Pension Bulletin September Volume IV Issue VII

Transcription

1 Pension Bulletin September 2015 Volume IV Issue VII

2 INDEX 1. NPS statistics 2 2. Conferences held during the month 8 3. Circulars and public notices issued by PFRDA 8 4. Press Releases 8 5. Highlights of development in International pension sector Global pension assets Economic Outlook and Macroeconomic Statistics Major news clippings on pension schemes of other countries 15 1

3 1. NPS statistics i. NPS-Growth of subscribers and Asset under Management for September, 2015 The number of subscribers under NPS increased by 0.42% during the month of September 2015 supported by 4.59 % growth in unorganised sector and 1.59 % growth in corporate sector. The AUM under NPS increased by 3.09 % during the month of September The highest growth in AUM is witnessed in corporate sector followed by state government. The subscriber base of newly launched Atal Pension Yojana has increased by % during September 2015 and AUM under APY have increased by 63.93%. The table depicting the same is as under: Sector Central Government State Government Corporate UoS NPS Lite* Number of Subscriber as on 29 Aug'15 Number of Subscriber as on 26 Sept'15 1,560,020 1,568,640 2,749,817 2,769, , , , ,710 4,467,968 4,467,898 % Growth Over the month Assets Under Management as on 29 Aug' 15 (Rs. cr) Assets Under Management as on 26 Sept'15 (Rs. cr) % Growth Over the month ,844 41, ,51 47, ,837 7, ,818 1, Total ,697 98, ,288,169 9,327,589 * Fresh/new registration under NPS Lite has been stopped w.e.f. 01 st April 2015 % Assets Assets Number of Number of % Growth Under Under Subscriber Subscriber Growth Sector Over Management Management as on 29 as on 26 Over the the as on 29 as on 26 Aug'15 Sept'15 month month Aug' 15 Sept'15 Atal Pension Yojana 683, ,

4 ii) Share of different sectors in total NPS Percent share of government subscribers in NPS is 42.9 %. However, share of private sector, NPS Lite and APY subscribers in total NPS is 5.2 %, 44.2 % and 7.7%, respectively. The AUM of government sector is 90.1 % against which the share of private sector, NPS Lite and APY is 7.9%, 1.9% and 0.1%, respectively. Sector wise share of subscribers, corpus and AUM are given in the following table: Sector Number of Subscribers (% of Total) Total Corpus (% of Total) iii. Overall Status of State Governments (as on ) Total Assets Under Management (% of Total) Central Government State Government Total Corporate Unorganized Total NPS Lite APY Total Grand Total states have joined NPS. Tamil Nadu has already notified but is yet to adopt NPS architecture. Employees and employers NPS contributions are retained by the state government instead of passing on to the NPS architecture for management by professional fund managers as per the investment guidelines prescribed by the Pension Fund Regulatory and Development Authority. West Bengal and Tripura are yet to notify NPS. As on 26 th September, 2015, Uttar Pradesh has the highest number of subscribers enrolled under NPS followed by Madhya Pradesh and Chhattisgarh. In terms of assets under management (AUM), Madhya Pradesh has the highest AUM of Rs crores followed by Maharashtra and Uttar Pradesh. State wise position of date of adopting the NPS, number of subscribers, corpus and the Assets under Management are given in the following table: 3

5 (As on 26 th September, 2015) S.No. State Govt. Date of Notification Date of Adoption Total No. of Subscriber Contribution (Cr) AUM (Cr) 1. Andhra Pradesh /9/ Arunachal Pradesh /1/ Assam /2/ Bihar /9/ Chandigarh** 11/6/2009 1/1/ Chhattisgarh /11/ Goa 5/8/2005 5/8/ Gujarat /4/ Haryana /1/ Himachal Pradesh J & K /1/ Jharkhand 9/12/2004 1/12/ Karnataka /4/ Kerala 7/1/2013 1/4/ Madhya Pradesh /1/ Maharashtra /11/ Manipur /1/ Meghalaya /4/ Mizoram /9/ Nagaland /1/ Orissa /1/ Puduchery** 7/3/2005 1/1/ Punjab 2/3/2004 1/1/ Rajasthan /1/ Sikkim /4/ Telangana /9/ Utarakhand /10/ Uttar Pradesh /4/ Tamil Nadu 6/8/2003 1/4/ Tripura* No No West Bengal* No No Total ,69,521 39, , * Executed agreement with CRA and NPS trust only for AIS officer ** Chandigarh and Puducherry status is included under the state government Status *** IRA compliance (i.e. submitted all required documents) in State Government is 89.53% 4

