Allianz - Oxford Pensions Conference 2009
Meeting the Challenges of the 21st Century
17-18 September 2009, University of Oxford
Our invited seminar will address crucial issues as to the funding and performance of supplementary pensions, drawing upon participants from continental Europe, the UK and North America. It will bring together the debate about the viability of defined benefit and defined contribution pension schemes in the light of the global financial crisis. Inevitably, our approach will be partial and even speculative — the future is subject to great uncertainty. Nonetheless, we are assembling a talented team of academics and industry professionals to lead discussion over one and a half days of intensive discussion amongst peers at Oxford University in September 2009.
The seminar is sponsored by Allianz Global Investors and Oxford University. In the first seminar we arranged with our partners in September 2007, we focused on 'The Governance and Regulation of Risk Management for Defined Benefit Pension Funds'. We emphasized the driving forces behind the regulation of risk management for defined benefit (DB) pension funds comparing the Anglo-Saxon world and continental Europe while critically questioning the impact and significance of the fair value principle and the nature and principles of prudent investment. Much has changed including the realisation that in the UK and continental Europe the debate about DB pension funding must be allied with the debate over defined contribution (DC) pension adequacy. There is, more than ever, an urgent need to share knowledge and experience between Europe and North America. This is a most important goal of the seminar.
For further information contact Professor Gordon L. Clark, Oxford University Centre for the Environment, South Parks Road, Oxford OX1 3QY, United Kingdom, tel: +44 (0)1865 285197 and +44 (0)1865 285067 or gordon.clark@ouce.ox.ac.uk and Dorothee Franzen, Oxford University Centre for the Environment, dorothee.franzen@ouce.ox.ac.uk
Background
The current financial crisis seems to repeat and amplify the shock waves the latest crisis between 2000 and 2003 sent to pension funds throughout the world. Whereas last time the term 'perfect pension storm' was coined to visualise the disastrous impact the simultaneous fall of equities and yields exerted on pension funds, this time the term 'tsunami' is spreading when referring to the current turmoil on worldwide financial markets. But different sectors of the financial system are affected in different ways. Casualties of the last crisis seem to be clustered around the Anglo-Saxon DB pension fund; this time the – up to now - most prominent casualties are US investment banks.
What are the implications of the current crisis on pension funds in the Anglo-Saxon world and continental Europe? Is this 'just' a regular fall of equity markets and adjacent segments of the financial system or is this something more fundamental? Are there successful strategies to cope with such extreme events? Can regulation shield pension funds from the fallout of capital markets? Do pension funds, regulators and theirs consultants alike pursue the right steering concepts and instruments? And how will this impact the strategic changes already underway?
Can we rely on the concepts such as the equity premium and the principle of mean reversion which together underpin the rational of equity investments for long-term investors? Can pension funds really be operated as long-term investors? If we are not successful in re-distributing risk between the current stakeholders in pension funds namely the sponsoring companies and active and passive members, who else would be willing to step in and take risk? What role can other financial sectors such as insurance companies, asset managers or specialised consultants play? Could we trust them as fiduciaries? Which governance models are best suited to solve the principal-agent-conflict inevitably embedded in current pension fund structures?
Goals and Objectives
Our goal is to sound-out the condition of DB and DC pension funds alike in the latest financial crisis and learn about coping strategies and successful crisis management. It furthermore critically questions the validity and soundness of widely applied investment strategies and risk management tools and asks the questions if the well-known cornerstones of financial-economic theory are still reliable. Finally, the seminar aims at sounding out new as well as familiar strategic options in risk management and pension fund governance.
The seminar will provide a broad discussion forum to deal with the following topics:
- How well did DB and DC pension funds cope with the current crisis?
- What are the lessons learned with regard to pension fund investment?
- Are straightforward funding rules viable risk management tools for DB pension funds?
- Can DC pension plans provide adequate pensions?
- What can be learned from the behaviour of plan participants?
- Can we still apply the doctrine of long-term investing to pension funds?
- How valid are the new strategic options the markets offer?
Participation in the Seminar
We have invited pension funds and their consultants, regulators and academics to convene to discuss and engage in the formulation of solutions. The invited international seminar, which takes place at Oxford on September 17-18th 2009 will bring to Oxford about 60 guests. The seminar will not be open to the public and will be conducted on a confidential basis.
Format of the Seminar
The seminar will be led by Professor Gordon L. Clark (Oxford). We intend to offer a briefing paper as a means of situating the debate. We hope that all participants will come to the seminar with the issues raised therein. But, like our previous conferences, we hope the seminar moves from the presentations to discussion in ways that go beyond the format of many other industry conferences. As such, we have left time after each presentation for discussion and debate. Consistent with our past experience in convening these types of high-level consultative seminars, the ground rules for success are simple: confidentiality, open discussion without attribution, a willingness to discuss based upon experience, and a commitment to articulating the lessons learnt thereof. Participants are not expected (but certainly welcomed) to contribute a written paper to the conference, but contribute their knowledge and experience through comments and interventions.
