영국 연금감독원(TPR)이 4월24일 Samuel Smith Old Brewery라는 회사와 그 회사 회장님을 기소했습니다. 이 회사는 260년전에 설립된 영국 최고의 맥주회사인데요, 올 1월29일까지 퇴직연금의 재정상태 등에 관하여 감독원이 자료제출과 관련 보고를 요청했는데 특별한 사유없이 이를 어겼다고 합니다.
영국에서는 이런 보고 거부는 범죄행위이고 벌금도 장난아니라고(unlimited fine) 하네요.
The Pensions Regulator (TPR) is to prosecute Samuel Smith Old Brewery and chairman Humphrey Smith for failing to provide information and documents for an ongoing investigation.
TPR announced on 24 April that it sought details of the North Yorkshire-based company's finances in order to better understand the funding position of some of the brewery's pension schemes.
This came after the company failed to comply with a notice issued under Section 72 of the Pensions Act 2004 on 12 January 2018, requiring the information and documents to be provided by 26 January 2018.
The company and Smith have been summonsed to appear at Brighton Magistrates' Court on 15 May.
They will each face a charge of neglecting or refusing to provide information and documents, without a reasonable excuse when required to do so under the act.
Smith was charged on the basis that the offence by the company was committed with his consent, or by his neglect.
Under section 72 of the Pensions Act 2004, TPR can require pension schemes, employers, and third parties to provide it with information and documents relevant to pensions. The failure to provide such information without a reasonable excuse is a criminal offence, and can result in an unlimited fine.
Additionally, those involved can suffer serious reputational damage from being convicted of non-compliance with the law while businesses can face further action from professional body.
The brewery was unable to provide PP with a statement in time for publication.
Hyacinthe Rigaud’s portrait of King Louis XIV, courtesy of the Getty Open Content Program
Tontines might be a nifty idea for retirement income. Too bad they haven’t been legal here for a century.
Tontine is a fancy word for betting on how long you’ll live – in a good way. Here’s the concept in a nutshell: many people pool their money in return for guaranteed regular payouts for life, similar to an annuity.
The people who live to, say 90, will receive ever-increasing financial payoffs, because the number of participants in the pool will invariably shrink over time. The catch is that the investors who die young won’t receive as much income as the men and women who live the longest – but they won’t need the money either.
A new study by the Center for Retirement Research (CRR) takes a close look at an idea that is tossed around among finance experts: modifying tontines to use them as a source of retirement income.
Some criticize them as a dubious investment, but they’ve stood the test of time. King Louis XIV of France was the first monarch to raise public funds using tontines, a 1650s creation of Italian financier Lorenzo Tonti. More than a century later, they caused financial hardship among middle-class investors, laying some of the groundwork for the French Revolution.
Tontines made it into American popular culture in the M*A*S*H* television show. Because Col. Potter was the last man standing among his World War I Army buddies, he got the only remaining bottle of brandy from a cache they’d found and drank while camped out in a French chateau. Tontines popped up again in an episode of The Simpsons: grandpa Abe Simpson and Mr. Burns fight over some valuable German paintings in a tontine their Army unit had created back in World War II.
Credit for the idea of a retirement tontine goes to a paper by two professors at York University in Toronto, Moshe A. Milevsky and Thomas S. Salisbury. In his new report, CRR researcher Gal Wettstein agrees that tontines might be a useful way to get regular retirement income – with modifications.
Tontines’ big advantage is their guaranteed payouts to each investor. But a tontine costs less than annuities, because its investors – rather than an insurance company – bear the risk. A modified tontine for retirees would address their current downside: very old people get the largest payoffs, by default, as others in the pool die, but age and poor health can prevent some from fully enjoying the money. The modified retirement tontine could make equal, regular payments to all the participants over the years – rather than give the biggest payouts to those who live the longest – Wettstein said.
