New Ireland Assurance
Provider of choice in the Life
and Pensions Market
YOUR PENSION & RETIREMENT
PLANNING PRESENTATION.
Presenters:
Noel Hackett - QFA Senior Pension Consultant
Tony Delaney – Area Manager , New Ireland
Thurs/ Friday 15th -16th May 2014
About New Ireland Assurance
• New Ireland is a leading Life Assurance
Company in Ireland
• Provides life assurance, pensions &
investment solutions to over 500,000
customers
• Established almost 100 years ago, New
Ireland was the first wholly Irish owned
company to transact business in Ireland
• New Ireland remains Irish owned to this
day as part of the Bank of Ireland Group
2
3
•
The Company has gone from strength to
strength, from just £1,000 in assets in 1918 to
over €13.4 billion today (Feb 2014)
•
New Ireland employs over 1,100 people with
the main Head Office on Dawson Street for
over 85 years
•
Have world class investment partners for our
existing single manager portfolios including
State Street Global Advisors Ireland, Bank of
New York Mellon Asset Management and
Kleinwort Benson Investors
Agenda
1. Your Main NUI Galway Pension Schemes
2. The Finance Act 2014 and changes that may affect
you
3. Investment Market Update and Investment Outlook
for 2014
4. Fund Choice, Fund Manager, Fund Performance and
Fund availability under your AVC Scheme
4
Benefits at Retirement
At retirement your benefits will come from:-
– State Pension ( PRSI Contributions)
– NUIG Scheme (s)
– Purchase of Notional Years
– Additional Voluntary Contributions ( AVCs )
– Personal Accumulated wealth/savings inheritances
5
NUIG Pension Scheme
• Defined Benefit Scheme
• Scheme provides
– Pension
– Lump Sum ( Gratuity )
– Spouses Pension
– Increases during course of payment
– Death in Service Benefit
• Actual benefits depend on when you joined
• Please refer to your NUIG Annual Benefit Statement.
• ( Individual Consultations with Noel Hackett)
6
Key Dates
• Pre 95 – no state pension, higher pension through NUIG
• Post 95 - employees pay PRSI and receive:
– State Pension
– Lower pension from NUIG
• 2004
• Future employees have minimum RA of 65
• Immediate early retirement pension available to:
– Existing employees from 50
– New employees from 55
– 2013- Career Average Earnings
7
State Pension
•
From 2014
– Single Person:
– Married Couple:
€230.30 per week
€383.80
•
Applies to all employees who joined since 1995
•
State Pension
2014
2021
2028
from age 66
from age 67
from age 68
(Social Welfare will pay Job Assist or other S/W payment- where for whatever
reason S/W payment not allowed, a Supplementary Pension maybe paid by
NUIG )
8
Early Retirement
Was always allowed but only as a deferred pension
Changes from 2004
– Existing employees from 50
– New entrants from 55
– Immediate pension payable
– Early payment reduction
9
Bridging the Gap - 2 Options
Purchase of Notional Years of Service
Through NUI Galway Pensions Office
AVC Scheme
Through New Ireland Assurance
10
Notional Years
• Employee can buy “notional years”
• Defined Benefit basis
• Must buy year with all the “trimmings”
–
–
–
–
11
Pension
Gratuity
Spouses Pension
Pension Increases
AVC Scheme
•
•
•
•
•
•
12
Tax Relief
Tax free growth
Fund Choice
Flexibility
Options at retirement
Inheritance Tax Planning
Employee Tax Relief Limits (including AVCs)
Age
Up to 30
30 - 39
40 - 49
50 - 54
55 - 59
60 +
% of Remuneration
15%
20%
25%
30%
35%
40%
- An earnings cap of €115,000 (2014 apply to Employee Pension Contributions for the
purpose of tax relief
- The above limits include contributions to NUIG Pension Scheme
13
Making it easy to track your Fund
Pensions Schemes Online
• Password protected website
• Information on
– premium history
– fund value
– Estimated fund at retirement
• It is free and easy to use
• Review yearly – especially if circumstances change
14
2014 Finance Act- Main changes
•
•
•
•
•
•
•
15
Pension Levy
Standard Fund Personal Threshold
Defined Benefit Changes
DIRT Tax 41% plus 4% PRSI
Inheritance Tax Threshold
Gift Tax
Age Exemption Limit @ Retirement
Market and Investment Update
•
•
•
•
•
•
•
16
Fund Performance
Equities
Bonds
Capital Guarantees
Property Funds
Risk Managed Funds
ESMA Risk Ratings 1-7
“Would you tell me, please, which way I ought to go from
here?”