Organisers of the Seminar
Gordon L. Clark is the Halford Mackinder Professor of Geography at the University of Oxford and Professorial Fellow of St Peter's College, Oxford. He is also been a Senior Research Fellow at Harvard University's Labor and Worklife Program. He is the author of Pensions and Corporate Restructuring in American Industry (Johns Hopkins University Press 1993), Pension Fund Capitalism (Oxford University Press 2000), and European Pensions & Global Finance (Oxford University Press 2003). He is a co-editor of the Oxford Handbook of Pensions and Retirement Income (Oxford University Press, 2006), co-author of The Geography of Finance (Oxford University Press, 2007), and co-editor of Managing Financial Risk (Oxford University Press, 2009). He is also a trustee of the Oxford Staff Pension Scheme.
Dorothee Franzen is a D.Phil. student at St Peter's College, University of Oxford. Her doctoral research focuses on the interaction of regulation and investment in the context of defined benefit pension funds. Prior to joining Oxford University she was Head of Pension Research at Allianz Global Investors. She holds a graduate degree in economics from Ludwig-Maximilians Universität, München. She was consultant to the OECD co-authoring a report on risk management at DB pension funds in an Asset-Liability-Management context and providing a report on the management of investment risk in DB pension funds. She is also consultant to MetallRente.
Agenda
Thursday 17 September 2009
| 12:00 – 14:00 | Registration, Welcome and LunchOpening Remarks
|
| 14:00 – 15:30 | Session 1: The Crisis I--DB FundingPanel discussion led by Roger Urwin, Watson Wyatt Opening remarks: David Zion, Credit Suisse Discussants
|
| 15:30 – 16:00 | Coffee Break |
| 16:00 – 17:30 | Session 2: The Crisis II--DC PerformancePanel discussion led by Divyesh Hindocha, Mercer Investment Discussants
|
| 17:30 – 18:30 | Shared ObservationsPanel discussion led by Tobias Pross, Allianz Global Investors with Paul Thornton, Gazelle, Kenneth W. Porter, American Benefits Council and with the participation of the audience |
| 18:30 – 19:30 | Drinks, Reception & Introductions |
| 19:30 – 22:00 | DinnerKeynote Speaker: Anatole Kaletsky, The Times |
Friday 18 September 2009
| 9:00 – 9:10 | Opening remarksTobias Pross, Allianz Global Investors |
| 9:10 – 10:30 | Session 3: New Frontiers--InvestmentSession Chair: Chris Hitchen, RailPen Investment Speakers
Discussants
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| 10:30 – 11: 00 | Coffee break |
| 11:00 – 12:30 | Session 4: New Frontiers--BehaviourSession Chair: John Ashcroft, Consultant Speakers
Discussants
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| 12:30 – 14:00 | Session 5: Long-term InvestmentLunch debate led by Udo Frank, Allianz Global Investors - RCM Speaker
Discussants
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| 14:00 -15:30 | Session 6: Fiduciary ManagementSession Chair: Anton van Nunen, Consultant Speaker
Discussants
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| 15:30- 16:00 | Final observations
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Reading List
- A Primer on Omega Metrics Tail Risk Analysis [PDF: 496KB]
- Rob Bauer (2009) Fiduciary Management: A Next Logical Step in the Evolution of Pension Management? ICPM Case Study, Rotman Shcool of Management, University of Toronto. pp. 24.
- Blommestein, H. et al. (2009) Evaluating the Design of Private Pension Plans: Costs and Benefits of Risk-Sharing, OECD Working Papers on Insurance and Private Pensions, No. 34, OECD Publishing, © OECD.
- Clark., G.L., Knox-Hayes, J., and Strauss, K. (2009) Financial sophistication, salience, and the scale of deliberation in UK retirement planning advance online publication
- Clark, G.L. and Urwin, R. (2008) Best-practice pension fund governance. Journal of Asset Management, 9(1): 12-21.
- Keating, C. (2009) Corporate Governance [PDF: 73KB]
- Munnell, A.H., Aubry, J-P. and Muldoon, D. (2008) The Financial Crisis and Private Defined Benefit Plans, Briefs 8-18, Center for Retirement Research, Boston College.
- PADA Investment Consultation Team (2009) Building personal accounts: designing an investment approach, UK Personal Accounts Delivery Authority.
- Prudent funding targets are key to the health of pension schemes, The Pensions Regulator.
Conference Information / Registration
The seminar starts at 12 am on Thursday, September 17th, 2009 and ends at around 4 pm on Friday, September 21st, 2007. The conference will be held at Corpus Christi College, Oxford. Maps of Oxford with the location of the colleges are available from the Oxford University website.
The following details should assist you in preparing your trip to Oxford.
Transport
Oxford is roughly 60 miles from Heathrow airport. A bus service linking Heathrow to Oxford leaves every 30 minutes at the cost of £25 (period return ticket). The journey takes about 90 minutes from the central bus station (terminals 1-4) and 80 minutes from terminal 5 depending on traffic. The bus can be taken to various Oxford stops. Corpus Christi College can best be reached from the stop 'Queen's Lane'. Rental cars are not advised, as parking in Oxford is extremely difficult.
Hotels
A limited contingent of rooms at preferred rates can be booked at:
- The Macdonald Randolph Hotel, please refer to the booking number OUCE170909.
- Malmaison Hotel Oxford, please refer to the booking number 1709SL.
- The Old Parsonage Hotel, please refer to the booking contract "Franze".
- Corpus Christi College, for booking please contact Dorothee Franzen
For further queries please contact Dorothee Franzen