessons, (personal Health and Social Education).  This type of education must become mandatory, spelling out in simple language the importance of saving regularly from a young age.  The power of compounding is easy enough to grasp, even for those who are not contemplating a future career as an actuary.  For those who can be taught the benefits of regular investing from a younger age, the future looks a lot brighter.

 Generation Y needs to radically change the ways in which they plan for their future financial security. 

Social Housing



Social Housing: A new source of long dated, inflation linked cash flows for pension funds

One of the biggest advantages that pension funds have over other investors is their long term investment horizon – this translates into their ability to invest in less liquid assets which are not appropriate for investors with shorter term liabilities.  They also need assets which give them protection against inflation, something that many are worried about following the injection of £200bn of central government funds through the process known as Quantitative Easing (QE).  A potential asset which ticks both these boxes (and offers an attractive pickup over linkers) is social housing debt.

Social housing, partially funded by the government, provides housing to low income families who are unable to afford to rent or buy property in the private sector.   It is generally provided by local councils and not-for-profit organisations such as housing associations (also known as Registered Social Landlords or RSLs). There are around 1,700 RSLs in England, and 90% of the stock, i.e. social rented units are owned by 18% of the RSLs.

In England, the RSLs are regulated by two agencies, the Homes and Community Agency (HCA) which deals with funding and regeneration work and the Tenant Services Authority (TSA) which is responsible for regulation of all social housing providers. 

RSLs activities are financed by the rent and service charges payments made by, or on behalf of those living in its property.  Guideline rent levels are set by the government –and the usual guideline limit on rent is RPI + 0.5% ensuring that the cash flows that RSLs receive are inflation linked. Often, the tenants have no income and therefore receive housing benefit which is paid directly to the RSL from the government body.   Thus rental streams are generally regarded as robust, with low levels of voids and bad debts at 2.1% and 1% respectively, suggesting that there is a continued strong demand for the properties and good performance on rent collection.

Traditionally, the HCA issued RSLs with partial government grants for new projects on the back of which the RSLs secured libor based lending from both major banks and building societies.  However, following the collapse of wholesale lending (post Northern Rock Sept 07) and the higher capital ratios required by financial institutions such lenders are now in scarce supply.  The government, having previously promised that one million of the three million new houses due to be built by 2020 will be at “affordable” below market rates, has indicated in its  2010 pre-budget report that the social housing budget could be slashed by as much as 18%.    The National Housing Federation (NHF) has warned that such cuts could mean that 556,000 affordable homes – which are categorized as more expensive than council properties but priced below market rates, would not be built.  How can the HCA tackle this funding shortfall?

A potential solution is for the individual inflation linked rents from tenants to be gathered up, structured  into tranches, wrapped with a rating (typically A or AA) and issued as a series of inflation linked bonds.  The issuer of such bonds could be either the individual RSLs or the HCA.

These bonds are then sold on to UK pension funds and other institutional investors at an attractive pickup over similarly dated linkers.  Through this type of structure, Pension funds are able to access the secured, long term, inflation linked cash flows they crave, whilst at the same time providing social good and much needed long term funding to RSLs/HCAs.

 Anyone interested?

 Also in the Actuary Magazine