dc- the new reality
DESCRIPTION
TRANSCRIPT
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Address 1
Address 2
Town/ City, Postcode
t *** **** ****
f *** **** ****
www.bluefingroup.co.uk
Employer duties Ready for change (?)
Robin Hames
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Agenda
• Why are we here?
• What‘s changing?
• What is NEST?
• What‘s this got to do with investments?
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Step back to 1999
A gloomy
forecast...
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Pensions were in crisis
• Millions of employees not saving for retirement
• Thousands of employers not offering a pension scheme
• Pensions deemed to be:
• too complicated
• too expensive
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The Stakeholder solution
• All employers had to offer
access to a stakeholder
pension scheme, unless
• they had fewer than 5 staff
• they already offered a
pension scheme
• A charging cap was applied
• A brighter future
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Back to 2011
Oh dear...
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Private sector pensions
Source: Standard Life October
2011
Type of scheme Size of funds
Occupational DB £800bn
Occupational DC £400bn
Contract DC £200bn
£1.4trn
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But...
86% of UK employers have no
scheme or a shell stakeholder
2 out of 3 UK employees are making
no provision for a pension
Source: The Pensions Regulator January 2011
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And...
0
25
50
75
100
125
0
25
50
75
100
125 GRR Low GRR Low
Pensions at a Glance 2011: Retirement-income Systems in OECD and G20 Countries - © OECD
2011
Relatively low ‗gross replacement rates‘ for average earners
GRR Average
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The new solution
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To do list The 10 new duties
1 2 3 4 5
Automatically enrol
‗eligible
jobholders‘
If they opt in, enrol
‗other jobholders‘
not automatically
enrolled
Every three years
automatically re-
enrol any ‗eligible
jobholders‘ who
opt out
Communicate any
waiting periods
(which can be up to
three months)
Pay employer
contributions for all
‗jobholders‘ who
are members
6 7 8 9 10
Any other UK
‗workers‘ who asks
must be placed in a
scheme
Inform providers
(including details of
any opt outs)
Register with the
Pensions
Regulator
Communicate to all
jobholders and
employees
Retain records for
at least six years
(except opt-out
forms for four
years)
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To don‘t list!
1 take action to remove ‗jobholders‘ from membership (unless leaving employment, moving to another qualifying scheme or member has opted out)
2 indicate or imply employment is dependant upon opting out when recruiting
3 induce members to opt out
4 subject ‗workers‘ to detrimental treatment if they want to opt in
5 provide false or misleading information to the Pension Regulator
6 pay employer contributions for all ‗jobholders‘ who opt
7 wilfully fail to comply with the new duties
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In detail...
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Regulatory guidance
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To summarise
• 7 new administration duties
• 2 new core communication duties – but with
several subsets
• A new demand – money
• A new requirement – select your automatic
enrolment scheme(s)
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Automatic enrolment schemes
Occupational
DB
Occupational
DC
Contract DC
(GPPs)
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NEST
• A new ‗master trust‘
pension scheme
• A public service mandate
• Aimed at low to moderate
earners
• With certain restrictions
(to be reviewed in 2017)
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DC investment governance and the Regulator
The Investment Governance Group (IGG) published its ―Principles for investment
governance of work-based DC pension schemes‖ in late 2010.
―Pension schemes are long-term undertakings
and require robust and resilient governance
structures. Clarity of roles in decision-making is
central to delivering good outcomes for pension
scheme members and this will be even more
important with auto-enrolment.‖ IGG chair Bill Galvin
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Pensions Act 2008 Chapter 30
17 Automatic enrolment schemes
(1) A pension scheme is an automatic enrolment scheme in relation to a
jobholder (J) if—
(a) it is a qualifying scheme in relation to J,
(b) it satisfies the conditions in subsection (2), and
(c) it satisfies any further conditions prescribed.
