Research shows linkage between pension amounts received and mortality.
Pensions specialist Mercer is advising smaller pension schemes to review their mortality data in light of new figures published by a research group of the Actuarial Profession, the Continuous Mortality Investigation (CMI).
The CMI has published research highlighting the wide variation of mortality experience among members of different pension schemes in the UK.The CMI pensioner data is based on the experience of the UK’s occupational pension schemes and is used to estimate mortality rates.
The lower the mortality rates, the longer people are expected to live.
This means pension payments are likely to have to be made for a longer time and schemes have to hold more assets to cover this longer period.
The research shows a wide fluctuation in mortality rates both between industry sectors and within each industry sector.
For example, overall mortality rates in the financial sector are around 20% less than the rates calculated by schemes in basic industries, such as mining and paper.
However, within the financial sector, members receiving pensions of less than £1,500 a year were almost twice as likely to die earlier than pensioners receiving over £25,000 each year.
The data suggests that working in the same industry could be less relevant to life expectancy than the level of pension received, which itself is likely to be just a proxy for the socio-economic group an individual belongs to.
Glyn Bradley, Associate at Mercer, explained:
"The CMI research highlights the wide variation in life expectancies between different pension schemes. While it is common knowledge that employees in different sectors have different life expectancies overall, there are also variations within an individual sector. In our mortality assessments for clients, we find that it's not unusual for senior managerial employees to live 2-3 years longer than employees with more routine work in the same company.
"This means that thesepension schemes need to hold about 10% more assets, per pound of pension being paid to the retired higher paid workers, relative to the amount they need to hold to provide a lower paid worker's pension. What is likely to be happening is that, on average, higher paid workers have healthier lifestyles – in the sense that they smoke less, drink less, take more exercise an d have access to better healthcare and diets– than lower-paid employees.
"Of course, some highly paid people lead less healthy lives, and many low paid people lead healthy lives, so these are very broad generalisations but in short: working with your hands won’t kill you, but the booze and fags might."
Bradley adds that pension schemes need to carefully consider their own membership.
A decade ago, it was difficult to set mortality assumptions on a scheme-specific basis.
Bradley goes on to say:
"Nowadays, even small schemes can’t afford to ignore the available information and need to take advantage of the modern actuarial techniques available to get a scheme-specific result.
"Postcode profiling, for example, is now routine for many schemes and easy for them to do, without needing to issue detailed lifestyle and medical questionnaires to members. Medium sized schemes now have access to the kinds of sophisticated modelling that were once the preserve of large insurers. How mortality rates will change in future is still very uncertain, but it is now easier than ever for schemes to get a good idea of where they stand today."
Finance Ministry, Bank Indonesia Not Dismayed by Recent Economic Slump - thejakartaglobe.com
The Finance Ministry and Bank Indonesia are optimistic that the recent slump in the financial markets will be just temporary, given that the country’s economy is in solid condition.
Investors scared off by events in Indonesia and abroad on Friday led the country’s benchmark stock index to its biggest single-day fall in almost seven months.
The rupiah also weakened overseas as investors reduced their holdings in Indonesian assets amid concern that the government’s regulatory framework would deter foreign investment. There were also fears that Greece’s withdrawal from the euro zone would siphon money from emerging markets.
Finance Minister Agus Martowardojo said he was optimistic that the nation’s economic growth was to remain strong, referring to the recent report issued by the Organization for Economic Cooperation and Development.
He said robust investment and a pick up in investment would be the key drivers in the domestic economy.
The Paris-based organization said in a report on May 22 that Indonesia’s economy “has continued to grow at a rapid pace, despite signs of slowing elsewhere in Asia and its impact on regional trade.”
The OECD predicted Indonesia’s economy will expand 5.8 percent this year and 6 percent next.
Hartadi Sarwono, a deputy governor at the central bank, acknowledged there had been a reallocation of assets from emerging market assets into safe-haven assets.
He also denied talk that Bank Indonesia would impose tight controls in foreign exchange, replacing the nation’s current free-floating foreign exchange system, which ensures the free movement of capital in and out of the country.
Investor Daily
Forex Signals - EURUSD Still Falling - Int'l Business Times
Recap: We didn't enter any new trades before the weekend (as promised), or yesterday since the US Banks were closed for Memorial Day. The markets did open with a bullish gap, however, which has already been closed and the pair is within 20 pips of it's Friday closing price.
FOREX-Euro falls near 2-year low on Spain worries - Reuters
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Alternative lenders enticed to North West - bdaily.co.uk
Challenging market conditions are fuelling growth in the asset based finance industry and the number of debt funds in the North West.
That is according to Deloitte’s head of debt advisory in North West, Nigel Birkett.
Figures from the Asset Based Finance Association (ABFA) show that the share of facilities above £10m in the overall market has more than doubled from 4% to 9% between 2001 and 2011.