6 iv. Summary of UoS Sector in NPS 65 PoPs with 40,008 service providers are registered with the PFRDA to provide services to citizens under the NPS. While the registration and contribution upload of government and government bodies employees is done by their respective Pay & Account offices, the private and the unorganised sector employees are serviced through the PoPs. As on September 26, 2015, 1,08,022 subscribers have been registered under the private and unorganised sector other than the NPS Lite and APY. The contribution from unorganised sector as on 26 th September 2015 was Rs. 487 crore against which AUM of the sector was Rs. 567 crore. Number of subscribers registered under NPS Tier II are 26,003. The contribution received from Tier II subscriber is Rs. 127 crore and the AUM is Rs. 135 crore. (As on 26 th September, 2015) a) Total number of registered PoPs 65 b) Total number of registered PoP-SP 40,008 Tier I c) Total No. of subscribers 1,08,022 d) Total amount of subscribers contribution Rs. 487 Crore e) Total Asset Under Management Rs. 567 Crore Tier II f) Total no. of subscribers 26,003 g) Total amount of subscribers contribution Rs. 127 Crore h) Total Asset Under Management Rs. 135 Crore v. Summary of Corporate Sector in NPS Total 1,951 corporates with 4,15,820 subscribers are registered under NPS. The contribution received from the corporate subscribers as on September 26, 2015 was Rs crore against which the AUM was Rs crore. (As on 26 th September 2015) a) Total number of corporate registered in NPS 1,951 b) Total number of subscriber registered in Corporate Sector 4,15,820 c) Contribution Rs. 6,156 Crore d) Total Asset Under Management Rs. 7,106 Crore 5

7 vi. NPS - Lite statistics Under NPS-Lite, 76 aggregators are registered having a base of lakh subscribers. Total contribution received from NPS Lite subscribers as on September 26, 2015 (excluding Swavalamban co-contribution by the govt. ) was Rs crore and the AUM was Rs crore. (As on September 26, 2015) a) Total number of Aggregators 76 b) Total number of subscribers registered lakh c) Contribution amount Matched and Booked (Excluding Swavalamban co-contribution by the GoI) Rs. 1,099 Crore d) Total Asset Under Management Rs. 1,842 Crore vii. Atal Pension Scheme statistics The subscriber base of newly launched Atal Pension Yojana has increased from 6.83 lakh in August 2015 to 7.74 lakh i.e. by % during September 2015 and AUM under APY have increased from Rs crore to Rs crore i.e. by 63.93%. (As on September 26, 2015) a) Total number of Banks registered under APY 305 b) Total number of subscribers registered 7,73,910 c) Total Asset Under Management Rs. 104 Crore viii. Returns of pension fund schemes The scheme wise and Pension Fund wise returns during the last one year are given in the following table: i) One year return (%) (As on 30 th September, 2015) Pension Funds SBI UTI LIC KOTAK RELIANCE ICICI HDFC Schemes CG SG Corporate-CG E C TIER I G E C TIER II G NPS Swavalamban