Milevsky and Salisbury have proposed ensuring the equal payments by basing them on the investor group’s overall survival probability. As investors die, Wettstein explains, the total number of fixed monthly payments would naturally decline, leaving enough funds in the pool to continue the equal payments. But the catch is that if everyone in the pool lives into their 90s – longer than average longevity predictions – lower payments would inevitably follow as the pool ran low.
Retirement tontines are still fanciful. But if they were legal, Wettstein wrote, they “would likely make the most sense as part of a larger portfolio.”
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미국에서 예전에는 40년 근무해서 저축한 연금자산으로 여생을 넉넉히 보낼수 있었습니다. 소위 "9 to 5"(9시 출근 5시 퇴근)라는 정규직에서 은퇴해서 10~15년 정도의 황금시기(golden years)를 충분히 즐기면서 여생을 마감하는 거죠.
...
하지만, 이제는 은퇴후 적어도 30년은 더 살아야하는데 과거와 같은 넉넉한 삶은 기대하기 어려울 것 같다고 합니다.
미국 사회보장국(The Social Security Administration)에 따르면 현재 65세의 경우 25%가량이 90세까지, 10%는 95세 이상까지 생존할 것이라고 합니다.
2030년이 되면 무상 의료보장(Medicare)이 시작되는 연령이 73세로 연기되고 그나마도 보장해주는 약값도 치료영역도 줄어들 것이라는 소설 속의 이야기(Twenty Thiirty:The Real Story of What happens to America. by Albert Brooks)가 현실로 변하고 있다고 합니다.
아무튼 지금까지의 연금플랜들은 이런 장수리스크를 충분히 고려하고 않고 세워지고 있었던 거죠.
어제 워싱턴포스트 기사인데, 건강한 고령자가 참여할 수 있는 유연한 일자리 환경, 은퇴자를 위한 교육기회 확대, 의료정책 등에 관한 심각한 정책변화가 예상됩니다.
A key part of retirement planning is estimating your life expectancy.
It’s a tough thing to think about. On the one hand, you hope to live a long and healthy life. But what if you live too long? Will you have enough money saved to take care of yourself until the end of your life?
“When you live longer, your money needs to last longer,” writes Mark Fried for the New York Daily News. “But a big problem is many people still hold fast to a retirement model based on a much shorter life span. They don’t consider that their retirement could last three decades or more, and so they don’t plan how to pay for that.”
“About one out of every four 65-year-olds today will live past age 90, and one out of 10 will live past age 95,” according to the Social Security Administration.
Use the agency’s life expectancy calculator to get a rough estimate of how long you (or your spouse) may live.
In a blog post on longevity and retirement, Fidelity Investments makes this point: “Fifty years ago, most Americans shared a common view of retirement. You left the 9-to-5 job and transitioned into your ‘golden years,’ a period of roughly 10 to 15 years, give or take, to live off your pension plan and enjoy life. Now it’s hard to say what retirement is. For many it can stretch 30 years or more.”
In an interview with Fidelity Viewpoints, Laura Carstensen, founding director of the Stanford Center on Longevity, says with longer lives we have to reshape our visions of retirement.
“Most people can’t save enough in 40 years of working to support themselves for 30 or more years of not working,” Carstensen said. “Nor can society provide enough in terms of pensions to support nonworking people that long. I’d like to see us move in a different direction: toward a longer, much more flexible working life, with more part-time work, in which people could come in and out of the workforce and have greater opportunities for education throughout their lives.”
If you like a scary story, read actor Albert Brooks’s first novel, “Twenty Thirty: The Real Story of What Happens to America.’’
In this fictional 2030, full retirement age has been pushed to 73. Premiums on Medicare have been raised even though coverage has been cut. There are drugs that cure Alzheimer’s. But there are consequences to having a healthier aging population.
Brooks imagines an America in which the younger generation is taxed heavily to fund social programs for seniors who, because of medical breakthroughs, are living well past 90. As a result, the young adults resent “the olds,” as they are called. They become the first generation financially worse off than their parents.