(2) The conditions mentioned in subsection (1)(b) are that—
(a) no provision of the scheme prevents the employer from making
arrangements prescribed by regulations under section 3(2), 5(2) or
7(4) for J to become an active member of the scheme;
(b) no provision of the scheme requires J to express a choice in
relation to any matter, or to provide any information, in order to
remain an active member.
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Good DC governance
Stage I: Governance structure
• Principle 1: Clear Roles and Responsibilities
• Principle 2: Effective Decision Making
Stage II: Investment choices and monitoring
• Principle 3: Appropriate Investment Options
• Principle 4: Appropriate Default Strategy
• Principle 5: Effective Performance Assessment
Stage III: Communications
• Principle 6: Clear & Relevant Communications
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So why are we here?
• Previous reforms failed
• Automatic enrolment is on its way
• DC will dominate
• Default funds will be mandatory
• Investment governance will come under
the microscope
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Questions?
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NEST’s Investment Approach
The New Reality Seminar
Mark Fawcett, Chief Investment Officer
2011
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© NEST Corporation 2011. We are entitled to bring any legal action necessary to protect our intellectual property rights. These slides do not
constitute financial or other professional advice. You must not, or allow another party to, alter these slides in any way. Copying or
distributing this material is allowed only with the permission of NEST Corporation.
What can NEST offer?
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© NEST Corporation 2011. We are entitled to bring any legal action necessary to protect our intellectual property rights. These slides do not
constitute financial or other professional advice. You must not, or allow another party to, alter these slides in any way. Copying or
distributing this material is allowed only with the permission of NEST Corporation.
A new market of people new to saving
There are around 19.7 million people employed in the private sector
with 14-15 million eligible for automatic enrolment
9-10 million without a
qualifying pension scheme
8 million people within NEST’s intended target market
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© NEST Corporation 2011. We are entitled to bring any legal action necessary to protect our intellectual property rights. These slides do not
constitute financial or other professional advice. You must not, or allow another party to, alter these slides in any way. Copying or
distributing this material is allowed only with the permission of NEST Corporation.
Understanding our target market
We are committed to designing our activities around the needs
of all of our future employers and members
Conducting
surveys
External
research
Research
panels
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© NEST Corporation 2011. We are entitled to bring any legal action necessary to protect our intellectual property rights. These slides do not
constitute financial or other professional advice. You must not, or allow another party to, alter these slides in any way. Copying or
distributing this material is allowed only with the permission of NEST Corporation.
How NEST can be used
• Offered to all workers Sole scheme
• To sit alongside existing scheme already in place for a different group of workers
For a particular group of workers
• Where the existing scheme has a waiting period
Entry level scheme
• Where minimum contributions are made for all workers, using another scheme to ‘top up’ contributions
Base scheme
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© NEST Corporation 2011. We are entitled to bring any legal action necessary to protect our intellectual property rights. These slides do not
constitute financial or other professional advice. You must not, or allow another party to, alter these slides in any way. Copying or
distributing this material is allowed only with the permission of NEST Corporation.
NEST’s Investment
Proposition
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© NEST Corporation 2011. We are entitled to bring any legal action necessary to protect our intellectual property rights. These slides do not
constitute financial or other professional advice. You must not, or allow another party to, alter these slides in any way. Copying or
distributing this material is allowed only with the permission of NEST Corporation.
NEST’s investment proposition
• A DC proposition with high standards of
investment governance
• Accompany our members through all the phases
of the pension/savings journey
• Recognising and meeting the very specific needs
of our membership over the long term
• In-house expertise supported by the best-in-class
service providers
• Tailor-made operational and monitoring platform
Member
Focused
Intelligent
Investing
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© NEST Corporation 2011. We are entitled to bring any legal action necessary to protect our intellectual property rights. These slides do not
constitute financial or other professional advice. You must not, or allow another party to, alter these slides in any way. Copying or
distributing this material is allowed only with the permission of NEST Corporation.
Evidence based solutions
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© NEST Corporation 2011. We are entitled to bring any legal action necessary to protect our intellectual property rights. These slides do not
constitute financial or other professional advice. You must not, or allow another party to, alter these slides in any way. Copying or
distributing this material is allowed only with the permission of NEST Corporation.