“That depends a good deal on where you want to get to”, said
the cat
- Lewis Carroll, Alice in Wonderland
17
Lets begin by reminding ourselves of the
cornerstone questions of any investment
decision…..
Objectives: What do
Timeframe:
Risk Profile:
you want to achieve?
How long do you have to achieve it?
How much risk can/will you take to
achieve it?
Every aspect of investment advice should revolve around always being
aware of your views on each of the three key points above!
18
The events of 2008 still fresh in our memories!















Sept. 8th
Sept. 14th
Sept 15th
Sept 16th
Sept 18th
Fannie Mae & Freddie Mac under government control.
Lehman's files for bankruptcy
Bank of America purchases Merrill Lynch
Fed takes 80% stake in AIG for $85bn
Lloyds TSB takes over of HBOS
Central Banks globally pump $180bn of liquidity into the market
Market ban on short selling
Sept 19th Paulson announces ‘Troubled Asset Relief Program’ – markets soar
Sept 21st Goldman's Sachs & Morgan Stanley become Bank holding companies
Sept 26th Overnight collapse of Washington Mutual in the biggest US bank failure ever.
Sept 29th Announcement that Bradford & Bingley and Fortis are being nationalised.
Citigroup agrees to buy Wachovia's banking business.
Sept 30th News that Irish government will guarantee all deposits and debt of main credit
institutions for 2 years
US Lawmakers vote against proposed treasury rescue package
19
1st week in October 08: As bad a week in markets as we’d seen
in decades!
20
This left many Investors very nervous about their future
finances, long after the market began to recover!
Is it safe to
Come back out?
“Both optimists and pessimists contribute to society, the optimist invents the
airplane, the pessimist the parachute”….George Bernard Shaw
21
1926 to 2013 annualised returns of the Standard and Poors equity index.
S&P 500 Index - Total Returns
Year
1926
1927
1928
1929
1930
1931
1932
1933
1934
1935
1936
1937
1938
1939
1940
1941
1942
1943
1944
22
11.62
37.49
43.61
-8.42
-24.90
-43.34
-8.19
53.99
-1.44
47.67
33.92
-35.03
31.12
-0.41
-9.78
-11.59
20.34
25.90
19.75
Year
1945
1946
1947
1948
1949
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
36.44
-8.07
5.71
5.50
18.79
31.71
24.02
18.37
-0.99
52.62
31.56
6.56
-10.78
43.36
11.96
0.47
26.89
-8.73
22.80
Year
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
16.48
12.45
-10.06
23.98
11.06
-8.50
4.01
14.31
18.98
-14.66
-26.47
37.20
23.84
-7.18
6.56
18.44
32.42
-4.91
21.41
Year
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
22.51
6.27
32.16
18.47
5.23
16.81
31.49
-3.17
30.55
7.67
9.99
1.31
37.43
23.07
33.36
28.58
21.04
-9.10
-11.88
-22.09
Year
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
28.68
10.88
4.91
15.80
5.49
-36.99
26.46
15.06
2.11
16.00
31.90
Cash funds offer little in terms of
return…..
2011
> 5%
23
2012
> 4%
2013
.5%
2014
.25%
Inflation may well be an issue in the near future. Challenge!
24
But we still only have a finite number of assets in which to invest!
Equities
Equities
Property
Deposits
Property
Bonds
25
Alternatives
Avoiding significant losses should be the starting point for
every successful investor!
Loss
Required Gain
20%
25%
40%
66%
60%
150%
Minimising losses and reducing investment risk has become more and more
important to investors after the great financial crisis of 2008.
26
The key learning from recent past…the power of stable returns.
Year 1
Year 2
Year 3
Total return
A
A
+20%
+20%
+20%
+20%
-10%
-10%
+29.6%
+29.6%
B
B
+35%
+35%
-10%
-10%
+5%
+5%
+27.6%
+27.6%
C
C
+10%
+10%
+10%
+10%
+10%
+10%
+33.1%
+33.1%
“I have two basic rules to investment, Rule no1: Never lose money.
