Tag: assets

Canada Pension Buys Student Housing Manager

Canada

The Canada Pension Plan Investment Board (CPPIB) announced on Friday that it is dipping its feet in the UK college student-housing sector.

[Read the press release here.]

CPPIB paid $1.67 billion to buy Liberty Living, a company that works with dozens of UK universities to provide and manage housing for students.

More from Reuters:

As part of the deal, CPPIB said it had bought more than 40 residences in 17 of the largest university towns and cities across the UK, containing more than 16,700 rooms, from Brandeaux Student Accommodation Fund.

The deal also includes the Liberty Living management platform, it added in a statement.

“As a long-term investor, this is … an ideal platform through which we can build further scale,” said Andrea Orlandi, Managing Director, Head of Real Estate Investments Europe, CPPIB.

“This sector is an attractive one for CPPIB and we expect to see continued demand for well-located and well-managed student residences such as those within the Liberty Living portfolio,” Orlandi added.

[…]

In a search for yield as fixed income returns diminish, pension plans globally are increasingly looking to buy into other high-yielding assets to maintain returns and meet their long-dated liabilities, with real estate chief among them.

CPPIB manages approximately $190 billion in assets.

 

Photo credit: “Canada blank map” by Lokal_Profil image cut to remove USA by Paul Robinson – Vector map BlankMap-USA-states-Canada-provinces.svg.Modified by Lokal_Profil. Licensed under CC BY-SA 2.5 via Wikimedia Commons – http://commons.wikimedia.org/wiki/File:Canada_blank_map.svg#mediaviewer/File:Canada_blank_map.svg

U.S. Public Pension Asset Growth Stalls in 3rd Quarter

Graph With Stacks Of Coins

The performance of corporate stocks hurt the growth of U.S. public pension assets in the third quarter of 2014, according to U.S. Census data.

After reaching a record high in the second quarter, public pension assets declined in the third quarter from $3.37 trillion to $3.31 trillion.

More from Reuters:

The breakneck growth of U.S. public pension assets paused in the third quarter of the year, due to falling earnings, U.S. Census data released on Wednesday showed.

The $3.31 trillion in cash and security holdings was slightly less than the record $3.37 trillion of the second quarter. That was still above $3.06 trillion in the third quarter of 2013.

Since the third quarter of 2012, public pension assets had steadily increased, setting record highs every three months.

But earnings on the funds’ investments, which provide the lion’s share of their revenue, fell $43.03 billion in the third quarter. It was the first loss for the investments since the second quarter of 2012, when earnings fell $18.51 billion.

The contraction came from the pensions’ largest asset holding, corporate stocks. Pension funds’ corporate stocks fell 0.7 percent from the previous quarter to $1.17 trillion. Still, that was 10.3 percent more than the third quarter of 2013.

International securities also fell from the previous quarter, by 4.9 percent to $624.5 billion. They decreased 2.1 percent from the year before, as well.

Treasuries, meanwhile, rose to $308.1 billion, which was up 0.1 percent from the second quarter and 15.8 percent from the third quarter of 2013. Corporate bonds were up 2.7 percent from the previous quarter to $381.3 billion, which was also 18.4 percent higher than the third quarter of 2013.

The data also showed that governments paid more towards pension funds in the third quarter of 2014 than they did over the same period in 2013. Likewise, employees paid more into their pensions, as well.

 

Photo by www.SeniorLiving.Org

Public Pension Hedge Fund Portfolio Returns vs. Benchmarks in 2014

hedge fund returns

Here’s a chart listing the strongest-performing hedge fund portfolios over the 12 month period ended September 30, 2014.

You can also see whether or not the portfolio outperformed its benchmark, and the percentage of system assets dedicated to hedge funds.

Chart credit: Pensions & Investments

New California Pension Data Now Online

Flag of California

California’s financial transparency website now features pension data on its state, county, and city-level pension systems.

The site includes data on assets, liabilities, funding ratios, membership statistics and actuarially required contributions, among other things.

More from MML News:

State Controller John Chiang has just made over a decade’s worth of state pension fund information available for public view on his open data website, ByTheNumbers.sco.ca.gov.

The site already allows taxpayers to track balance sheets of the state’s 58 counties and 450-plus cities in terms of their revenues, expenditures, liabilities, assets, and fund balances.

According to Chiang, this latest, massive data dump, representing over a million new data fields, provides “a one-stop portal into the financial underpinnings” of each of California’s 130 public pension systems. The information comes as the state and local communities continue to wrestle with managing pension costs, including how to manage the unfunded liabilities associated with providing retirement security to police, firefighters, teachers and other providers of critical public services.

The Sacramento Bee has already crunched some of the numbers:

Local-government employers contributions to defined-benefit retirement systems have nearly tripled in the last 11 years, according to the most recent data published by the California State Controller’s Office, while employee contributions have nearly doubled.

Meanwhile, more retirees are drawing money from their retirement systems while fewer active employees are paying in. Some of the troubling numbers:

– Cities and counties statewide paid $17.52 billion last year into pension funds, up from $6.38 billion in 2003. Employees’ contributions rose from $5.21 billion to $9.07 billion in 2013.

– Despite receiving more money, pension systems’ unfunded liabilities soared from $6.33 billion to $198.16 billion over the 11-year span.

– The number of local government retirees drawing benefits increased 50 percent, from a little over 800,000 in 2003 to 1.22 million last year.

– In 2013, there were 2.14 million active employees who paid into their retirement systems, down slightly from 2.25 million workers on local government payrolls in 2003.

You can view the data at https://bythenumbers.sco.ca.gov/.

UK’s Largest Pension Fund Foresees “Difficult” Year

stocks

The UK’s Universities Superannuation Scheme (USS), the country’s largest pension fund, is preparing for the possibility that its unfunded liabilities could be larger than reported, and its financial condition more serious than its 85 percent funding ratio might suggest. From Financial News:

USS pays out £100 million worth of pensions a month, and its team of fund managers and traders in London undertake £1 billion worth of transactions every day. The team beat its targets last year, producing a 7.9% return against benchmark performance of 6.5%, according to its annual report to March 31, 2014, published late Wednesday.

Despite all this, the pension fund is struggling financially. It is currently undertaking a full formal valuation of its assets and liabilities as of 31 March 2014, a lengthy and complex process which it is expected to complete by the end of the year.

The pension scheme has provided an interim estimate of its funding level at the same date – 85%, implying a deficit of around £7 billion. This is a fall from the deficit reported at 31 March 2013 – £11.5 billion – reflecting a recovery in markets in the meantime.

However, USS’s trustees cautioned that the final figure might be “materially” different to £7 billion, and could be larger.

Administrators of the fund, along with labor groups and other parties, are already planning various cutbacks and cost-saving measures to head off the potential news of higher-than-believed liabilities. Reported by Financial News:

The main proposals are to close the old final-salary section of the scheme to its existing members – it was closed to new joiners in 2011 – and to introduce a new cap on the pensions that can be built up under the new career-average benefits section.

At the same time a new defined-contribution section, offering pensions that aren’t guaranteed, would be opened so that any members earning more than the cap can put their extra savings into it.

According to Universities UK’s July proposal: “This threshold has not yet been set but, depending on affordability, Universities UK’s aim is to maximise the number of scheme members who will fall below the salary threshold.”

The Universities Superannuation Scheme became the largest pension fund in the country this year after its assets grew to £41.6 billion.