Risk people
need to take
Risk people
can take
Members’ risk profile
Risk people
want to take
Mind the gap
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© NEST Corporation 2011. We are entitled to bring any legal action necessary to protect our intellectual property rights. These slides do not
constitute financial or other professional advice. You must not, or allow another party to, alter these slides in any way. Copying or
distributing this material is allowed only with the permission of NEST Corporation.
A fund range to meet our members’ needs
NEST 2037
Retirement
Fund
NEST
Pre-retirement
Fund
NEST Lower
Growth Fund NEST Sharia
Fund
NEST Ethical
Fund
NEST Higher
Risk Fund NEST 2032
Retirement
Fund
NEST 2027
Retirement
Fund
NEST 2022
Retirement
Fund
NEST 2017
Retirement
Fund
NEST 2012
Retirement
Fund
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© NEST Corporation 2011. We are entitled to bring any legal action necessary to protect our intellectual property rights. These slides do not
constitute financial or other professional advice. You must not, or allow another party to, alter these slides in any way. Copying or
distributing this material is allowed only with the permission of NEST Corporation.
The three phases of saving
for NEST Retirement Date Funds
Age
Maximum Minimum
Ris
k p
rofi
le
Reference glide path
22 27 32 37 42 47 52 57 62
Foundation Growth Consolidation
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© NEST Corporation 2011. We are entitled to bring any legal action necessary to protect our intellectual property rights. These slides do not
constitute financial or other professional advice. You must not, or allow another party to, alter these slides in any way. Copying or
distributing this material is allowed only with the permission of NEST Corporation.
NEST Retirement Date Fund objectives
Foundation
• Unaccustomed to savings
• Loss aversion - high
• Risk capacity and risk
need - low
• Target CPI
Growth
• Risk appetite, and risk
capacity - medium
• Risk need - higher
• Sensitive to extreme
shocks
• Maximise performance
• Target CPI + 3%
Consolidation
• Preserve a retirement
income
• Match annuity prices
• Convert to a suitable
annuity option
• Cannot take severe
losses late in the
journey
target investment returns in excess of inflation after all
charges over the long term
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© NEST Corporation 2011. We are entitled to bring any legal action necessary to protect our intellectual property rights. These slides do not
constitute financial or other professional advice. You must not, or allow another party to, alter these slides in any way. Copying or
distributing this material is allowed only with the permission of NEST Corporation.
Lifecycle of 2058 Retirement Fund
22 27 32 37 42 47 52 57 62
Ris
k p
rofi
le
Age
Return Seeking
Composite Fund
Income Seeking
Composite Fund
Annuity Tracking
Composite Fund
2058
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© NEST Corporation 2011. We are entitled to bring any legal action necessary to protect our intellectual property rights. These slides do not
constitute financial or other professional advice. You must not, or allow another party to, alter these slides in any way. Copying or
distributing this material is allowed only with the permission of NEST Corporation.
The importance of diversified portfolios
Global Equities
Liquidity
Inflation Linked Debt
Dev Sovereign Debt
Investment Grade Debt
EM Sovereign Debt
High Yield Debt
Small Cap Equities
EM Equities
Property
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© NEST Corporation 2011. We are entitled to bring any legal action necessary to protect our intellectual property rights. These slides do not
constitute financial or other professional advice. You must not, or allow another party to, alter these slides in any way. Copying or
distributing this material is allowed only with the permission of NEST Corporation.
Communicating our
investment approach to members
• Straightforward and clear
language
• Fund choice made easy but
not pushed
• Hierarchical approach to
presenting information
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© NEST Corporation 2011. We are entitled to bring any legal action necessary to protect our intellectual property rights. These slides do not
constitute financial or other professional advice. You must not, or allow another party to, alter these slides in any way. Copying or
distributing this material is allowed only with the permission of NEST Corporation.
