Newly-published statistics reveal that British Airways (BA) has recently injected £50m to cut the deficit of its most underfunded pension scheme.

What is the perfect holiday for those who work in the busy, complex world of pensions? Something relaxing, destressing, not involving too many medieval cathedrals, challenging pieces of sculpture, crowded beaches, scary rollercoaster rides or cramped, noisy bazaars.

The O2 defined contribution (DC) scheme has written to members highlighting concern at the performance of UBS Global Asset Management.

Hewitt Associates has reported soaring hedge fund allocations for clients over the last two years as schemes seek to control their exposure to market volatility.

Consultants have warned Friends Provident that it risks being overtaken by competitors if it fails to refocus its pensions proposition.

Large pension funds are ensuring their voices are heard at the companies they invest in, according to the National Association of Pension Funds (NAPF).

Hargreaves Lansdown has warned that annuity rates are likely to fall.
The consultancy noted that seven leading annuity rate providers had dropped their rate by as much as 2% in August 2008.
Nigel Callaghan, pensions analyst at Hargreaves, noted that while it was impossible to predict future rates, both long-term and short-term trends appeared to be moving in the direction of further cuts.

Infrastructure investments have proved the one bright note for the £1.8bn Nationwide Pension Fund, which lost -2.9% over the year to the end of March.

Special contributions to pension schemes have risen for the third year in a row, according to Mercer and the Association of Corporate Treasurers.

The government is under mounting pressure to launch an independent review of public sector pensions and abandon contracting out to prevent a fiscal crisis.

Defined benefit (DB) schemes will not be forced into Solvency II regulations, according to a European Commission consultation paper.

The £7bn ICI Pension Fund has increased its weighting in high yield bonds from 2% to 2.5% of its portfolio.

An annuity that offers an income based on five different health risks has been launched on a pilot basis by Legal & General.
The insurer claims an individual could benefit from an extra 12% income with its Annuity Plus product compared with a standard annuity.
Applicants in the pilot study will be asked if they smoke, have high blood pressure, a high cholesterol level, their height and weight, and whether they have diet-controlled diabetes.
This non mandatory information will, in addition to postcode, be used to determine the additional annuity income that may be provided.

The Environment Agency has cited fiduciary responsibility in its favouring of environmentally-focused fund managers over established players.

Buyout business will be closer to £8bn this year rather than insurers’ projected £15bn for bulk annuities, according to Punter Southall Transaction Services.

The latest calculation on those of us not saving enough for our retirement is 49%, according to a new Scottish Widows survey.
The finding came from a poll of 6,000 people, all earning at least £10,000. Scottish Widows point out that the projected retirement lifestyles of those quizzed would be out of reach, partly due to the fact that one in six will use their tax-free lump sum to pay off their mortgage and 24% plan to use it to pay off debts.

Poor coverage in Asian and emerging markets is a key reason for an underwhelming fund-of-hedge fund performance this year, according to Standard & Poors.

South Africa is a viable long-term investment option due to its infrastructure opportunities, according to StanLib.

Axa Investment Managers (Axa IM) has split its fixed income division into two teams, covering credit and interest rates.
It believes this will better able it to follow investment themes, rather than being product-led.
The interest rate team will be headed up by Chris Iggo, while the credit team will be headed by Hannah Strasser.

PROFILE: Chairman of the Association of Pension Lawyers Alastair Meeks speaks to Tom Willetts about the growth of the organisation, achieving value for money from lawyers’ fees, and the continued separation of trustees and sponsors following the Pensions Act 2004.

The other week we waved farewell to our summer interns. Probably a temporary farewell – they were an excellent bunch and all left with job offers from us in hand, inviting them to return this time next year. Being ‘Generation Y’, they didn’t hold back from the tough questions, including the perennial one about whether there is a career in pensions for them.

Getting the right type of learning and making sure it is suitable and proportionate is key.

Active management

The name given to the practice of picking certain investments on the basis that you know better than others how much they are worth and how well those investments will perform.

Many schemes adopting LDI are hedging interest rate risks, but not inflation risk.

The executive pay approval system has come a long way, and the US is set to follow the UK’s lead, says Tom Powdrill.

NAPF trustee conference 2008:
Understanding and controlling risk
November 26
One Great George Street,
Westminster

Your usual correspondent has escaped to one of the very few Greek islands still without any form of telecommunications (well chosen, Norman), so I have the honour of giving you this week’s View from the bridge.

Given the current yields on corporate bonds, there is a broad range of attractive opportunities to expand into credit. The challenge for investors is how to select from the credit universe the most promising bonds with the least risk.

Global equities has emerged as the most interesting asset class for pension funds over the last few years.

Expectations of global equities managers are rising, and pension funds are increasingly turning to high alpha mandates to generate returns, says Gill Wadsworth.

With the credit crunch firmly entrenched, investment opportunities have become harder to find and will require a well-informed asset manager to uncover the hidden gems, says Chris Arnott.

Background

Standard Life Investments (SLI) manages £130.6bn* in assets and is one of the fastest growing investment managers in Europe. It operatse on a global scale with offices in the UK, US, Canada, India, and Hong Kong.

Global equity continues to offer ample opportunity to generate alpha above domestic stocks. But over the past year, portfolios have been shifting their focus from mid cap to large cap companies, says Michael Seymour.

Background

Threadneedle was founded in 1994 and manages more than £62bn* of assets. Offering successful investment solutions is its only business, and many types of clients worldwide now benefit from its informed decision making, including pension schemes, insurance companies, private investors, corporations, mutual funds and affiliate group companies.

SEI has expanded its institutional team in London with three senior appointments to meet demand for fiduciary management.

Northern Trust Global Investments has named Steven Cress (pic) as head of sales and client services for its international asset management business.

Unigestion, the hedge funds, private equity, and quantitative equity fund manager, has named Konstantinos Iordanidis (pic) as managing director of hedge funds.

Baring Asset Management has appointed Katie Bowmar (pic) as head of product development to develop the business amid complex global markets.