Rule no 2: Never forget rule no 1”!! …… Warren Buffett
Source: Newton
27
A complex market…which can be difficult to navigate
Derivatives for
Protection
Tactical Asset
Allocation
Customer
Questionnaires
Property?
ESMA?
Protected
¯
Funds
Manager
¯
Diversification
Rebalancing
?
28
Portfolio
Construction
Total Return
Strategies
Market Neutral
Strategies
Regulation &
Compliance
Performance Figures & Fund Choice
• FUND
•
•
•
•
•
•
•
•
•
•
•
past 12months
Cash Fund(1)
Gilt Fund (4)
BNY Mellon(4)
Elements(3)
Protected Assets (4)
Managed (5)
Consensus(5)
Ethical (5)
Evergreen
(5)
Equity Fund(6)
Innovator
(6)
3yrs pa
0.2%
2.5%
4.4%
4.5%
6.6%
11.7%
9.9%
11.0%
10.5%
14.1%
-0.3%
• Funds are updated each day.
• ESMA Risk rating 1 to 7 scale.
29
0.5%
7.0%
4.6%
4.4%
3.4%
10.5%
10.0%
10.2%
8.6%
11.8%
2.0%
5yrs pa
0.7%
5.2%
n/a
n/a
n/a
14.0%
14.0%
14.1%
11.2%
17.6%
11.0%
SSgA — A True Global Player
• €1.7 Trillion in Asset Under Management1
• Over 400 investment professionals
• 27 Global Offices; 9 Investment Centres
• 24 Hour Trading
Rankings:
# 1 Global Endowment/Foundation Assets2
# 1 Sovereign Wealth Fund Assets2
# 2 Worldwide Institutional Assets2
Key Stats:
• We Manage Money for 9 of the Top 10 S&P 500 Companies3
• We Manage Money for 6 of the Top 20 Wealthiest Countries in the World 3
AUM is $2.15 Trillion. This AUM includes the assets of the SPDR Gold Trust (approx. $37.1 as of 30 September 2013).
for which State Street Global Markets, LLC, an affiliate of State Street Global Advisors, serves as the marketing agent. Please note that AUM totals are unaudited.
2 Pensions & Investments, 31 December 2012.
3 Source: SSgA, as of 31 December 2013. S&P 500 top 10 by market capitalization as of 31 December 2013.
Source: SSgA. Top 20 Wealthiest countries by GDP per Capita as of World Economic Outlook Database — October 2013.
1
30
IREPRS-0681
SSgA: Size isn’t Everything…. But it Helps!
Snap shot of how SSgA measure up against some local competitors
1800
1600
1400
1200
800
€1,600
1000
600
€335
Aviva
€250
€340
Great West & Irish Life
200
0
SSgA
Source: P&I/Towers Watson Global 500 year end 2012.
31
IREPRS-0516
Zurich
€205
Global AUM (€ Billion)
400
Standard Life
A Different Approach…
Lifestyling – Moving to safer assets as you get older
Passive
approach…
Active IRIS
approach…
Equities
32
IREPRS-0740
Source: SSgA.
This chart is for illustrative purposes only.
Absolute Return
Bonds / Cash
Target Return to Help Absorb Shocks
Equities
Early Years
Goal
Equities + Absolute Return Fund
33
Source: SSgA.
This chart is for illustrative purposes only.
Growth phase
Retirement
Active IRIS Glide Path
34
Target Return Strategy
35
Target Return Strategy Helps Manage
Risk
36
Target Return Strategy Helps Manage
Risk
37
Passive IRIS Glide - Path Default Fund
38
Passive Management
Why SSgA for Passive?
SSgA’s Trading Advantage Helps Deliver World Class Index Tracking
10%
• 24hr Trading — London, Boston & Hong Kong
0%
• 282 million¹ shares traded every day
• 21.8%2 of shares matched between clients
-10%
-20%
-30%
• 0.02%3 trading commission paid on market trades
= Low Cost and Efficient Trading
SSgA Global Trading Desk for year ending 2012.
Boston Global Passive Equity Desk average, Q2 2013.
3 Average Commissions paid on traded, Boston Global Passive Equity Desk, Q1 2013.
-40%
-50%
1
2
39
IREPRS-0740
SSgA World Index Equity Fund
Source: SSgA, All World Developed Equity Index, MSCI World Net Dividends Re-invested.
