Mitigating cost of ageing

McKinsey has an interesting Chart Focus displaying the mitigating effect of direct & indirect policy measures on the opportunity cost to growth of ageing societies. By far the largest effect could be had in Germany by raising the average rates of return on savings, which would not appear to be outlandish, given the notoriously conservative nature in which German savings tend to be invested. Immigration and higher fertility pale in comparison.

Location competition starts to bite

Evidently, the cross border competition for locating IORPs starts having an impact - at least, that's the impression you get when reading this story about the Dutch central bank lambasting neighbouring Belgium's new (and competitive) pensions regulation. We wonder for how long the Commission will be able to uphold its politically highly sensitive stance of tolerance towards regulatory & supervisory shopping - which is conceptually at the core of the Pensions Directive.

P.S. Naturally, the Belgian response wouldn't be too far out.

Institutional Life Markets Association

IPE has an interesting story about the recent foundation of Institutional Life Markets Association (ILMA), a non-profit trade association to “encourage best practices and growth of the mortality and longevity related marketplace”. Founding members of this potentially highly relevant association are Bear Stearns, Credit Suisse, Goldman Sachs, Mizuho International, UBS and West LB AG. The association does not appear to have a website, yet.

CFA Magazine finds

The CFA Magazine often is a good source of interesting material, written in a competent, yet conversational style. Cases in point are Stephen Brown's article about RIXML, an electronic data format similar to XBRL, but specialising on research information and therefore not quite as pervasive as XBRL, and John Rubino's excellent piece about global liquidity, providing insights into the global yield curve and failing monetary policy in the presence of free flows of capital and the carry trade.

Draft Swiss pension law

Swiss pensions association ASIP has published a concise draft of a revised occupational pensions law to assist the ongoing debate about simplifying the overly complex current law. Surprisingly, this draft still does not refer to the prudent person rule in its asset management section. Encouragingly, the draft does away with politically set rates such as the conversion rate or the guaranteed minimum return.

At the same time, ASIP has published the executive summary of a research paper examining the alleged over-capitalisation of the Swiss second pillar with a view to reducing the full coverage requirement. Some of the arguments proffered are truly surprising: foreign investments are used as evidence of an over-abundance of capital. Unsurprisingly, the authors conclude that there is no indication for too much saving and that it is reasonable to maintain the full coverage requirement.