The Pension Trustee's Investment Guide

Robin Ellison

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Edition 1, Paperback , 248 pages
ISBN (10): 1 85418 430 x; (13): 978 185418430 6
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Sample Chapter

Overview

Far too many pension trustees – even in large funds – have an inadequate understanding of investment and financial markets. This book – tailored specifically for pension fund trustees – fills an important knowledge gap.

Designed as a practical, easy-to-follow guide to the new financial environment in which pension trustees are learning to operate, it provides you with a set of working definitions, and the financial techniques and tools needed in order to improve returns and safeguard risks.

It summarises the latest thinking and techniques in traditional assets, such as equities, bonds, property and cash, and examines the potential for investing in less conventional asset classes, such as hedge funds, private equity and commodities, where both rewards and risks can be high.

Content

Contents
Part 1
The trustee as investor
1 The trustee’s role
Trust and regulation
Knowledge and understanding
2 Scheme funding
The valuation
The sponsoring employer
The recovery plan
Schedule of contributions
Funding statements
3 Powers to invest
Suitable care
Limitations
Proper advice
Statement of investment principles
4 Asset allocation
Prudent portfolios
New thinking
The starting point
Asset classes

Part 2
Core assets
5 Quoted equities (shares)
Future returns
Growth or value
Large cap or small cap
Performance measures
International switch
Passive or active
Investment styles
Held to account
6 Bonds
Fixed income
Other types of bonds
Yields and price
The yield curve
Economic risks
Credit risks

7 Property 63
Returns
Capital intensive
Direct or indirect
Local or international

8 Cash
Interest rates
The instruments
Part 2
Alternative assets
9 Private equity
Investment vehicles
Venture capital
Buy-outs
Costs
Returns

10 Hedge funds
Investment techniques
Investment strategies
11 Commodities
The market
The contracts
Trading the index
12 Infrastructure
Asset qualities
Risks
Channels

Part 4
Derivatives
13 Risk instruments
What they are
The markets
14 Futures
The futures contract
Hedging
Returns
Controls
15 Swaps
How they work
Use by pension funds
Financial position
16 Options
Calls and puts
Uses

Part 5
Alternative strategies
17 Liability driven investment
Liability profile
Liability matches
Pooled funds
Best returns, least risk

18 Multi-asset investing
A new mindset
Risk models
19 Portable alpha
Beta and alpha
Alpha transfer
20 Pooling
Common investment funds
European pooling
Unit trusts and investment companies
Limited partnerships

Appendices
I The bluffer’s guide
Abbreviations
II The British Pensions System
The system
State pension credit
HMRC rules
Self-administered and insured
Money purchase and final salary
Unfunded schemes
AVCs

III Pensions by numbers
What tax relief is there on pensions?
Can I live on the basic state pension?
What will pensions cost the country?
How important is grey power?
How long will I live?
How important are workplace pensions?
Are there enough people working to
support me in my old age?
IV Bluffer’s cases 193
Investments
Surpluses – whose money is it?
Equal treatment
Employers and trustees
V Addresses 201
Accounts
Actuarial matters
Consultants
Consumer affairs
Europe and international
Industry
Investment
Lawyers
Personal pensions
Population and demography
Pensions profession
Regulation and compliance
Financial Services Authority London
Tax
VI Further reading
General
Periodicals
Law
The pensions system
Accounting
Investment
Policy
Statistics
Sources
Publications

Index of advertisers

Reviews

Endorsed by The Pensions Management Institute

The Pension Trustee’s Investment Guide has been endorsed by the Pensions Management Institute, the professional body for those working in the field of pensions and employee benefits..

For further details on trustee innovations and awards, go to the The Pensions Management Institute website.

The author

Robin Ellison is Head of Strategy, Pensions at UK law firm Pinsent Masons. He is a member of the CBI Pensions Panel and a trustee of several pension funds, both as independent trustee and as chairman. He also practices as a commercial mediator.

He is the author of numerous books on pensions including The Pension Trustee’s Handbook (Thorogood Publishing) and editor of Pensions Benefits Law Reports. He is Chairman of the NAPF and Visiting Professor in Pensions Law and Economics at Cass Business School, City University London.

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