The trend demonstrates the growing maturity of the industry and its acceptance as a form of finance with larger corporates.
Recent years have seen the introduction of US financial heavyweights Wells Fargo and PNC to the UK market through Burdale Financial and KBC Business Capital.
Together with the established lenders in the market, this form of funding is becoming more accepted in the mid-market arena.
Mr Birkett, Partner, said: “The North West has a sizeable asset based lending industry which will only get stronger in the years to come.
“We recently advised on the £80m refinancing of WT Burden, which generated significant appetite from asset finance lenders.
“The number of debt funds is also increasing and can offer an alternative to traditional bank finance.
“Whilst debt funds to date have typically targeted larger companies, recent funds launched such as Metric Capital and Encina are focusing on the mid market.
“As banks continue to focus on strengthening their own balance sheets, increased liquidity appears some way off.
“The increased availability of alternative funding, including asset based lending and mid market debt funds, is therefore good news for corporates in the region.”
Forex: USD/CAD near session highs above 1.0250 - FXStreet.com
FOREX-Euro edges up but Spain fears leave it vulnerable - Reuters UK
* Euro stays near last week's low just below $1.25
* Doubts grow that Spain can support ailing banks on its own
* Eyes on whether Spanish govt bond yield hits 7 pct
* EUR short covering may be curbed ahead of Irish referendum
LONDON, May 29 (Reuters) - The euro edged up against the dollar on Tuesday as investors cut hefty bearish bets in the currency, but worries about Spain's banking sector left it hovering close to its lowest levels in nearly two years.
Analysts and traders said the euro had good support at the $1.2500 level and Friday's trough of $1.2495, with bids around that area, but expected it would soon break lower given the extent of the concerns surrounding the euro zone debt crisis.
Worries about the cost of shoring up Spain's banking system lifted its debt yields on Monday, driving the gap between Spanish and German 10-year yields to euro era highs, as the risk grew that Spain may be forced to seek an international bailout.
The euro was up 0.2 percent at $1.2566, with traders citing demand from corporates and Middle East names.
Having failed to clear resistance at previous support around $1.2625 for three days in a row, however, the euro was vulnerable to another test of Friday's low, which marked its weakest since July 2010.
"We may see a bit of consolidation here but going forward we still have a euro that is very weak and vulnerable. The widening of spreads between Spain and Germany and Italy and Germany keeps worries about the debt crisis very much alive," said Niels Christensen, currency strategist at Nordea in Copenhagen.
"I don't see the euro moving above $1.27. It's only a matter of time before it breaks $1.25. This is psychological support but it's not a big level like the January low was (around $1.2624) and that has clearly broken."
The euro gave up most of the gains made on Monday after Greek polls showed more support for pro-bailout parties ahead of the country's election on June 17. That eased fears Greece may leave the euro zone.
Bids just below $1.25 may support the euro for now, though further losses could see it drop towards $1.2450, where traders reported stop-loss sell orders.
"Although pessimism over Greece is somewhat receding, worries about Spain are growing, with markets watching whether the Spanish bond yield will hit the seven percent mark," said Masafumi Yamamoto, chief FX strategist at Barclays in Tokyo.
Short-term, the euro may continue to be held up by bouts of short covering. Speculators bolstered short euro positions to record highs in the week ended May 22, leaving ample scope for a correction as they cut positions and book profits.
TROUBLES IN SPAIN
Many traders expect further downside in the euro as they fear troubles at Spanish banks hit by a bust in property could further complicate Madrid's efforts to rein in its debt.
Spain's fourth-largest lender Bankia has asked for a bailout of 19 billion euros, in addition to 4.5 billion euros the state has already pumped in to cover possible losses on repossessed property, loans and investments.
Prime Minister Mariano Rajoy on Monday again ruled out seeking outside aid to revive Spain's banking sector, though many investors are sceptical this will be possible.
Spanish 10-year bond yields rose above 6.5 percent on Monday. A level of 7 percent is seen as critical as euro zone countries that have previously requested bailouts did so soon after their 10-year yields rose above that mark.
Any buying in the euro may also be curbed ahead of Ireland's referendum on Europe's new fiscal treaty on Thursday, although the market is cautiously optimistic that the Irish will support the treaty on fear that a "no" vote could add fuel to the fire.
Against the yen, the common currency fetched 99.87 yen , not far from a four-month low of 99.37 yen hit last week. The yen, along with the dollar, was supported by the market's risk averse mood.
The dollar stood at 79.47 yen, not far from a three-month low of 79.002 yen.
The higher-yielding Australian dollar was up 0.4 percent at $0.9888, above last week's six-month low of $0.9690.
Money comes in for Rodgers - SkySports
Wigan's Roberto Martinez was being strongly tipped to take over at Liverpool after talks with the club's American owners Fenway Sports Group in Miami last week.
