Category: Pension

THE health of U.S. state pension systems improved for the first time since 2014 because of global stock-market gains, according to Wilshire Consulting.

Pensions had 70.2 per cent of assets required to meet obligations to retirees in fiscal 2017, an increase from 67.4 per cent in the prior year, the Santa Monica, California-based firm said in its annual state funding report. That improvement may ease the financial pressure on states from their retirement systems, given that when investment returns lag they need to boost their annual contributions to cover the gap.

The rally that pushed global equity markets to new highs boosted state pension assets to $3.2 trillion, the most in at least 20 years, the firm said. International stocks rose 24.5 percent in the 12 month period, ending June 30, 2017, Wilshire said.

State pension assets grew by more than nine per cent compared to the previous year, while liabilities rose five per cent to $4.5 trillion, leaving a $1.35 trillion deficit.

Despite the strong gains, pensions have been steadily reducing their expected rates of return, a step that will require them to pay more into the retirement systems. Almost half of the 130 retirement systems Wilshire analysed reduced their discount rates in fiscal 2017. The median assumed rate of return declined to 7.25 per cent from 7.5 per cent in fiscal 2016

The Contributory Pension Scheme (CPS) is being challenged by low adoption of self-help platforms, Pension Fund Operators Association of Nigeria (PenOp) President, Mrs Aderonke Adedeji has said.

Mrs Adedeji spoke at just-concluded journalists workshop held in Uyo, the Akwa Ibom capital.

In a paper titled: “Contributory Pension Scheme, achievements and challenges: service delivery”,  she  said these problems were hampering members’service delivery.

Despite the huge investments in technology by her colleagues, she said many clients preferred the old, manual way.

She said members also had been having difficulties in getting customer data that were not communicated to PFAs, thereby leading to difficulties in locating some clients.

She said the PFAs were aware that good service means being courteous, consistent and reliable.

They are also aware that they have to give value for money, be knowledgeable, trustworthy, responsive and address issues and show good understanding of the customer, she said.

She said the CPS is better, noting that the old scheme was restricted by structure.

Mrs Adedeji said: “With regard to service delivery, the old scheme was a challenge. The private sector was largely without pension schemes. Those funded by the government soon became a burden while records and customer data became unreliable. There were frequent painful verification exercises, fraudulent practices from absence of transparency, delays in pension disbursement, no regulation, supervision and accountability, no updates and feedback and no recourse.

“The CPS was birthed to solve  these problems through policies, regulations, and a special focus on service delivery. The scheme empowered stakeholders and introduced service that never existed. It eliiminated fraud by allowing separation of duties, established a strong regulatory, security and supervisory framework as it birth the National Pension Commission (PenCom) among others.”

She pointed out that the CPS is all about service and is still evolving.

“It requires service to employers and employees, major focus and investment. The CPS is an intricate and multi-faceted system that requires continuous enlightenment and updates. Each stage and phase is supported by an array of service initiatives by operators and PenCom. The major achievement in a short-while compared to other sectors like banking and insurance and it creates more customer interaction opportunities than any other sector or industry.

“We have engaged in enlightenment and dissemination of information on the scheme to both the employer and employee, Know Your Customer (KYC) activities and data capture to ensure accuracy of customer data, employer support and advisory services, like setting up contribution schedules, calculation of deductions, among others,” she added.

The gender gap in the United Kingdom (UK) retirement income has widened dramatically over the last decade, with the average single woman now earning £85 a week behind her male counterpart, according to a new data.

The findings come as companies and organisations continue to report the difference between what they pay male and female workers ahead of the April 4 deadline by the government, and suggest that gender pay inequalities do not stop after people retire.

The former Liberal Democratic Pensions Minister, Steve Webb said the figures revealed a shocking surge in the gap between older men and women.

Webb is the Director of Policy at the Mutual Insurer Royal London, which issued the figures after a detailed analysis of newly published statistics from the Department for Work and Pensions. It said in 2006-07, the average retired single woman had a gross income of £294 per week, while her male counterpart received £325 – a gap of £31 per week.

But by 2016-17, the gap had nearly trebled to £85, with the average woman on £316 per week and the average man on £401, the company said. The data showed women’s incomes had risen by 7 per cent in real terms over the period, compared with a 23 per cent increase for men, it added.

Webb said his team looked at a 10-year period to iron out year-to-year fluctuations in the data, but the deterioration had all been concentrated in the last two years.

The widening gap appears to be driven by two factors. One is that the real earnings of women over pension age have been pretty flat, while those of men have more than doubled. Over the last decade, according to the data, the real earnings of single women in retirement actually fell slightly – from £21 per week in 2006-07 to £19 in 2016-17. But for men, the average increased from £17 per week to £37.

Meanwhile, occupational pension incomes have risen for both men and women – but with a particularly sharp increase for men. Women’s average workplace pension income has risen from £58 per week to £81 over the decade, but men’s workplace pensions have shot up from £83 per week to £125, stretching their lead over women.

Insurer Prudential has previously said that women could end up losing out when it came to retirement incomes because they took career breaks and changed their working patterns to look after dependants. As a result, many women will end up with smaller pension pots and some are likely to receive a reduced state pension too.