Designed for the target market
Clear
communication Online
Travels with
the member
Tailored
investment
approach
Help with
retirement
income Low charges
Always focused on our members
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© NEST Corporation 2011. We are entitled to bring any legal action necessary to protect our intellectual property rights. These slides do not
constitute financial or other professional advice. You must not, or allow another party to, alter these slides in any way. Copying or
distributing this material is allowed only with the permission of NEST Corporation.
Questions?
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1 Aldgate
London EC3N 1LP
t 0207 709 4500
f 0207 709 4501
www.bluefingroup.co.uk
The Right Default Making Better Decisions – Trustee/Employer
2 November 2011
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Agenda
• Default fund governance framework
• Suitability and Objectives
• Improving ‗Lifestyle‘
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Default Fund Governance Framework Investment Governance Group
• Ensure default strategy is
appropriate
• Allow appropriate time
• Define strategic objectives
(risk and return)
• Base strategy on robust and
detailed member data
• Competitive fees
Consider the needs of the broad
membership
• risk and return (net of fees/costs)
• its position in relation to all other
investment options
• members‘ expected term to
retirement
• members‘ attitude to risk
• the expected format and structure
of their retirement benefits
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Default Fund Governance Framework
All qualifying schemes, for the purposes of automatic enrolment, must have a
default fund.
The guidance details specific obligations in relation to the governance, design,
review and communication of the default fund.
• Identify and delegate key decisions and functions in writing.
• Designed around the expected scheme membership and their needs.
• Produce high level objectives.
• Consider fund suitability along with affordability and risk management.
• Automatic communication to members covering the fund objective, risk profile
and charges.
• Full review every three years and on the occurrence of various significant
events.
DWP Guidance (May 2011)
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Bluefin Views
• Generic member segmentation / risk analysis can be flawed. However actual
member behaviour should be monitored and factored into default fund
design.
• Glidepath design should reflect the likely desired outcome for the majority of
members.
• Diversification of assets add value in reducing risks.
• Passive management provides the most cost effective access to asset
classes.
• Dynamic asset allocation can add value in reducing risk.
• Matching assets should reflect the underlying income requirements / annuity
prices.
• Hedging / loss prevention relative to the final benefits should be implemented
where this is cost effective.
• Higher / lower risk strategies should be offered to complement the default
fund.
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Long Term Objectives
• Required income determined by contributions
and investment returns at an appropriate level
of risk
• What range of outcomes is reasonable
• Ensure appropriate risk measure
• Return requirements – change from market
indices to ‗inflation plus X%‘
• Security of benefits vs. cost of security
• Getting the bond portfolio right
• Can forward interest and inflation swaps
provide better hedging?
• Capital protection strategies using
derivatives
• Introduction of other risks
(e.g. counterparty risk)
Dynamic Asset
Allocation
Lower Returns Higher
Conventional
Asset Allocation
Fewer
Large
Gains
Fewer
Large
LossesFre
qu
en
cy
Dynamic Asset
Allocation
Lower Returns Higher
Conventional
Asset Allocation
Fewer
Large
Gains
Fewer
Large
LossesFre
qu
en
cy
Improved
outcomes
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Improving Lifestyle Strategic glidepath design
• Reducing risk during the growth phase through diversification
• Introducing matching assets earlier
• Matching assets - considering the type of annuity to be purchased
• Low cost passive with active asset allocation to diversifiers
• More Regular rebalancing
• Use of investment platforms to allow effective switching between managers
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Improving Lifestyle Lifestyle Challenges
• Administration complexity and operational risks
• Structure limitations – legal structures, platform requirements
• Communicating more complex designs
• Effecting changes
• No tactical glidepath shifts
• End point sensitive (late retirement, income drawdown)
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Target Date Funds Improved Flexibility – Reduced Risks
• A series of funds with different target dates
• Age appropriate strategic and dynamic asset allocations
• Simple to change - low operational risks / costs
• Can include a more sophisticated strategy
• Not constrained by member administration
• Diversification of manager risk
• Easy to communicate
• Can include gradual de-risking running to retirement and beyond
• Can include fully open-architecture
2010 – 2012 TDF
2013 – 2015 TDF
2016 -2018 TDF
Etc
…
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Regulatory Statement
• Bluefin is a trading name of Bluefin Corporate Consulting Limited. Registered Office: 5
Old Broad Street London EC2N 1AD Registered in England No: 1860722. Bluefin
Corporate Consulting Limited is separately authorised and regulated by the Financial
Services Authority.