8 ii) Return (Compound Average Growth Rate) since inception (%) (As on 30 th September, 2015) Pension Funds SBI UTI LIC KOTAK RELIANCE ICICI HDFC Schemes CG SG Corporate-CG TIER I TIER II E C G E C G NPS Swavalamban ix. Charge structure for NPS/APY subscribers The service charge structure of intermediaries under NPS & APY is as follows: Intermediary Charge Head Service Charges Method of Deduction POP (Charge for each subscriber) Subscriber Registration Transaction involving contribution a Private Govt. Lite/APY Rs. 125 NA NA To be collected upfront from the subscriber 0.25% of contribution, Min. Rs. 20 Max. Rs NA NA NPS Lite/Swavalamban/APY paid by the Govt. CRA PRA Opening Rs. 50/- Rs. 50 Rs. 15/-* Through cancellation of Charges units. For govt. AMC per account Rs. 190/- Rs. 190 Rs. 40/-* subscribers paid by the Charge per Rs. 4/- Rs. 4 Free* Govt. transaction Trustee Bank Nil Nil NA PFM Charges Investment Management Fee 0.01% p.a % p.a. Through NAV deduction Custodian (On asset value in custody) Asset charges servicing % p.a. for electronic segment & 0.05 % p.a. for physical segment Through deduction NAV Note : * CRA has reduced the charges for NPS Lite subscribers. The PRA opening charges has been reduced from Rs. 35/- to Rs. 15/- and the annual maintenance charge per account has been reduced from Rs. 50/- to Rs. 40/-. Additionally, the charge per transaction which was Rs. 4 per transaction after initial 12 free transactions is free now. The revised charges are applicable w.e.f. 1 st July

9 2. Conferences held during the month A conference on Atal Pension Yojana (APY) for Banks in Odisha was organized by PFRDA with the help of NABARD on 04 th September, 2015 at Regional Office, NABARD, Bhubaneshwar, Odisha. The Public Sector Banks, Regional Rural Banks, District Central Cooperative Banks, State Apex Cooperative Banks and Urban Cooperative Banks in Odisha participated in the conference. The objective of the conference was to enhance the role of the Banks in the recently launched flagship pension scheme of the country Atal Pension Yojana (APY). The scheme provides minimum Government guaranteed monthly pension to subscribers from Rs 1000-Rs 5000 along with GoI co-contribution to eligible subscribers for an amount up to Rs 1000 for a period of five years provided one register by December All Indian Citizens in the age group of years may join the scheme through any bank branch. Shri Hemant G. Contractor, Chairman PFRDA briefed about the contours of Old Age income security and advised all the participants to play an active part in outreach of the scheme. The gathering was welcomed by Shri A G Das, CGM, PFRDA. Shri S K Kale, CGM, NABARD highlighted the importance of adopting APY by the Cooperative Banks of Odisha and elaborated various facets of financial inclusion. Orissa State has a population of 4.20 crore and 40% of the population is in the age group of years. This demographic dividend of the State provides ample scope for PFRDA to target the scheme in a more meaningful manner. 3. Circulars and public notices issued by PFRDA during September, 2015 The following circulars and public notices have been issued by PFRDA during September, The details of the same are available on PFRDA S website i.e Circular dated 01-Sept-2015 on Implementation of the Multilateral Competent Authority Agreement (MCAA) and Foreign tax Compliance Act (FATCA) 2. Circular dated 07-Sept-2015 on Investment Guidelines for NPS Schemes (Other than Govt. sector (CG &SG), Corporate CG, NPS Lite & APY) w.e.f 10 th September, 2015) 3. Public notice dated 18-Sept-2015 was issued by PFRDA against Saga Trip Marketing Solution Private Limited and DSR Electronics and Financial Services Private Limited 4. Press Releases a) Meeting with Chief Secretary, Maharashtra by Chairman, PFRDA Chairman, PFRDA met Shri Swadheen S Kshatriya, Chief Secretary, Government of Maharashtra and Secretaries of various departments of the State to solicit their support in offering the Atal Pension Yojana scheme to the unorganized workforce in the State. The Chief Secretary evinced interest in the long term benefits of APY and assured the State Government s support in all possible ways in reaching out to unorganised workers. The objective of the meeting was to spread the recently launched flagship pension scheme of the country Atal Pension Yojana throughout the State of Maharashtra. The scheme provides minimum Govt guaranteed monthly pension to subscribers from Rs 1000-Rs 5000 along with GoI co- 8

