Skip to main content
211607 right arrow icon
Executive MBA Preview Day – Sat 17 May | Register your place

Close search

Industry Insights: Pensions

31st Jan Pensions 4

This week we took a look at pensions with two industry experts: Richard Hall from Argyll Covenant and Henry Tapper from First Actuarial (and author of "The Vision of the Pension Playpen", one of the top ten websites every investor should bookmark according to the Times)

Pensions: Personal

With people living longer than ever, the state can't afford to pay for 100% of peoples' upkeep once they retire. The state pension will not be sufficient, so people have to make private provision, with some help from their employer. Henry explained that this was the motivation behind auto enrolment, new legislation that requires employers to offer a pension scheme to their staff.

The key take away for students - when you get your first pay slip and see that some money has been deducted for your pension contributions, this is a GOOD thing. Due to compounding of returns, the sooner you can start saving into a pension, the better.

Pensions: DB and DC

Richard explained the difference between a defined benefit pension (where the annual amount received in retirement is fixed and guaranteed by the employer) and a defined contribution pension (where the annual amount received is not guaranteed and depends upon the performance of the underlying investment portfolio). A DB pension is clearly better, but they can still fail if the sponsoring employer goes bust or decides that they can't afford to support the scheme anymore. Richard's company, Argyll Covenant, works on behalf of scheme members to assess the risks of that happening - very similar to how a ratings agency works assessing credit worthiness. We've seen examples of these potential failures in the news recently with Carillion and the Universities pension (which may lead to strike action that directly affects students).

Pensions: Careers

There are plenty of opportunities to work in the pensions industry, from consultancies like Richard's and Henry's to big pension advisory firms and of course the pension funds themselves. Traditionally much of the work has been focused on the DB schemes, but as Henry pointed out, auto enrolment means that the DC side is now growing and there will be a lot of work to do ensuring that these schemes are well ran and deliver for their members.

Pensions: Investment

Pension funds are also big investors, and touch on many areas of finance. Whether you are working as an investment banker, asset manager or regulator - there's a good chance you will come into contact with pension funds at some point. It's worth knowing something about how these key buy-side players work.

Published 2 February 2018
Topics:
Industry Insights reviews

You might also like

Students Christmas Party 2018

20 December 2018
As the first term comes to an end, the annual student Christmas party returned this year. We welcomed ICMA Centre students and staff to celebrate the festive season and relax after a busy term.

New study: sustainability ratings are a reliable indicator of countries' solvency

31 October 2013
Munich, 16 October 2013 – There is currently a high level of uncertainty on the international financial markets, due to the budget dispute in the USA surrounding the proposed raising of the borrowing limit. The markets are waiting with bated breath to see whether the Democrats and the Republicans will be able to agree on raising the debt ceiling, which currently stands at just under 17 trillion US dollars. The key question for investors is whether the USA and other countries will be able to pay back the debts they have taken on or whether, as in the case of the debt cut in Greece, they can expect to see losses on their investments. A recent study based on sustainability rating agency oekom research’s country ratings shows that sustainability ratings are a reliable indicator of countries’ solvency and that taking sustainability ratings into account allows investors to make a better assessment of the overall risks.
Business News Press releases

PhD student Fahad Alhumaidah published in RBS Reserve Management Trends 2013

8 May 2013
Fahad Alhumaidah's research has been featured in the Central Banking Publications’ (CBP) annual book titledRBS Reserve Management Trends 2013. Published in spring each year, the book presents survey results of around 60 participating central banks, responsible for more than $6.7 trillion in reserve assets, on their views of the global financial markets and the key issues facing the international monetary system. Aside from the survey results, the book also features other chapters relevant to the subject of central bank reserve management contributed by various authors.