Wait. We don’t have to imagine. This is a case of fiction imitating real life.
“While healthy retirees have much lower monthly medical expenses than those with serious conditions such as diabetes or cancer, their longer life expectancies mean that they actually need to save much more to pay health care costs in retirement,” writes Eleanor Laise, senior editor for Kiplinger’s Retirement Report.
Your thoughts Are you afraid of outliving your retirement savings? Send your comments to colorofmoney@washpost.com.
Retirement rants and raves I’m interested in your experiences or concerns about retirement or aging. What do you like about retirement? What came as a surprise?
If you haven’t retired, what concerns you financially? You can rant or rave. This space is yours. It’s a chance for you to express what’s on your mind. Send your comments to colorofmoney@washpost.com. Please include your name, city and state. In the subject line put “Retirement Rants and Raves.”
In last week’s retirement newsletter, I wrote about the increase in grandparents co-signing for student loans. I asked for your thoughts on the issue.
Julie of Austin wrote, “Grands will do ANYTHING for their beloved grandchildren, they make even the wisest of us lose all reasoning. I will print out this article and FRAME IT as a reminder for the time in the near future when this request comes from one or more of my seven granddarlings. Repairing our retirement savings after a layoff during the recession (& the recession itself) has been impossible enough, more financial hardship we do not need! Love does NOT equal money!”
Denise Keenan wrote, “My husband and I are now retired, and our two boys have fortunately been able to make their payments on their student loans. However, we co-signed on their loans many years ago. I remember the bank/banks threatening higher interest rates for the loans if the parent did not co-sign.”
She wanted to know if they can be removed as co-signers.
“I’m 71 and have a huge student loan due to high interest rates that they capitalize. If I can’t pay it off, will the loan die when I die? Or, will my family still be responsible for it? No husband or children but have a niece and sister.”
Your estate may be responsible for paying off your student loan (assuming there are enough assets left). But if you did not have a co-signer, family members would not be personally responsible for paying off the loan.
Many of you wrote to talk about your fears of rising health-care costs in retirement.
“I worry about the cost of health insurance and health care,” one reader wrote. “I am paying $1,000 a month for health insurance now with a $5,500 deductible. I am barely able to make these payments, but I have a depressed immune system and cannot move to another company. Why doesn’t the federal government allow insurance companies to sell across state lines? This would might give me and others like me a choice.”
“I retired last summer at age 60 and am in the midst of waiting for the outcome of my disability claim (for a spinal disorder),” another reader wrote. “I have a state employee pension and a Social Security widow’s pension, so basically I am quite comfortable. I have a nice apartment and can pay all my bills. The downside is that I am paying $400 a month for health insurance and have a $4,000 deductible. I also pay for prescription drugs for high blood pressure. I can afford the generics, for now. But costs are rising. My question is, how can Americans find this even remotely acceptable? I lived in a city outside the U.S. where I could walk into a clinic and get seen for about $10. I wanted a retirement as peaceful as it could get. I worked all my life to be able to sit and read, take vacations, buy gifts for my family, sleep late and consume the occasional shrimp cocktail. I am worried now about my ability to take care of my health.”
I’d like to end on some observations about retirement from Jim Gallagher of Bemidji, Minn.:
“I guess I don’t have any crazed rants or raves about retiring,” Gallagher wrote. “But since you asked, I’ll offer a few insights since pulling the pin in 2011. I was a federal civil service employee and retired at the ripe age of 55. I had met my age and service requirements to collect my pension. I had no good reason to keep working. A federal government office is a community unto itself in rural areas. I rarely socialized outside a group of work associates while working. Since retiring, I have been surprised at how little I see agency employees around town much less at any social event. I just don’t seek out the people I used to work with. This has challenged me to find other friends or social outlets. It really is an ongoing challenge to stay socialized. I live on a lake, but rarely go fishing. I don’t need another thing to do alone. I look for activities where I can be involved with other people.”
