Key Themes for Pensions in 2012


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Key Themes for Pensions in 2012

  1. 1. Redington13-15 Mallow StreetLondon EC1Y 8RDT. 020 7250 ManchesterKey Themes for Pensions in 2012Robert Gardner, Redington23rd February 2012
  2. 2. 2Contents1. Market Update• Gilt and swap rates2. Key (Investment) Themes for Pensions in 2012• Liability Driven Investment (LDI)• Setting Clear Goals & Objectives Importance of Strong Governance = Ability to ACT The Pensions Risk Management Framework Dynamic De-Risking Flight Plan Consistent Assets and UK infrastructure3. Social Media and #Pensions• An overview of using social media personally and professionally;• And how to use social media to communicate, engage and educate key stakeholders: Facebook Twitter LinkedIn RedBlog Mallowstreet
  3. 3. 3
  4. 4. 4Market Update30-Year UK Gilt Yield
  5. 5. 5Market UpdateUK & Japan 30-Year Swap Rates
  6. 6. 6Key (Investment) Themes for 2012Liability Driven Investments (LDI) : Maximise Your Toolset
  7. 7. 7Key (Investment) Themes for 2012Good Governance = Ability to ACT
  8. 8. 8Key (Investment) Themes for 2012The PRMF Dashboard
  9. 9. 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020GBPMillions―Actual Liabilities∙∙∙ Assets Path- - - Liabilities Path―Actual Assets9Key (Investment) Themes for 2012The Flight Plan: From ‘set and forget’ to ‘anticipate and recalibrate’Source: Redington
  10. 10. 10Key (Investment) Themes for 2012Case Study: Dynamic De-RiskingFunding level comparison01/10/2010 – 07/09/2011FundinglevelSource: RedingtonStrategy Funding levelFunding levelvolatilityOriginal 70.6% 18%Low risk allocation 71.8% 16%Dynamic de-risking 76.2% 13%As of 7 September 2011:
  11. 11. 11-6-4-2024680 5 10 15 20 25 30GBPMillionsYearsInitial investmentAttractive realreturnsInflation-linkedcashflowsProviding a match forliabilitiesInflowsOutflowsSource: RedingtonKey (Investment) Themes for 2012Flight Plan Consistent Assets: Cashflows
  12. 12. Key (Investment) Themes for 2012Case Study: Cambridge Water12Cambridge Water• Economic environment has small impact on returns• Inflation-linked cashflows and returns• Low regulatory riskWater Infrastructure: Key AttractionsImage source: BMImage source:Cambridge FirstImage source:Cambridge Water• Bought by HSBC in August 2011 (forwarehousing) for £74m• Provides water for 300,000 people inCambridgeshire• 2010/2011: Revenue of £20m with pre-taxprofits of £7m• No external debt bar revolving credit facility
  13. 13. 13Questions?
  14. 14. Social Media in the #Pensions Space
  15. 15. Social Media in the Pensions SpaceFacebook
  16. 16. Social Media in the Pensions SpaceTwitter #Pensions
  17. 17. Social Media in the Pensions SpaceLinkedIn
  18. 18. Social Media in the Pensions SpaceRedBlog
  19. 19. Community Membership Growth
  20. 20. ContactsDisclaimer21ContactsDirect Line: +44 (0) 20 7250 3416Telephone: +44 (0) 20 7250 3331Redington13-15 Mallow StreetLondon EC1Y 8RDRobert GardnerFounder & DESTINATION FOR ASSET & LIABILITY MANAGEMENTDisclaimer For professional investors only. Not suitable for private customers.The information herein was obtained from various sources. We do not guarantee every aspect of its accuracy. The information is for your private information and is for discussion purposes only. A variety of marketfactors and assumptions may affect this analysis, and this analysis does not reflect all possible loss scenarios. There is no certainty that the parameters and assumptions used in this analysis can be duplicated with actualtrades. Any historical exchange rates, interest rates or other reference rates or prices which appear above are not necessarily indicative of future exchange rates, interest rates, or other reference rates or prices. Neitherthe information, recommendations or opinions expressed herein constitutes an offer to buy or sell any securities, futures, options, or investment products on your behalf. Unless otherwise stated, any pricing informationin this message is indicative only, is subject to change and is not an offer to transact. Where relevant, the price quoted is exclusive of tax and delivery costs. Any reference to the terms of executed transactions should betreated as preliminary and subject to further due diligence .Please note, the accurate calculation of the liability profile used as the basis for implementing any capital markets transactions is the sole responsibility of the Trustees actuarial advisors. Redington Ltd will estimate theliabilities if required but will not be held responsible for any loss or damage howsoever sustained as a result of inaccuracies in that estimation. Additionally, the client recognizes that Redington Ltd does not owe anyparty a duty of care in this respect.Redington Ltd are investment consultants regulated by the Financial Services Authority. We do not advise on all implications of the transactions described herein. This information is for discussion purposes and priorto undertaking any trade, you should also discuss with your professional tax, accounting and / or other relevant advisers how such particular trade(s) affect you. All analysis (whether in respect of tax, accounting, law orof any other nature), should be treated as illustrative only and not relied upon as accurate.©Redington Limited 2012. All rights reserved. No reproduction, copy, transmission or translation in whole or in part of this presentation may be made without permission. Application for permission should be made toRedington Limited at the address below.Redington Limited (reg no 6660006) is registered in England and Wales. Registered office: 13-15 Mallow Street London EC1Y 8RD