• The information contained within this presentation does not constitute independent financial advice.
• Investors should always seek independent financial advice before committing themselves.
• The information contained in this presentation is based on our understanding of current UK law and taxation, which may change in future.
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Questions?
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Technology to support
benefit platforms Des Matthewman. Head of Technology
Bluefin Corporate Consulting
Apps, Comms and
Audience of One
The role that can be played by technology in
the design and implementation of targeted
comms
2 November 2011
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Speaking from experience
Providing benefits
online since 2001
Used by more than
180 companies
and over 150,000
employees
EMPLOYER
EMPLOYEE TRUSTEE
Orbit Online
Benefits
Sent nearly 3
million emails
Just under 1 billion
of funds on platform
Over 50k SMS
fund alerts
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UK Pensions Rising to the challenge
UK
Pensions
Succeeding
in a wider
context
Engaging
with
Employees
Meeting the
challenge of
DC
Managing
Auto
Enrolment
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Succeeding in a wider context
An EVP is an extension of the brand
What an employee
receives from their
employer in return for the
performance of their job
Employee
Value
Proposition
=
Typical Brand values
• Constantly innovating
• Exceeding expectations
• Freedom to shape the future
• Refreshing
• Dynamic
• In touch
• Respect for the individual
• Passion for clients
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Engaging with employees
• Engagement is dependent on effective communication
• Effective communication successfully combines:
• Employee engagement is, therefore, dependent
on accurate, accessible data being interpreted,
formulated and distributed in a multitude of ways
Message Channel Context Relevance
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Engaging with employees Brand
orbitbenefits.com .co.uk
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Engaging with employees Multi-device compatibility and the rise of mobile
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Meeting the challenge of DC
Supporting employees with:
Funding Investing Retiring
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Meeting the challenge of DC Funding
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Default
strategy
Recomm-
ended
funds
Wider fund
universe
Alternative
strategy
1
Alternative
strategy
2
Alternative
strategy
…
EMPLOYEE
1 2 3 4
Meeting the challenge of DC Investment
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Meeting the challenge of DC Investment tools
Fund Comparison Portfolio X-ray
Portfolio Risk/Return
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Meeting the challenge of DC Retirement
• State Default Retirement Age
abolished 6 April 2011
• Number of 65 year olds in Britain will
increase by c150,000 between 2011
& 2012
• 65 year olds can expect to live for
another 18-20 years
• Every one retiring from a DC plan
can consider an open market option
– but over 2/3rds don‘t shop around
2011 2012
Number of people turning 65:
658,000 806,000
We know people need to engage on the subject of
retirement planning earlier and need to know the facts
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Meeting the challenge of DC Retirement tools
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Managing auto-enrolment
Design
Multiple schemes / NEST?
Employee segmentation?
Administration
Auto-enrolment
Opt-ins and Opt-outs
Re-enrolment
Communication
Employee notifications
Scheme / process information
Reporting
TPR Registration &Compliance
Auditable Records (6 years)
Reliant on data being used efficiently and
effectively within and across systems
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UK Pensions Rising to the challenge
Technology
& comms
enable you
to…
position
pensions in
the wider
context
interact with
employees as
individuals
help employees
make informed
decisions
comply with
employer
duties (cost)
effectively
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Regulatory Statement
• Bluefin is a trading name of Bluefin Corporate Consulting Limited. Registered Office: 5 Old Broad Street London EC2N 1AD. Registered in England No: 1860772.
