Pension Pulse

I've decided to take a solid break from blogging to spend time with family and friends. Those of you who want to track pension and investment news can do so by following the links below: 1) Google: pension 2) Google: private equity 3) Google: commercial real estate 4) Google: hedge funds 5) Pension Tsunami 6) Benefits in the News 7) Financial Iceberg (blog from my friend, Jean-Pierre Desloges) In addition, there are many links to other sites on the top right hand side of this blog under the Pension News section. There are a couple of articles worth noting. The National Post reports that insurance giant Sun Life Financial Inc. has signed a “game-changing” $150-million annuity policy with the Canadian Wheat Board that transfers investment and longevity risk from the wheat board’s pension plan to the insurer. Pension risk transfers are booming and more deals are on their way. Insurers like Sun Life and Prudential will benefit from this trend. De-risking cor...

Dan Primack of Fortune reports, Ben Bernanke threatens private equity : Some potentially seismic news for the private equity market yesterday, as Yankee Candle canceled a $950 million debt refinancing that would have resulted in a $187 million dividend for owner Madison Dearborn Partners. Not yet reported is that fellow Madison Dearborn portfolio company Asurion Corp. also ended its pursuit of an $850 million term loan to refinance existing debt that comes due in 2017. To be clear, this isn't a Madison Dearborn issue. It's an industry issue. Private equity has been propped up over the past few years by artificially low interest rates – an environment that has allowed the industry to often escape negative repercussions for its pre-crisis overspend. But now rates are rising in anticipation of next week's Fed meeting and the dreaded "T" word. "We've all been expecting this for some time, and now it finally seems to be happening," explains a s...

Michael Gayed, chief investment strategist and co-portfolio manager at Pension Partners , wrote a comment over the weekend, Visibility And The Clearer Trade : The S&P 500 (SPY) fell last week as markets gyrated between gains and losses following unimpressive industrial production, concerns over Japan, the direction of bond yields, and ultimately what the Fed will say next week. On CNBC Thursday, I argued that the big concern is that we are in a period of falling bonds and falling stocks - something which is an infrequent occurrence given the historical inverse relationship between longer duration Treasuries and equities. However, just as everyone is seemingly getting nervous about a rising interest rate environment, it does seem entirely plausible that the exact opposite occurs and we re-enter a period of falling bond yields and recovering cyclicals. I am not convinced a correction is yet here for stocks. SuperBen and the League of Extraordinary Bankers will not risk t...

Steve Hawkes of the Telegraph reports, A million over 65s are still in work as pension crisis hits home : Official job figures on Wednesday showed that nearly one-in-ten “pensioners” were still employed - 615,000 men and 388,000 women. The total of 1,003,000 is an increase of nearly 100,000 in the past 12 months alone and almost double the levels of a decade ago. Experts said the marked rise was partly down to changing demographics and the fact that many over 65s - the post war baby boomers - wanted to stay on in the office. But others said tens of thousands of older workers simply had no choice but to carry on trying to top up their savings given the holes in their pension plans. Annuity rates have tumbled since the Bank of England started its money-printing programme in 2009. Figures published two months ago showed that men need 29pc more savings to reap the retirement income that they could have gained in 2009. A survey this week said a third of retirees would have wor...

Marc Jones of Reuters reports, Global shares pummeled, dollar slumps as rout gathers pace : World stocks were pummeled and the dollar slumped on Thursday as a sell-off on global financial markets in thrall to central bank stimulus accelerated. European shares fell sharply in morning trading, dropping 1.3 percent after the second biggest fall in Japan's Nikkei in over two years left Asian shares at their lowest level of the year. Heavy selling hit the dollar, which slumped 2 percent against the yen as investors spooked by the plummeting Japanese stock market unwound hedges. It fell as low as 93.90 yen, its lowest since April 4, giving back almost all the gains made since the Bank of Japan's aggressive monetary easing announced on that day. The U.S. currency dropped to a 3-1/2 month low against the euro before a slight rebound left the common currency buying $1.3350. The rout has been triggered by noises from the U.S. Federal Reserve, which meets next Tuesday and ...

Mark Cobley of Dow Jones Financial News reports, BT Pension Scheme prepares for inflation rise : The UK’s biggest pension fund, the £39bn BT Pension Scheme, plans to increase its investments in inflation-proof assets by as much as £4bn over the next few years, paving the way for it to make more infrastructure investments. The pension fund, like many others in the UK, is exposed to inflation because it must pay out benefits in line with rising prices. This year, the scheme reviewed its investments in negotiation with BT, and has decided to double its target for these assets from 15% of its portfolio to 31%. The scheme’s 2012 report and accounts, published last week, show that as of December 31 it had an inflation-linked portfolio worth £8.4bn. This is about 22% of its total assets, more than its previous target but well behind the revised one. Of that figure, £6.7bn is held in “UK public sector” assets, likely UK index-linked government bonds, which are a good match for pens...

Gary Lamphier of the Edmonton Journal reports, European movie theatres just the ticket for Alberta pension fund AIMCo : Alberta Investment Management Corporation is taking a bold step into the movie business. The province’s $70 billion pension fund manager and an Ontario-based partner have agreed to acquire one of Europe’s top movie theatre chains for 935 million British pounds, about $1.48 billion Cdn. AIMCo’s joint purchase of Vue Entertainment with OMERS Private Equity — the investment arm of the $61 billion Ontario Municipal Employees Retirement System — is expected to close in July. Vue Entertainment, currently owned by London-based Doughty Hanson & Co., one of Europe’s largest independent private equity firms, operates 1,321 movie screens in 146 cinemas across Europe and beyond. “This took a little longer to close than we thought,” AIMCo chief Leo de Bever told the Journal on Monday, after returning to Edmonton from Europe on Sunday evening. “There are always las...

Yoshiaki Nohara, Toshiro Hasegawa and Satoshi Kawano of Bloomberg report, Japan’s Pension Fund Cutting Local Bonds to Buy Equities : Japan's public pension fund, the world’s biggest manager of retirement savings, said it will reduce its holdings of local bonds and buy more shares. The proportion of assets held in Japanese bonds will be cut to 60 percent from 67 percent, the health ministry said yesterday in Tokyo at a briefing to announce changes to the mid-term plan of the Government Pension Investment Fund. The weighting of local shares will be increased to 12 percent from 11 percent currently. The Health and Welfare Ministry, which oversees pensions, didn’t give a time frame for the changes. “It was a negative factor as far as bond supply and demand is concerned,” said Makoto Suzuki, a bond strategist at Okasan Securities Co. in Tokyo, one of the 24 primary dealers obliged to bid at government debt sales. GPIF’s shift toward higher-yielding assets comes as it prepares...