The Pension Trustee’s Investment Guide

February 2008
More details
  • Publisher
  • Published
    15th February 2008
  • ISBN 9781854184306
  • Language English
  • Size 5.25" x 8.75"

Far too many British pension trustees—even in large funds—have an inadequate understanding of investment and the financial markets.

Trustees are now expected to take center stage in making informed financial decisions to cover a scheme’s future liabilities and to manage risks in a way in which they can be held accountable. At the same time, they are having to consider more complex and innovative financial instruments to diversify their portfolios and to improve their returns.

This book is designed as a practical, easy-to-follow guide to the new UK financial environment in which pension trustees now have to operate. Edited by Robin Ellison, it sets out the challenges that trustees now face in making investment decisions, providing them with a set of working definitions and the financial techniques and tools they need in order to improve their returns and safeguard their risks.

Given the statutory requirement to draw up a statement of investment principles, it discusses the strategies that trustees might pursue and reviews the pros and cons of “liability driven investments”, a new approach for managing potential deficits. It summarizes the latest thinking and techniques in traditional assets, such as equities, bonds, property and cash and it examines the potential for investing in less conventional asset classes, such as hedge funds, private equity and commodities, where both rewards and risks can be high. It looks at the use of innovative financial instruments, such as derivatives and real estate investment trusts, defining what they are and how they can help trusts invest in a more efficient and flexible manner.

For trustees looking for more simplicity and lower costs, a rundown is given of tracker funds and pooled investments. The book also discusses the implications of investing on an international or global basis, highlighting in particular the implications of foreign exchange and tax.

PART 1 THE TRUSTEE AS INVESTOR: 1) The Trustee’s Role; 2) Scheme Funding; 3) Powers to Invest; 4) Asset Allocation; 5) PART 2 CORE ASSETS: 5) Quoted Equities (shares); 6) Bonds; 7) Property; 8) Cash; PART 3 ALTERNATIVE ASSETS: 9) Private Equity; 10) Hedge Funds; 11) Commodities; 12) Infrastructure; PART 4 DERIVATIVES: 13) Risk Instruments; 14) Futures; 15) Swaps; 16) Options; PART 5 ALTERNATIVE STRATEGIES: 17) Liability Driven Investment; 18) Multi-Asset Investing; 19) Portable Alpha; 20) Pooling; APPENDICES: I) The Bluffer’s Guide; II) The British Pension System; III) Pensions by Numbers; IV) Bluffer’s Case; V) Addresses; VI) Further Reading.

Robin Ellison

Robin Ellison is Head of Strategy, Pensions at UK law firm Pinsent Masons. He is a member of the CBI Pensions Panel and a trustee of several pension funds, both as independent trustee and as chairman. He also practices as a commercial mediator. He is the author of numerous books on pensions including The Pension Trustee's Investment Guide, (Thorogood Publishing) and editor of Pensions Benefits Law Reports. He is Chairman of the NAPF and Visiting Professor in Pensions Law and Economics at Cass Business School, City University London.

Adam Jolly

Adam Jolly writes regularly for many leading financial and technical journals. He is editor of The Growing Business Handbook and co-author of The International Patents Handbook and The Pension Trustee’s Investment Guide.