• Bluefin Corporate Consulting Limited is authorised and regulated by the Financial Services Authority.
• The information contained within this presentation does not constitute independent financial advice.
• The information contained in this presentation is based on our understanding of current law and taxation.
• HMRC policy, practice, and legislation may change in the future.
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Questions?
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Flight Plan for Individuals: Achieving Better Outcomes
Flight Plan for Individuals: Achieving Better Outcomes
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Flight Plan for Individuals: Achieving Better Outcomes
• DC is no more than a 1 person DB scheme
• DB investment strategy can be applied to DC schemes
• Use other DB tools to help manage DC schemes?
• Closure to new members and future accrual has led to
focus on the End Game
• DC members have an End Game – retirement income
• DB uses Flight Plans to manage towards the End Game
DC is just DB for individuals?
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Flight Plan for Individuals: Achieving Better Outcomes
2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033
GB
P M
illio
ns
Liabilities Path Assets Path
What is a Flight Plan?
Flight Plan “levers”
1
2 3
Liability Basis
Contributions &
Required Return Time Horizon
Target:
Full funding
Start
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Flight Plan for Individuals: Achieving Better Outcomes
Personal Flight Plan
Example Flight Plan: Personal objectives and “levers”
54 55 56 57 58 59 60 61 62 63 64 65
GB
P T
ho
usan
ds
Age
Target Income Minimum Income Requirement
1
2
Annuity rate /
lump sum
Contributions &
Required Return
Time Horizon
You are
here
Target income
Minimum
income
3
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Flight Plan for Individuals: Achieving Better Outcomes
Early
Retirement
De-risk
54 55 56 57 58 59 60 61 62 63 64 65
GB
P T
ho
usan
ds
Age
Target Income Minimum Income Requirement
Scenario 1: Outperformance
1
Target higher
retirement income
a
R
b
Target
retirement age
Early
retirement
date
Example Flight Plan Target
income Your Options are: R
If you
are here b a
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Flight Plan for Individuals: Achieving Better Outcomes
54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70
GB
P T
ho
usan
ds
Age
Target Income Minimum Income Requirement
Deferred
retirement
age
Re-risk to target
minimum income
Scenario 2: Underperformance
c If you
are here
Your Options are:
Consider deferring
retirement
c
D
Target
retirement
age
Example Flight Plan
2
Target
income
Minimum
income D
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Flight Plan for Individuals: Achieving Better Outcomes
54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70
GB
P T
ho
usan
ds
Age
Target Income Minimum Income Requirement
Re-risk to aim for target
income
Scenario 3: Moderate Performance
Your Options are:
De-risk to secure
minimum income
d
e
Target
retirement age
Example Flight Plan
e
Maintain risk and target
income but defer
retirement
D
D
Deferred
retirement
age
If you
are here
Target
income
Minimum
income
3
d
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Flight Plan for Individuals: Achieving Better Outcomes
Default Funds – Different Risk/Return Profiles
Lower Risk Profile:
• Low growth
• Stable income
Higher Risk Profile:
• High growth
• High volatility
Equities Diversified Growth Corporate Bonds Gilts
• Adjusting risk and return
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Flight Plan for Individuals: Achieving Better Outcomes
Default Funds – Even more options? A step too far
• Beyond default
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Flight Plan for Individuals: Achieving Better Outcomes
• Flight Plans have an application to DC
• ...but are they too complex?
• For most members, probably
• Used for monitoring if not asset allocation
• FSA/tPR issues, particularly with regard to ‗advice‘
• If not for individual members then for TDFs
Summary
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Flight Plan for Individuals: Achieving Better Outcomes
Disclaimer 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 market factors 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 actual trades. 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. Neither the 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 information in 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 be treated 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 the liabilities 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 any party 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 prior to 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 or of any other nature), should be treated as illustrative only and not relied upon as accurate.