But there was still no word from Martinez as he arrived back in Manchester today following a family holiday in Barbados and Wigan chairman Dave Whelan has issued a deadline of Thursday for an agreement to be reached.
The story took a new twist today with Swansea boss Rodgers, who originally turned down the chance to speak to FSG, appearing firmly back in frame with online bookies Sky Bet. He is now 1/2 to be appointed Reds' manager with Martinez out to 2/1.
It now appears to be definitely a two-horse race with Borussia Dortmund manager Jurgen Klopp out to 12/1 after being as short as 2/1 early on Monday.
Football trader Joe Petyt explained: "When Martinez was photographed with FSG's John Henry in America he became the strong favourite but even during that time we saw sustained money for Rodgers.
"In the last 24 hours the amount of money we've seen on Rodgers has increased substantially which indicates to us that some people have heard that he's going to take the job."
China Drowning in Money: What It Means for the U.S. - The Heritage Foundation
Global financial markets are keenly interested in China’s short-term economic direction and policy choices. American policy should look farther. If China chooses to try to stimulate its economy in the second half of the year, even if successful, it will only exacerbate a more pressing long-term challenge.
This challenge in part takes the form of too much money. While attention is focused on when the People’s Republic of China (PRC) might catch the U.S. in terms of GDP, it has already passed the U.S. on some measures of its monetary base. Such high liquidity typically precedes periods of stagnation or even outright economic contraction. It is one of the surer reasons for anticipating that China’s true economic growth might slow sharply, a possibility that has clear implications for American policy.
Moreover, excess Chinese liquidity has already had an impact in the U.S. The two economies are linked by Beijing’s chosen balance-of-payments rules, which tie the yuan to the dollar and compel the PRC to hold excess reserves in American bonds. The U.S. has its own money supply management challenges, and communication between the two countries’ monetary authorities will be valuable.
Not for All the Money in China
There are many different ways to measure the supply of money. There are also pronounced differences in national monetary systems, which cause natural differences among economies. For a large economy, the PRC is immature financially, so that more capital stays within the banking system. This is a well-recognized long-term problem.[1]
One manifestation of the problem is a comparatively high ratio of broad money M2 (currency in circulation plus demand and time deposits) to GDP. China is well above the global average on this measure, while a somewhat similar economy in Brazil is well below. Nearly all of the countries that have higher M2/GDP ratios than China are in Europe, which, in light of recent developments, is not reassuring.[2]
More importantly, the ratio for the PRC is not only high but has been rising steadily. Since the financial crisis, a number of countries have rising liquidity, including the U.S. However, those countries with both high and clearly rising liquidity (Spain, for example) are a small and unhealthy bunch. This is not good company for China to be keeping.
The U.S. is only one point of comparison, but it is an instructive one. In 1998, China’s M2 was 70 percent smaller than America’s. In 2011, it was 40 percent larger. While Chinese GDP expanded greatly in that period, it was still only half of American GDP at the end of last year. Yet the PRC had $3.8 trillion more in broad money supply sloshing around.
Measurements of leveraging show roughly similar problems. China’s dependence on bank loans for financing intensified with the lending explosion in 2009. In 1998, loan volume was 102 percent of GDP. By 2008, it had only inched higher to 106 percent of GDP. Just three years later, though, it had jumped to 123 percent of GDP. More comprehensive measures of credit show still higher figures and steeper climbs.[3]
What Happens Next?
There is plenty of discussion at present about short-term weakness in the Chinese economy and whether additional stimulus is the right response. The longer term is clear: On its present policy path, the effective stimulus Beijing can apply through monetary policy will continue to decline.
At the high levels of liquidity that have now been reached, further leveraging has and will continue to become increasingly ineffective. More and more money must be employed to get the same results. Barring a major policy misstep, there is no true crisis imminent. However, a crisis must loom as a possibility at some point.
This leaves Beijing with unpleasant choices. More monetary stimulus will have only a limited impact now at the cost of digging deeper into a hole that China must eventually climb out of. Whether or not further short-term stimulus is chosen, the PRC must eventually de-leverage to some extent. This will exert downward pressure on growth for some time. After years where growth has been inflated by a flood of new money, this signifies instability, and the Communist Party does not like instability.
How liquidity is drained, however, could matter a great deal. Broad money should at least stabilize relative to GDP, and total credit should slow relative to GDP. It would be greatly preferable if, at the same time, bank lending were to become less important. This could occur with financial reform. The PRC should have more commercialized banks that are more circumspect about lending under the wrong conditions. It should have more financial options so that banking is less important relative to bonds, stocks, futures, and other financial outlets.