10 contribution to eligible subscribers for an amount up to Rs 1000 for a period of five years provided one registers by 31st December All Indian Citizens in the age group of years may join the scheme through any bank branch. Maharashtra State has a population of crores and 38% of the population is in the age group of years, which provides a huge opportunity for the scheme. Atal Pension Yojana (APY) can be extended to scheme of various State Government departments i.e Department of Women and Child Development, Health Department, Rural Development and Labour Department etc. b. Meeting with Secretary, Finance, Telangana and other Secretaries by Whole Time Member (Economics), PFRDA on WTM (Eco), PFRDA met Shri K Ramakrishna Rao, Principal Secretary, Finance department, Government of Telangana and Secretaries of Women and Child Development department, Labour department, Health & Family Welfare department, Rural development department and Panchayati raj department of the State to solicit their support in offering the Atal Pension Yojana scheme to the unorganized workforce in the State. WTM (Eco) briefed about the features and benefits of Atal Pension Yojana scheme. The Secretary, Finance evinced interest in the long term benefits of APY and assured the State Government s support in all possible ways in reaching out to unorganised workers. The scheme provides minimum Govt guaranteed monthly pension to subscribers from Rs 1000 to Rs 5000 along with GoI co-contribution of 50% of the total contribution subject to a maximum of Rs 1,000/- per annum, for a period of five years to eligible subscribers provided one registers by 31 st December All Indian Citizens in the age group of years are eligible to join the scheme through any bank branch. The following points were discussed during the meeting: i. Publicity for Atal Pension Yojana in local language by the State Government. ii. iii. iv. Migration of eligible subscribers from Swavalamban to Atal Pension Yojana (APY) and new enrolments under APY through Society for Elimination of Rural Poverty (SERP) under Rural Development department. Enrolments under APY for Anganwadi workers and Helpers under Women and Child Development department. Enrolments under APY for Asha workers and Mid Wifery under Health & Family Welfare department. v. Enrolments under APY for Building and Other Construction Workers and labourers under Labour department. vi. vii. Enrolments under APY for contractual staff, employees and Unorganized Workers across all departments. Relooking the existing Pension schemes across State Autonomous Bodies (SABs) and State Public Sector Undertakings (SPSUs) and working out modalities of extending notification for NPS wherever applicable. 9

11 As on date, Telangana State has registered 1,11,212 subscribers from State Government and State Autonomous Bodies with a total contribution of 1,493 crores. Telangana State has a population of 3.51 crores and 38% of the population (1.35 Crores) is in the age group of years, which provides a huge opportunity for APY. c. PFRDA officials met the bankers of Maharashtra State to secure their support on Atal Pension Yojana (APY) Shri A.G. Das, Chief General Manager,Pension Fund Regulatory and Development Authority(PFRDA)met the bankers of the State of Maharashtra at Pune to seek their enhanced participation in outreach of the Govt sponsored Guaranteed pension scheme, APY. There are nearly 8 lacs subscribers who have joined since June 15 and Maharashtra is the major contributor under the scheme with more than 80,000 enrolments. A specialized SLBC meeting was conducted on APY implementation & achievement of targets by the Banks at Pune on 24 th Sept 2015 and the meeting was organized by Bank of Maharashtra. During the meeting Shri. L. M. Deshmukh, General Manager, Financial Inclusion, Government Business & Convener, SLBC, Maharashtra urged the bankers to participate in sourcing APY with higher numbers. PFRDA officials have made a presentation on APY highlighting the latest changes in the product. The recent changes have made the pension product more customer friendly with flexible mode of payments as per the option of the subscribers of the scheme. Now the subscribers can opt for monthly, quarterly or half yearly mode of payments and subscribers who have already registered with monthly payment option may change into either quarterly or half yearly mode of payments. Mr A G Das has addressed to the concerns and feedback of the banks in mobilizing APY and assured his support to the bankers. He exhorted the bankers to utilize the services of BC and aggregators for sourcing APY. 5. Highlights of development in pension sector International- Global pension assets According to The Global Pension Asset Study (GPAS), a study by Towers Watson which gathers yearly data on total assets, asset allocation, and plan structure for occupational pension plans in Australia, Brazil, Canada, France, Germany, Hong Kong, Ireland, Japan, Malaysia, Mexico Netherlands, South Africa, South Korea, Switzerland, UK and US, total assets of the world's largest 300 pension funds grew by over 3% in 2014 (compared to around 6% in 2013) to reach a new high of over US$15 trillion. Ten years ago, total assets at the world's largest pension funds grew by 27% in that year to reach US$8.4 trillion and move above the previous high of US$6.6 trillion reached in The research shows that by individual region North America had the highest five-year combined compound growth rate of around 8% compared to Europe (over 7%) and Asia-Pacific (around 4%). The research also shows that the world's top 300 pension funds now represent around 43% of global pension assets. According to the research, defined benefit (DB) funds account for 67% of total assets, down from 75% five years ago. During 2014, defined contribution (DC) assets grew the most, by almost 5%, followed by defined benefit (DB) plans assets (almost 4%) and reserve funds (over 1%) while hybrid plan assets decreased by over 2%. 10