Redington Limited (reg no 6660006) is a company authorised and regulated by the Financial Services Authority and registered in England and Wales. Registered office: 13-15 Mallow Street London
EC1Y 8RD
Ian Maybury
Managing Director Senior Actuary, Co-Head of ALM and Investment Strategy
Direct Line: +44 (0) 20 3326
7129
Telephone: +44 (0) 20 7250
3331
Redington
13-15 Mallow Street
London EC1Y 8RD
Ian Maybury
Managing Director | Senior Actuary, Co-Head ALM
& Investment Strategy
www.redington.co.uk
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Generation Y -
Generation Y Thinking differently
Thinking differently
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Generation Y - Who is Generation Y
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Generation Y -
X Y
Who is Generation Y
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Generation Y -
X Y
Who is Generation Y
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Generation Y -
X Y
Who is Generation Y
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Generation Y -
X Y
Who is Generation Y
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Generation Y -
Boomer Gen X Gen Y Gen Z
X,Y and Z
• Now aged 49-64
• Idealistic, career-
oriented, consumerist
• Promoted „young‟
and propped
• Peak income earning
1991-2005
• Succession planning,
advisory boards, non-
exec directors
• Now aged 34-49
• Realists, cyncial
• Held back by “old fart
log-jam”
• Peak income earning
2006-2021
• Office sandwich gen,
resentful of Boomer
focus on Y‘s
• Must deal with baby
boomers in retirement
• Now aged 19-34
• By 2025 will make up
largest population of
workforce and fill
senior management
roles
•Experiential, ethicists,
uncommitted to
career/relationships
• Helicopter kids;
KIPPERS
• Technology savvy;
global thinking
• Inherit Boomer
wealth
• Aged 19 or less
• Will enter workforce
from 2020
• First generation to be
taught ICT from age 5
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Generation Y - A life in detail
Changing life expectancy creates the concept of a ‗working life‘ followed by retirement
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Generation Y -
Source HM revenue and Customs Statistics, Survey of Personal Incomes 2004/5; KPMG
Accumulation of wealth
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Generation Y - Population trends
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Generation Y - Moving education to the classroom
• In England and Wales financial planning is
not compulsory but features in Key Stage 3&4
(11 - 16yrs)
• In Oct ‗09 Scotland announced that every child
will get money management lessons -
however, there are currently no plans to make
this mandatory
• Japanese children taught about pensions
and saving for retirement from an early age
(11 - 18) by local municipality officials
• Sessions not limited to schoolchildren
• All nationals between 20 - 59 are required
to enrol in the national pension plan
43%
Have never received
any form of financial
education
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Generation Y -
“Saving is something that is at the
bottom of my list of important things...
I only save money if something is left”
Male - Frankfurt
Attitude to finance and savings
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Generation Y -
“I want to be able to do things now.
I don‟t want to wait until I‟m fifty
and have a million dollars. By then I
wont want to do these things and I
will have missed out”
Male
Attitude to finance and savings
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Generation Y - Attitude to finance and savings
“I went to the bank and wanted to
invest money, and the guy just spoke
financial mumble - jumble to me”
Female
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Generation Y - Attitude to finance and savings
“Rent, travelling, dining out, having fun
and if something is left, you can save it”
Male
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Generation Y -
Should I start
my DC scheme
now?
Legacy?
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Generation Y -
Disclaimer 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 market factors 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 actual trades. 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. Neither the 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 information in 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 be treated 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 the liabilities 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 any party 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 prior to 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 or of any other nature), should be treated as illustrative only and not relied upon as accurate.
Redington Limited (reg no 6660006) is a company authorised and regulated by the Financial Services Authority and registered in England and Wales. Registered office: 13-15 Mallow Street London
EC1Y 8RD
Robert Gardner Founder & Co - CEO http://twitter.com/#!/robertjgardner
Direct Line: +44 (0) 20 7250
3416
Telephone: +44 (0) 20 7250
3331
Redington
13-15 Mallow Street
London EC1Y 8RD
Robert Gardner
Founder & Co-CEO
www.redington.co.uk
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Gen X or Gen Y?
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