On money he wrote: “I have been surprised at how far my retirement income goes month to month. I had mapped it out well, but I am still surprised when I have money left over at the end of the month. This has changed my mind-set about spending. I look at my savings and the monthly pension check and look out ahead at how many more years I have on this earth. I feel like I need to have a spending plan now versus the savings plan I stuck to for 30 plus years. This stability is great, but I need to couple this with greater elements of happiness and socialization as I age.”
Newsletter comments policy Please note it is my personal policy to identify readers who respond to questions I ask in my newsletters. I find it encourages thoughtful and civil conversation. I want my newsletters to be a safe place to express your opinion. On sensitive matters or upon request, I’m happy to include just your first name and/or last initial. But I prefer not to post anonymous comments (I do make exceptions when I’m asking questions that might reveal sensitive information or cause conflict).
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U.S. corporate pension funding ratios dipped slightly to about 86% in March, according to reports from Mercer, Wilshire Consulting, Conning, and Aon Hewitt.
According to Mercer, the estimated aggregate funding ratio of defined benefit plans sponsored by S&P 1500 companies was 87% as of March 31, down 1 percentage point from February on the back of negative equity market returns.
Discount rates decreased by 5 basis points in March to 3.92%. The S&P 500 and MSCI EAFE indexes decreased 2.7% and 2.2%, respectively.
The estimated aggregate deficit of pension fund assets of S&P 1500 companies totaled $286 billion as of March 31, up $24 billion from the $262 billion measured at the end of February.
"March snapped a streak of funded status gains dating back to August 2017, as it fell back slightly," said Matt McDaniel, a partner in Mercer's wealth business, in a news release on the results. "During this period, interest rates and equity valuations have both risen markedly. Plan sponsors should look to see if their pension policies are aligned for current market conditions. While the drop in funded status for March was small, history has shown us it is a question of 'when' — not 'if' — funded status volatility will return."
According to Wilshire, the aggregate estimated funding ratio for U.S. corporate pension plans sponsored by S&P 500 companies decreased by 1.6 percentage points to end March at 86.8%, yet remains up 3.6 percentage points over the trailing 12 months.
The monthly change in funding resulted from the combination of a 1.1% increase in liability values and a 0.8% decrease in asset values. Despite March's decline, the aggregate funded ratio is up 2.2 and 3.6 percentage points, respectively, year-to-date and over the trailing 12 months.
"March was the second consecutive month that saw funded ratios driven lower by negative total asset returns," said Ned McGuire, managing director and a member of the pension risk solutions group at Wilshire Consulting, in a news release on the results. "March's 1.6-percentage-point decrease in funding was the largest drop in 21 months. The retracement in funding was led by a decline in global equities and a rise in liability values that resulted from a nearly 10-basis-points decrease in the bond yields used to value pension liabilities."
Meanwhile, Conning's pension funded status tracker model that follows the funding of the average corporate pension plan in the Russell 3000 universe found the funding ratio of the average Russell 3000 pension plan fell by 1 percentage point to 85% in March from 86% in February. This was mainly driven by a fall in global equity markets by around 2% due to global trade war concerns.
The average plan's liability also increased marginally as the effective discount rate fell by 10 basis points to 3.8% over March.
Year-to-date, the funded status is still up by 2 percentage points.
According to the Aon Pension Risk Tracker, the aggregate funding ratio for U.S. pension plans in the S&P 500 decreased to 86.5% in March from 87.7% at the end of February. Pension fund assets saw a -0.4% average return in March, according to Aon Hewitt.
Year-to-date through March 31, the funded status improved to 86.5% from 85.6% at the end of 2017. The funding deficit decreased by $31 billion this year, which was driven by a decrease in liabilities of $79 billion, offset by an asset decrease of $48 billion year-to-date.
