A holistic look at investing
What do inflation-linked pension benefit schemes and Texan cowboys have in common? We look at a source of scheme risk that many trustees may not have considered: limited price indexation risk. This could become increasingly important for trustees as their schemes progress along their de-risking glidepaths.
At LGIM’s client conference, pension-related theatricals took place alongside discussions of ‘digital humans’ and the long-term trends dominating the investment landscape.
If your base case is that interest rates will rise faster than is already priced in, how much should you under-hedge? The answer could be less than you think.
The introduction of auto-enrolment has led millions more to save into a pension. But is encouraging people to put more aside for the future the sole antidote to money worries? What if the worries themselves were stopping people saving?
Some belief is needed in factors other than market exposure to justify choosing a multi-factor strategy over a market-cap weighted one. But how much belief?
The increase in minimum contribution rates was widely feared, but has it really led to a rise in the number of members opting out of their company pension schemes?
Short-cuts have their place. If you can avoid complexity and effort, it makes absolute sense to do so. It gives you time to work on other projects, or in my case re-watch The Treble (1999), reliving the good ol’ days. However, when it comes to retirement income, short cuts may be counter-productive and nowhere is this more apparent than with the 4% rule.