Financial reform is not only painful; it takes time. Interest rate liberalization, de-control of financial markets (with attendant risk), and partial privatization in banking cannot be done overnight. Beijing has a bit of time, since there is no impending crisis, but genuine reform should start as soon as possible. If it begins quickly, the payoff from reform can more than offset the discomfort from the inevitable deleveraging. The PRC’s financial system can shift from a source of instability to a source of efficiency.
American Involvement
Like it or not, the U.S. is already involved in the Chinese liquidity problem. Some portion of excess Chinese liquidity inevitably spills into the U.S.—and more than anywhere else, because the yuan is tied to the dollar. Most famously, this was part of the feedback loop that contributed to the recent financial crisis. It has continued since, with Chinese money entering the U.S. in various ways.[4]
But, as it was before the financial crisis, Chinese liquidity overflow into the U.S. remains only part of the loop. Though American money supply is now smaller, the U.S. economy is still much bigger, and the dollar is the world’s reserve currency. Extra American liquidity, whether due to low interest rates in the middle of the last decade or quantitative easing more recently, spills over onto the rest of the globe.
When it finally becomes willing to deal with its own monetary problems, Beijing will therefore cast a nervous eye to the Federal Reserve. To a lesser extent, the Fed should do the same with regard to the People’s Bank. The U.S. should:
- Continue and enhance information exchange with China on monetary policy. Countries make their own monetary choices, but transparent and timely communication helps make for better policy.
- Plan for notable economic change in the PRC in the medium term. Beijing could adopt financial reform and become much more efficient, or it might refuse and see true growth slow considerably.
- Intensify bilateral and Asian regional trade and investment liberalization, such as the Trans-Pacific Partnership, to help protect friends and allies against a possible Chinese slump.
Tightening the Taps Together?
China and the U.S. face the same long-term challenge to unwind money growth. The two challenges are connected, though the PRC’s is clearly more daunting. China must act or lose monetary policy as a tool, and American policymakers should be aware of the stakes.
Derek Scissors, PhD, is Senior Research Fellow in Asia Economic Policy in the Asian Studies Center at The Heritage Foundation.
For those with more money than taste... the £125,000 diamond encrusted gold coins on sale to celebrate Queen's jubilee - Daily Mail
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Forget commemorative mugs or tea towels, there's now a much more elaborate souvenir on sale to mark the Queen's diamond jubilee.
But with a price tag of 125,000, you'll need more money than taste in order to afford it.
The East India Company has released 60 minted gold coins, one for each year of Queen Elizabeth II's reign, encrusted with diamonds to celebrate the royal milestone.
Despite the hefty price tag, the company has revealed that it has had 'brisk and determined interest' from monarchist collectors and investors from across the globe.
Diamond Queen: The East India Company have released 60 of these gold coins encrusted with diamonds to mark the jubilee
The gold coins weigh a kilo and feature the head of the Queen wearing a diamond tiara, necklace and brooch with the words 'Elizabeth Regina, Diamond Jubilee 1952-2012' around the outside.
They have also released 60 silver coins of the same design and weight but at a 'cheaper' price of 25,000.
Each kilo struck by The Royal Mint represents over 1,000 hours of craftsmanship - and the company has received particularly high interest in the coins from international buyers.
As a result, the company is now scheduling private viewings in Monaco, Moscow, Geneva, Hong Kong, the Middle East and India.
The East India Company, which has a flagship store in Mayfair, has long-standing links to the British monarchy.
Expensive souvenir: Diamonds are encrusted in the tiara, necklace and brooch of the Queen's image raising the price of the one kilo gold coin to 125,000
Queen Elizabeth I founded the East India Company in 1600 by Royal Charter.
In the 19th century, the company set jewels in a tiara for Britain's other diamond Queen, Queen Victoria, when she was crowned Empress of India.
Sanjiv Mehta, CEO of East India Company said: 'The company was instrumental in building the British Empire with its legacy still visible today in what we know as the Commonwealth Nations.
'We chose to commission the Royal Mint, another quintessential British brand who first minted coins for us over 200 years ago, with this unique project to create a timeless tribute that reflects the grand achievement it celebrates.'
Commemorative: Sixty silver coins have also been made and are on sale for 25,000
Given the expensive nature of the purchase, buyers get more for their money than just the coin.
It is presented on royal purple velvet in a bespoke presentation case, designed by British company Linley.
A diamond-magnifying loupe is hidden in the base compartment of the presentation case, which enables owners to get a close-up view of the encrusted diamonds.
The purchase also includes a book which tells the story of the Queen Elizabeth II's 60-year reign.
Could you go on a 125,000 shopping spree and hand this coin over as payment? Its like when they sell a 5 coin for 8 .... If I want a 5 coin I will pay 5 for it, thank you please. My other half used to collect coins, before i spent them on the bus - Claire, Bristol, 29/5/2012 16:51------What made you buy a bus?
- Tom, Chichester, 29/5/2012 17:57
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