That the third quarter was turbulent was no surprise. But recently released funding figures for pension funds and asset under management figures for asset managers have helped us crystallise the cost of the uncertainty surrounding the future of the EU and US growth prospects.
To recap: Canadian pension funds with a combined C$340bn in assets posted their worst quarterly returns since 2008 in the third quarter, with performance down 3.2% and assets down 5.5%, according to RBC Dexia. The €103bn ($142bn) Pensioenfonds Zorg & Welzijn said its funding ratio dropped to 91%, down from 110% in the previous quarter. The funding ratio of the €235bn Stichting Pensioenfonds ABP fell to 90% from 112% the previous quarter.
ABP and PFZW both announced plans to freeze pension payments because of the lower funding status and officials said there was a strong possibility of reducing payments going forward unless the economic situation improves. (See story on here)
BlackRock, the world’s largest asset manager, said market movements battered its assets under management. BlackRock’s assets were down 9% in the quarter driven in part by a large drop in equity strategies (down 18% over the quarter to $1.44trn).
In all cases, officials were quick to blame the drops on the inability of global political leaders to get their acts together, and rightly so. For investors already dealing with a slow growth recovery, concerns over the eurozone are contributing to market volatility and directly impacting the health of their portfolios. Up and down markets coupled with low interest rates are hammering funding levels.
PFZW’s managing director Peter Bordorff said: “As long as European leaders shirk their responsibility for arriving at a definitive answer to the European debt crisis, it will not be possible for Dutch pension funds to start showing sufficient recovery.”
BlackRock CEO Laurence Fink blasted European policy makers for taking incremental and short-term measures to fix the economy. He said governments’ behaviour has left investors “confused, frozen and looking for answers”. (Visit www.globalpensions.com for news on asset manager returns)
Investors will clearly spend Q4 looking for clarity around solutions to this very political crisis.
Raquel Pichardo-Allison, Editor
The Pensions Regulator (TPR) and Labour MP Stephen Kinnock and will listen to the experiences of steelworkers when transferring their pensions away from the British Steel Pension Scheme (BSPS) next week in Port Talbot.
Just Group has acquired a 75% stake in the holding company of Corinthian Pension Consulting in a bid to strengthen its professional defined benefit (DB) advisory services.
The Pensions Regulator (TPR) has exercised its production order power under the Proceeds of Crime Act 2002 for the very first time as part of a fraud investigation.
The ITN Limited Pension Scheme has named Trafalgar House as its administrator for an initial term of five years.