Skip to content
University of Oxford
School of Geography and the Environment

 School of Geography and the Environment

University of Oxford Allianz Logo

Allianz - Oxford
Pensions Conference 2011

Pension Challenges in the New Normal Risk - Investment - Design - Regulation

Invited Seminar, 22-23 September 2011, University of Oxford

More than two years after the start of the Global Financial Crisis (GFC) we are still struggling to understand the precise shape of the economic environment and the global financial markets post-GFC. Many of us are trying to figure out the consequences for funded pensions and are redesigning our navigators through this new unknown.

Is this a new unknown after all? Stock markets close to their pre-crisis heights could suggest a reversion to the old known. The New Normal - a term coined by PIMCO - assumes a different world though - a world characterised by deleveraging, reregulation and de-globalisation.

In this conference we aim to sound out this New Normal and its implications for the world of funded pensions. In doing so, we aim at investigating into sustainable, long-term investment and risk management for pension funds and to explore into the lessons to be learnt from behavioural finance. We will engage in the formulation of solutions and inquire the institutional design required for successfully delivering the pension promise in this New Normal.

For further information contact Professor Gordon L. Clark, School of Geography and the Environment, University of Oxford, South Parks Road, Oxford OX1 3QY, United Kingdom: tel: +44 (0)1865 285197 and +44 (0)1865 285067 or and Dorothee Franzen, School of Geography and the Environment, Oxford,

Background

We have used the term the New Normal as the theme for this year's invited seminar so as to underline our view that the challenges facing funded pensions around the world call for a radical rethinking of the nature and stability of financial markets as well as the ways in which we should approach the future whether in terms of investment practice or in terms of the institutions and organisations that underwrite our respective futures. The term, of course, comes from PIMCO and we begin proceedings with a presentation about what was intended by the term as well as what they see are the forces shaping the future.

For those who are trustees, or immediately responsible for pension fund investment strategy, you might recall that in the early phases of the global financial crisis some commentators suggested that markets would recover, find their way back to stability such that the investment practices and policies used over the last 25 years would once again rule the roost. We acknowledge that this remains one thread of discussion in the industry; but we contend that whether or not we return to normal the global financial crisis has prompted a great deal reflection over the assumptions that underpin the industry.

For those looking forward, the New Normal represents a truly significant break with the past. The map of global prosperity and growth suggests that Emerging Markets are here to stay - institutional investors and pension funds concerned about realising target rates of return will likely have to integrate Emerging Markets into their core investment strategies. It seems unlikely that they can remain an "add-on" to investment strategies that hold fast to Western economies and markets. By this account, the New Normal has ushered in an era of global investing where, not withstanding currency risks, political risks, and issues of transparency and disclosure, opportunities are to be found elsewhere.

Most obviously, the New Normal has prompted us to think about long-term investing in ways that are more than simply the accumulation of short-term positions which follow markets up and down. As commentators have noted, the logic and discipline associated with long-term investing is anything but "normal". Once we take seriously long-term investing, we must also take seriously the global risks associated with the environment and social standards in ways that a number of large pension funds and sovereign wealth funds have suggested.

Finally, if the New Normal challenges us to think about investment practice and the time horizons over which we may seek to realise our objectives, the New Normal surely also challenges us to think about how to deliver on pension promises. That is, what kind of institutional innovations and developments are consistent with the New Normal? Are there better ways of delivering the promises inherent in funded pension systems? Are new kinds of pension delivery institutions better at adapting to the New Normal then the institutions inherited from the second half of the 20th century?

Goals and Objectives

Here, our objective is plain: beginning with the New Normal, we plan to interrogate models of long-term investment, the responses of plan sponsors and regulators to the New Normal, and the challenges posed by new findings in behavioural research for the design and delivery of pension and retirement benefits.

Participation in the Seminar

We invite 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 Worcester College, University of Oxford, 22 - 23 September 2011 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 Conference

The conference will be led by Professor Gordon L. Clark (Oxford). We hope the conference 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 expected to 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, Professorial Fellow of St Peter's College, Oxford, and is Sir Louis Matheson Visiting Professor in the Faculty of Business and Economics at Monash University (Melbourne). He is the author of many books on pension issues including Pension Fund Capitalism (Oxford University Press 2000) and European Pensions & Global Finance (Oxford University Press 2003) and is a co-editor of the Oxford Handbook of Pensions and Retirement Income (Oxford University Press, 2006). He is currently completing a co-authored monograph linking behavioural economics with pension savings behaviour entitled Saving for the Future (forthcoming Oxford University Press, 2011). As well, he is co-author of The Geography of Finance (Oxford University Press, 2007) and co-editor of Managing Financial Risk (Oxford University Press, 2009). He is a trustee of the Oxford Staff Pension Scheme and is a member of the University's Socially Responsible Investment Review Committee.

Dorothee Franzen is a DPhil 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 writing Managing Investment Risk in Defined Benefit Pension Funds, OECD Working Papers on Insurance and Private Pensions, No. 38, March 2010, and co-authoring Pension Fund Regulation and Risk Management: Results from an ALM Optimisation Exercise, OECD Working Papers on Insurance and Private Pensions, No. 8, June 2007. She is also consultant to MetallRente.

Agenda

Thursday 22 September 2011
12:00 - 12:30
Registration and Welcome
12:30 - 14:00
Lunch
Opening Remarks

Gordon L. Clark, University of Oxford, and Elizabeth Corley, Allianz Global Investors

Keynote Speaker: The New Normal

Mike Amey, PIMCO

14:00 - 15:45
Session 1: The New Normal I - Implications for DB

Panel discussion led by Divyesh Hindocha, Mercer Investment

Discussants:
15:45 - 16:15
Coffee Break
16:15 - 18:00
Session 2: The New Normal II - Long-Term Sustainability

Session Chair: Giles Craven, Shell International

Speakers:
18:00 - 19:30
Drinks, Reception and Introductions
19:30 - 22:00
Dinner
Keynote Speaker:

John Hutton, former Secretary of State for Work and Pensions

Friday September 23rd, 2011
9:00 - 10:30
Session 3: New Frontiers - Lessons from Behavioural Finance

Session Chair: Gordon L. Clark, Oxford University

Speaker:
Panel discussion with:
10:30 - 11:00
Coffee Break
11:00 - 12:30
Session 4: New Frontiers - New Generation DC Plans

Session Chair: Fiona Stewart, OECD

Speakers:
  • Addressing Current and Emerging Challenges to a Private Defined Contribution Retirement System: The Case of the United States
    Charles Jeszeck, Government Accountability Office - Download Presentation [PDF: 530KB]
  • DC Plans: Leveraging Scale
    Mark Walker, Unilever
Respondent:
12:30 - 14:30
Session 5: The New Normal III - The Solution?

Lunch debate led by Joanne Segars, National Association of Pension Funds

Speaker:

Tim Jones, National Employment Savings Trust

Respondent:

Jeremy Cooper, Challenger Limited

Closing Remarks

Elizabeth Corley, Allianz Global Investors, and Gordon L. Clark, University of Oxford

Reading List

Further Information

For further information please contact Professor Gordon L. Clark or