Past performance is not a guarantee of future results. The performance includes the reinvestment of dividends and other corporate earnings and is calculated in euro.
The performance figures contained herein are provided on a gross of fees basis only, but net of administrative costs. The performance figures do not reflect the
deduction of investment management or other fees which could reduce the return. Index returns are unmanaged and do not reflect the deduction of any fees or
expenses. Index returns reflect all items of income, gain and loss and the reinvestment of dividends and other income.
MSCI World net dividends reinvested
Passive IRIS – Global Equity (MSCI)
Country Allocation
Top 10 Stocks
40
40
Source: Country Allocations and top 10 Holdings: ssga.com as at 31.03.2014
% of Fund
APPLE INC
1.5%
EXXON MOBIL CORP
1.3%
MICROSOFT CORP
1.0%
GOOGLE INC-CL A
1.0%
JOHNSON & JOHNSON
0.9%
GENERAL ELECTRIC CO
0.8%
WELLS FARGO & CO
0.8%
NESTLE SA-REG
0.8%
CHEVRON CORP
0.7%
JPMORGAN CHASE & CO
0.7%
Passive IRIS – Government Bonds
Country Allocation
Key Stats
Approx. Duration
Approx. Yield to maturity
41
41
Source: Country Allocations Are the neutral benchmark weights for both funds. The Key Stats are provided by SSgA as at 31.03.2014
and are based on the underlying SSgA funds.
Government
Bonds
Long
Government
Bonds
6.9
12.4
1.2%
1.9%
Passive IRIS – Corporate Bonds
Key Stats
Corporate Bond Fund
Barclays Euro-Aggregate
Corporate Bond Index
Benchmark
Effective Duration
4.7
Yield to maturity
1.8%
Number of Issues
1,372
42 Source: Country Allocations and Key Stats are taken from SSgA.com as at 31.03.2014 and are based on the underlying SSgA fund “SSgA
42
Euro Corporate Bond Index Fund”.
Passive IRIS – Property
Key Stats (Excluding Cash Holding)
Fund Size
# of direct holdings
90%
Approx. Initial Yield**
(on direct property assets held)
6.6%
Weighted Average Term to Break*
Currency Hedging
(level of currency hedging on Non-Euro
investments)
43
47
% of fund in Direct Holdings
Vacancy Rate
(ERV of vacant assets expressed as % of total
ERV of direct assets)
43
€495M
Source: SSgA. All data is at 31 March 2014 unless otherwise stated subject to change, and should not be relied upon as current thereafter. The weights above are exclusive of
cash holdings.
*As at 30 June 2013.
**This is calculated on the basis of contracted rent divided by capital value of direct property holdings and does not take into account any of the costs associated with the fund or
property acquisition costs.
11.2%
6 Years
50%–
100%
Passive IRIS – Cash
-
Primarily invested in AAA Rated SSgA Liquidity Fund
-
Over 75 different Cash Instruments held with over 40 different large
Financial Institutions
-
Weighted Average Maturity of Cash Instruments is 38 Days
-
Primary Focus is on Safety and Liquidity
44
44
Source: Stats taken from SSgA.com as at 31.03.2014 – SSgA EUR Liquidity Fund
So lets finish by looking at the correct investment
process.
1. Your Goals
objectives
5. Regular Review
4. Investment
Fund choice
45
2. Your Risk
Profile
3. Asset Allocation
What Should I Do Next? Contact:
Pensions Office NUI Galway
Ph:
Email:
(091) 495028 ext: 5028
pensions@nuigalway.ie
or
Noel Hackett, QFA,Pensions Consultant
New Ireland Assurance
Tel:
(061) 312166
Mobile: 086- 8186163
Email:
Noel.hackett@newireland.ie
46
Any Questions?
Thank You for attending
47
Individual Consultations Available
Noel Hackett will be available (9 – 5pm)
for Confidential Individual Consultations
Concourse Room AC 201 (near Smokeys )
Monday 19th Tuesday 20th & Wed 21st May 2014
Contact:
Ann Cormican or Caroline Mooney
Extn 5901/5028
ann.cormican@nuigalway.ie
Caroline.mooney@nuigalway.ie
48