12 According to the research, the U.S. remains the country with the largest share of pension fund assets accounting for around 38%, while Japan has the second-largest market share with around 12%. The Netherlands has the third-largest market share with 7%, while Norway and Canada are fourth and fifth largest, respectively, with around 6% share each. The research shows that 25 new funds entered the ranking during the past five years and, on a net basis, the countries that contributed the most new funds were the U.K. and South Korea (two funds), Russia, Australia, France, Peru, Vietnam and the U.S. (one fund). During the same period, Germany and Japan had a net loss of three funds from the ranking. The U.S. has the largest number of funds in the research (128), followed by the U.K. (27), Canada (19), Australia (16), Japan (15) and the Netherlands (13). Top pension fund assets almost double in ten years Assets under management (AUM) of the world s largest pension funds totaled $15.4 trillion in Funds AUM increased by 3.4% in 2014, compared to 6.2% in The top 20 funds had a growth rate of 3.9% in 2014, a slightly higher increase than the overall ranking. North America remained the largest region in terms of AUM, accounting for 43.2% of all assets in the research. Europe was the second-largest region (28.5%), followed by Asia-Pacific (24.1%). North America experienced the most noticeable annualized growth during the period (7.6%), continuing the good performance since the 2008 recession. Europe and Asia- Pacific showed growth rates of 7.1% and 3.9%, respectively. The US accounted for 128 of the funds in the ranking. Since 2009, it has seen nine of its funds drop out from the top 300, while 10 new funds joined the ranking. Sovereign and public sector pension funds accounted for 66.9% of the total assets, with 141 funds in the top 300. Defined benefit (DB) funds accounted for 66.8% of the total assets in the ranking. DB assets grew by 3.7% in 2014, compared to 4.7% for defined contribution (DC) plans, 1.4% for reserve funds, and a decrease of 2.5% for hybrids. On an arithmetic average basis, the top 20 funds invested approximately 39.5% of their assets in fixed income securities, 42.2% in equities, and 18.3% in alternatives and cash. North American funds have predominantly invested in equities while there was a higher interest for fixed income in Asia-Pacific funds. 11

