Pensions

Private equity helps CalPERS mature

16 Jul 2020

The $400 bln U.S. pension fund posted a 4.7% return for the year to June 30. It's one hint of the challenge of hitting its long-term 7% target. Moving deeper into buyout investments and using leverage to manage liquidity and risk should help the California outfit get closer.

Green investing loses star player at bad time

31 Mar 2020

Hiro Mizuno is leaving Japan’s $1.5 trln pension fund. The chief investment officer led the way in focusing more on environmental, social and governance factors. Asset management can ill afford the exit of such a figurehead just as Covid-19 pushes these issues to the backburner.

Emmanuel Macron swaps fiscal rigour for reform win

17 Feb 2020

The French president’s flagship pension bill is heading to parliament. The overhaul will boost his reformist credentials before March local elections. Still, compromises made to defuse union opposition mean the problem of plugging a growing pension deficit has been deferred.

Macron needs to resist ghosts of reformers past

19 Dec 2019

A second week of strikes over President Emmanuel Macron’s plan to raise the full retirement age to 64 has paralysed the country. His predecessors met the guillotine over much less. But cutting pension spending to the EU norm isn’t ideological – it’s about fiscal sustainability.

Bolsonaro’s epic pensions victory may be his last

23 Oct 2019

Brazil’s president has secured a budget-saving $195 bln overhaul of the country’s retirement program. It’s a success that eluded plenty of his predecessors. But the far-right leader’s low approval ratings and endless controversies may make tax and spending reforms a tougher slog.

U.S. pension backstop is sinking under own weight

7 Mar 2019

The government’s insurance fund for certain retiree pay faces bankruptcy by 2025, potentially affecting millions. Charging the likes of UPS and Albertsons more could hasten the decline. That leaves Congress to find a way to cover a $54 bln hole. All sides will feel the pain.

SEC throws sand in ESG investors’ wheels

5 Mar 2019

It’s not just CEOs who are irked by investors’ call for more disclosure over environmental, social and governance risk. A top official from the U.S. securities regulator said that such proposals waste the agency’s time. Pension funds pushing for change have a long march ahead.

Brazil’s Bolsonaro hits pension bull’s-eye

20 Feb 2019

The new president’s plan to trim $270 bln from ruinous social-security spending is smartly aimed. Shoot much higher and supporters and lawmakers might balk entirely; much lower and foreign investors might not take him seriously. Now the congressional haggling begins.

Fewer Chinese babies intensify an old story

22 Jan 2019

The country’s birth rate fell below 11 for every 1,000 people, its lowest level since the People’s Republic started in 1949. It’s a reminder that the country’s working-age population will keep shrinking, and makes redesigning a weak pension system a far more pressing matter.

In need of cool head, Brazil braces for opposite

25 Oct 2018

Far-right ex-army man Jair Bolsonaro looks set to win Sunday’s presidential runoff, riding voter anger over corruption, violence and economic stagnation. Prioritizing pension reform over strongman tactics would better address the nation’s ills. You can’t shoot fiscal deficits.

Lone Star tactics can’t fix Chicago pension woes

20 Sep 2018

The Windy City is considering issuing debt to help plug a $28 bln retirement gap. Houston did a similar bond deal last year, but it had a smaller deficit and coupled borrowing with benefit cutbacks. Illinois law rules those out, making Chicago’s problem more difficult to solve.

CalPERS has good reason to recruit from Beijing

20 Sep 2018

The $350 bln pension fund may hire a manager of China’s forex reserves as its next investment boss. His China knowledge would be a plus. Nativists may howl. But Ben Meng trained on Wall Street and ran asset allocation at CalPERS. That’s what makes him a good pick for the job.

Aussie office bid war offers easy investor exit

19 Sep 2018

U.S. private equity giant Blackstone is fighting with a Canadian pension fund over $3 bln of Australian commercial property. The market has boomed but Investa, the target, has underperformed of late. The ensuing rally gives shareholders a chance to relocate at a nice premium.

U.S. pension pots both half full and half empty

29 Aug 2018

Buoyant markets have helped public and corporate retirement plans boost funding to the highest levels in years. They can’t afford to relax though. Pensions are still weaker than they were before the crisis, and the bumper returns of the past five years are unlikely to continue.

Carillion pitchforks are a blunt but merited tool

26 Jun 2018

The UK pension regulator could claw back 17 mln pounds from bosses of the collapsed outsourcer. That’s peanuts compared to Carillion’s pension deficit, and implies a tortuous legal saga. Still, the group’s chaotic failure and reckless management warrant a hefty deterrent.

Tax cuts hasten demise of U.S. corporate pensions

15 May 2018

With a $6 bln annuity purchase, FedEx has offloaded a chunk of its obligations. Lower U.S. tax rates are encouraging more companies to do the same. It’s good for older workers, but it’s another nail in the coffin of employer-provided retirement security for millennials.

Cheques for millennials stokes UK’s asset bubble

8 May 2018

Young people face a turbulent labour market and have less asset wealth than their elders. A think tank’s idea of reforming inheritance tax and giving 25-year-olds 10,000 pounds is better than nothing. But it risks further inflating house prices without deeper structural changes.

Puerto Rico budget ignores the human element

27 Apr 2018

The bankrupt island’s federal oversight board certified plans that include cuts to pensions and other austerity measures. Some are in line with what Puerto Rico’s governor proposed. But they don’t adequately address the risk of yet more working-age people jumping ship.

Capita swerve averts Carillion-style crash

23 Apr 2018

The outsourcer is raising 700 mln pounds from shareholders. Halving its debt-to-EBITDA ratio helps new CEO Jonathan Lewis avoid the downward spiral that felled the UK contractor. The bigger task is showing that a stronger balance sheet can reverse sliding revenue and cash flow.

Texas downgrade worry is a good problem to have

12 Apr 2018

The Lone Star State’s comptroller reckons its increasingly underfunded pension obligations risk a credit markdown. Texas’ rainy-day fund helps give it more leeway than many states. Others face bigger problems because, as the U.S. economy has improved, their budgets haven’t.