13 i. Economic Outlook 6. Economic Outlook and Macroeconomic statistics India s GDP growth forecast Quite a few international and national institutions have predicted that India s gross domestic product will grow between 7% and 7.5% for the year. According to a report by Ms. Nidhi Sinha in Mint (October 07, 2015), since the beginning of last month, forecasts on India s economic growth by various agencies have been mostly negative; yet, the overall picture does not look grim. Agencies predict India s gross domestic product (GDP) will grow between 7% and 7.5% for the year. Earlier, on 30 June, data released by the Central Statistics Office showed India s GDP growth slowed to 7% in the April-June quarter from 7.5% in the January-March quarter as measured at market prices. With the International Monetary Fund (IMF) cutting the outlook for India on Tuesday, here s a look at who else is wavering about India s growth and why. IMF The IMF has marginally lowered its growth forecast for India to 7.3% this year, lower than the 7.5% it projected in July. But it expects growth to accelerate to 7.5% the following year. It also added that India will remain the world s fastest growing major economy. The Washingtonbased multilateral institution attributed the lowering of India s growth forecast to the weakening of global external demand and the consequent impact on Indian exports. Speaking in Washington on 30 September, IMF chief Christine Lagarde said global growth will likely be weaker this year than last, with only a modest acceleration expected in World Bank The World Bank has maintained India s growth forecast for the year when other multilateral agencies and even the Reserve Bank of India think the global situation will drag down the country s growth, reports The Economic Times. In its twice-a-year South Asia Economic Focus released on 4 October, the World Bank said India will grow 7.5% in the current fiscal, same as its earlier June forecast, but warned delays in the adoption and implementation of key reforms could affect investor sentiment. Reserve Bank of India While releasing its monetary policy on 30 September, the Reserve Bank of India (RBI) revised downwards its real GDP forecast for to 7.4% from the earlier expectation of 7.6%, saying that growth is expected to pick up in the latter part of the fiscal. The baseline outlook, however, is subject to considerable uncertainties surrounding commodity prices, monsoon and weather-related disturbances, volatility in seasonal items and spillovers from external developments through exchange rate and asset price channels. 12

14 Ratings A day after the RBI revised downwards its real GDP forecast for to 7.4%, Fitch Ratings has lowered India s GDP growth estimate for the current fiscal to 7.5% from 7.8% on average monsoon, but said the country is poised to grow at 8% next fiscal on the back of reform push. In its Global Economic Outlook report, Fitch said India took over as the fastest growing BRIC this year with 7.5% GDP growth, driven by structural reforms and higher investment,, but added that GDP growth in the first (April-June) quarter was disappointing as it slowed to 7% from 7.5% in the preceding quarter. Asian Development Bank On 22 September, Asian Development Bank (ADB) pared India s growth estimate for by 0.4 percentage points to 7.4% for from 7.8% predicted earlier, owing to economic slowdown in industrial countries, a weak monsoon and stalled action on key structural reforms. The report said a pick-up in the pace of investment and kickstarting the pending reforms will be vital to boost growth momentum. Organisation for Economic Co-operation and Development The Organisation for Economic Co-operation and Development (OECD) also trimmed its growth estimate for India in 2015 to 7.2% from 7.3% predicted earlier, but just like IMF, maintained that the country will still be the fastest growing major economy over the coming two years. The organization noted on 16 September that the main exception to the worsening global economy is India, where growth is supported by strong consumer spending and public investment in infrastructure. The slowdown has been sharpest in countries heavily dependent on commodities and/or with close trade links to China, notably in east and south-east Asia. The main exception to the worsening picture is India, where growth is supported by strong consumer spending and public investment in infrastructure, it said in its report. Moody s On 8 September, Moody s Investors Service said the Indian economy would grow at 7% in the current fiscal on the back of slow recovery in industrial output and investment. It added that country s current account deficit may remain low, supported by declining oil prices. We have also reduced our projections for India to 7% in 2015 and 7.5% in 2016, from 7.5% and 7.6% based on high frequency indicators suggesting that the recovery in industrial output and investment is slow, and bank credit growth still subdued, it said. UBS Earlier in September, Swiss brokerage UBS revised downwards India s GDP growth projection for the current fiscal to 7.1% from 7.5% earlier, on account of weaker external demand prospects, reported PTI. The global financial services firm has also lowered its growth projection for financial year to 7.6% from 8.3% earlier. The downward revision in growth projection comes despite lower oil prices which were expected to provide a boost to Indian growth. 13

15 Weaker external demand prospects and slow progress on balance sheet repair leads us to curtail our growth forecast in spite of cuts in UBS Brent oil price projections to an average of $57.5 in calendar 2016 (from $70), UBS said in a research note. ii. Macroeconomic Statistics Indicators Units As on 31 ST August 2015 As on 30 th September Absolute Change 5=Col 4- Col 3 Percentage Change 6= {Col 5/ Col 3 }*100 S&P BSE Sensex CNX Nifty Rs/$ Gold $/Ounce Crude Oil (NYMEX) $/Barrel Whole Price Index ON BASE =100* (y-oy) (y-o-y) Consumer Price Index ON BASE 2012=100* Index of Industrial Production** ON BASE = year G-Sec Yield Foreign Reserve Exchnage Net FPI/FII(Equity) (Rs crore) Net FPI/FII (Debt) Net FII (Total) FDI Equity Inflows^ (y-o-y) 3.66 (y-o-y) p.a. Rs USD in bn Rs Crore Rs Crore Rs Crore Rs Crore * Figures of July and August, 2015 ** Figures of May and July, 2015 ^ Figures of May and June (y-o-y) 4.2 (y-o-y)

16 7. Major news clippings on pension schemes of other countries i. Hundreds of thousands withdraw cash from pension pots after rules relaxation: (UK) - Lisa Bachelor@lisabachelor Thursday 17 September 2015 More than 2,00,000 people have emptied their pension pot or withdrawn cash from it after the relaxation of rules on accessing retirement savings this year. The first comprehensive independent analysis shows that 204,581 people have taken advantage of the pension freedoms bought in by George Osborne on 6 April that give those aged over 55 unfettered access to their money for the first time. The figures from the Financial Conduct Authority, the City watchdog, show that 137 savers cashed in entire pension pots worth 250,000 or more, despite the fact that only 25% of such a lump sum withdrawal would tax-free. Of the remainder who cashed in their entire savings, more than 47,000 withdrew pots worth up to 30,000.At the same time, the sale of annuities which provide a regular income from the pot of money that a pension plan holder has accumulated during their working life took a major hit. Just more than 12,000 annuities were sold between April and June compared with almost 90,000 in the same period two years earlier. Tom McPhail, head of pensions research at financial adviser Hargreaves Lansdown, said previous reports on the pension freedoms had understated the significance of the changes. We now know that investors are behaving radically differently compared to just a few months ago, he said. Investor demand for non-annuity retirement incomes, in the form of drawdown and one-off lump sums, now dwarf sales of annuity arrangements. It is perhaps too early to be sure that this is a permanent shift but it is starting to look that way. As well as revealing the numbers of people accessing their pension cash, the FCA report highlighted the hefty charges some savers face when they try to get their hands on their money. While the report showed that 85% were able to access their pension money without paying an exit fee, more than 100,000 people faced charges of 1,000 or more. About 13,000 of these would pay more than 5,000.Steve Webb, the former pensions minister who brought about the pension freedoms, said on Twitter: 147,000 over-55s face exit penalties over 5%; no way Govt will allow that to continue. The figures will feed into an ongoing consultation by the Treasury into charges. The consultation was announced by the chancellor in June in response to mounting criticism over high charges and will close in mid-october. The Treasury will be taking a close look at these numbers to see whether there are grounds to intervene, said McPhail. An exit penalty of over 1,000 is hard to justify. The FCA figures also appear to dispel some suggestions that pension providers are simply refusing to offer savers access to their cash. It said 80%-90% of people could access their pension money without needing to transfer providers. However, the FCA figures do not cover workplace pension schemes and a separate report from the pensions regulator suggests that fewer than half of workplace pension schemes allow one-off or regular withdrawals from pension pots. In addition, fewer than a third of workplace schemes give people access to their money via income drawdown. 15

17 ii. UK pension schemes face billion-pound bill: (UK) d644.html#axzz3p0qvSoAu by Madison Marriage September 13, 2015 The mayor of London s newly appointed pension and investment adviser has warned that UK pension funds are in denial. Imminent European rules could force schemes to put aside hundreds of billions of pounds in additional capital. Edmund Edi Truell, who last month was appointed as an adviser to Boris Johnson following two years in charge of the London Pensions Fund Authority, believes Brussels will impose stricter than expected solvency requirements on pension funds within five years. iii. FCA to review new pension rules as complaints rise: (UK) / 01 October 2015 The Financial Conduct Authority (FCA) has published proposed changes to the rules on pension freedoms a day after new complaints figures. As new figures reveal that the number of complaints made to pension companies increased by nearly a fifth in the first six months of the year, the FCA has outlined proposed changes to its pension rules to tackle the risks and challenges faced by consumers in the new retirement market. Life and pensions firms received 73,055 complaints about their products in the six months to June an increase of 19.7% compared to the previous six months. The pension changes that came into force in April 2015 allow people greater flexibility to access their money and greater choice in what they then do with it. However, the process hasn't always been smooth, with people facing delays and the need to switch contract or provider to get their preferred option. Most complained about pension companies Prudential was most the complained about firm in terms of life and pensions products with 8,827 complaints, followed by Friends Life (7,013), Royal London (5,688), Aviva (4,342) and Scottish Widows (4,110). Executive director Richard Lloyd said: It s worrying to see such a big rise in complaints about pension companies. If the freedoms are to be a success, it s important that firms play their part in helping people access, and make the most of, their hard-earned savings. The regulator should work with the government to identify where firms are falling down and take action to ensure people are treated fairly. Regulator to consult on pension freedoms The consultation paper published by the FCA today proposes a series of measures to improve the way that consumers are informed about how they can access their retirement money. Among the proposals from the FCA are new requirements to help consumers shop around, measures to ensure that consumers have the information to make informed decisions and a discussion around the remuneration arrangements for the non-advised purchase of annuities. Pension pots below 10,000 will not be subject to the FCA s new second line of defence rules. When the rules were originally announced in February 2015, providers had to deliver the 16

18 warnings to every customer but now this will only apply to pots above 10,000 or if policies include safeguarded benefits. The consultation on changes to pensions regulation also proposes a commission cap, or even a ban, on non-advised annuity sales. The FCA is also providing guidance for debt management firms who may be pressurising people into using their pension pot to pay down debt. iv. Canada Pension Plan to invest in eone: (CANADA) - By StockMarketWire 16th September 2015 Canada Pension Plan Investment Board is to acquire 52.9 million common shares of Entertainment One at a price of 2.69 per common share from Marwyn Value Investors LP. CPPIB's total investment of 142.4m will represent an approximate 17.9% ownership interest in the company. The transaction is conditional upon CPPIB having received notice from the Australian Foreign Investment Review Board that there are no objections concerning its proposed acquisition of shares in eone. Notification, and the closing, is expected within 30 days. Chief executive Darren Throop said: "We look forward to welcoming CPPIB as a significant shareholder of eone. CPPIB has a strong track record of focusing on the long term success of the companies in which it invests and we are excited that it will play a part in the eone story as we execute our strategy to double to size of the business over the next five years." v. Japan s Public Pension Fund Moves to Invest in Private Equity: (JAPAN) By Eleanor Warnock Sept. 16, 2015 Government Pension Investment Fund GPIF will provide about $500 million to a World Bank unit to invest in private equity in developing countries TOKYO Japan s $1.2 trillion public pension fund, the largest fund in the world of its kind, has taken its first step toward investing in private equity. The Government Pension Investment Fund has struck a partnership with the International Finance Corp., part of the World Bank Group, under which GPIF will provide some $500 million for IFC to invest in private equity in developing countries, according to people familiar with the deal. The move is a coup for IFC because competition is intensifying among global money managers to help shepherd the GPIF s diversification. The Japanese fund, which long had a portfolio heavy on domestic government bonds, said last year it was putting more money in stocks and foreign bonds. The GPIF is also venturing further afield into assets such as infrastructure, private equity and real estate. These assets can comprise up to 5% of the GPIF s 141 trillion ($1.2 trillion) portfolio. The GPIF is legally prohibited from direct private-equity investments, so it must put in money through investment trusts. PFRDA is not responsible for accuracy of data/information/interpretations and opinions expressed in the case of signed articles/speeches as authors are responsible for their personal views. PFRDA has no objection to the material published herein being reproduced, provided an acknowledgement of the same is made. 17