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Presentation to Presented by: Noel Hackett (QFA, MIB, Dip Invest) New Ireland Assurance Senior Presentation to Presented by: Noel Hackett (QFA, MIB, Dip Invest) New Ireland Assurance Senior Pensions Consultant Tel: 086 -8186163 Tony Delaney- Area Manager 12 th & 13 th April 2012. time 11. 00; 13. 00; 15. 00

Benefits at Retirement § At retirement your benefits will come from: – State Pension Benefits at Retirement § At retirement your benefits will come from: – State Pension – NUIG Scheme – Personal Wealth / Savings 2

State Pension § From 2012 – Single Person € 230. 30 per week – State Pension § From 2012 – Single Person € 230. 30 per week – Married Couple € 383. 80 § Applies to all employees who joined since 1995 3

NUIG Scheme § Defined Benefit Basis § For employees joining after 1995 : – NUIG Scheme § Defined Benefit Basis § For employees joining after 1995 : – Pension Benefits based on Pensionable Salary – Salary less twice the OAP (In 2012 a deduction of € 23, 951) – Employees pay PRSI and qualify for OAP 4

NUIG Scheme § Normal Retirement Date – Pre 2004 employees – From age 60 NUIG Scheme § Normal Retirement Date – Pre 2004 employees – From age 60 – Post 2004 employees – From age 65 § 1/200 th pensionable service/pensionable remuneration to 3. 33 times State Pension (39, 918) Plus § 1/80 th x pensionable service/pensionable remuneration in excess of this limit(change to normal integration rules on 1/1/2004) § Pension of 1/80 th of Pensionable Salary per year of service, on integrated basis(less twice state) same for salary over € 39, 918 pa § Tax Free Lump Sum of 3/80 th of Salary 5

Example § Employee on a salary of € 50, 000 joined NUIG in 2000 Example § Employee on a salary of € 50, 000 joined NUIG in 2000 at age 30 § Service to age 65 is 35 years § Pensionable Salary is € 26, 049 (€ 50, 000 - € 23, 951) § Pension from 65 is 35/80 ths of € 26, 049 – € 11, 396 p. a. § Tax Free Lump Sum is 105/80 ths of € 50, 000 € 65, 625 6

Early Retirement § Was allowed but only as a deferred pension § Changes from Early Retirement § Was allowed but only as a deferred pension § Changes from 2004 – – – Existing employees from 50 New entrants from 55 Immediate pension payable Early payment reduction Change to normal integration from 1/1/2004 7

Bridging the Gap - 2 Options § Purchase of Notional Years of Service Through Bridging the Gap - 2 Options § Purchase of Notional Years of Service Through NUI Galway Pensions Office § AVC Scheme Through New Ireland Assurance 8

Notional Years § Employee can buy “notional years” § Defined Benefit basis § Must Notional Years § Employee can buy “notional years” § Defined Benefit basis § Must buy year with all the “trimmings” 9

Scope for AVCs § Will your benefits be on an integrated basis – i. Scope for AVCs § Will your benefits be on an integrated basis – i. e. joined after 1995 ? § Do you – – Wish to retire early ? Have short service ? Want to provide a higher Spouses Pension Your pension Tax free lump sum based now on your final (cut) salary+ scope to enhance this – “Revenue Final 10 year salary rule” 10

AVC Scheme § No promised benefits – will depend on – Investment Returns – AVC Scheme § No promised benefits – will depend on – Investment Returns – Annuity Rates – if pension bought at retirement § Can be more flexible than added years – – Select a monthly contribution Save for a specific benefit ARF option Lump Sum only 11

Additional Voluntary Contributions § Government incentive through: – Tax Relief – Generous contribution limits Additional Voluntary Contributions § Government incentive through: – Tax Relief – Generous contribution limits – ARF option – greater flexibility at retirement 12

How much can I Contribute ? Up to age 30 15% 30 to 39 How much can I Contribute ? Up to age 30 15% 30 to 39 20% 40 to 49 25% 50 to 54 30% 55 to 60 35% 60 and over 40% 13

USC for self assessed under age 70 the 2012. rates Part of aggregate income USC for self assessed under age 70 the 2012. rates Part of aggregate income Rate of USC First € 10, 030 Next € 5, 980 Next € 83, 984+ 2% 4% 7% Income > € 100, 000 10%

TAX CREDITS Employee Tax credit Personal tax credit-single -married Widowed bereaved in yr of TAX CREDITS Employee Tax credit Personal tax credit-single -married Widowed bereaved in yr of ass. One parent family tax credit Home carer tax credit Dependant relative Blind person credit-single both blind -married Additional credit widowed pers Age credit-single Age credit married 15 2010 € 1, 830 3, 660 1, 830 900 80 1, 830 3, 660 600 325 650 2012 € 1, 650 3, 300 1, 650 810 70 1, 650 3, 300 540 245 650

Standard Rate Bands 2010 2012 € € Single/Widowed 36, 400 32, 800 Married-one income Standard Rate Bands 2010 2012 € € Single/Widowed 36, 400 32, 800 Married-one income 45, 400 41, 800 *Married-two incomes 72, 800 66, 500 One parent/Widowed 40, 400 36, 800 » With a max transferability between spouses of € 45, 400 in 2010 and € 41, 800 in 2011 » AGE EXEMPTION LIMIT 2010 € 20, 000 € 40, 000 Single Married 16 2012 € 18, 000 € 36, 000

Public Sector: PENSION LEVY RATES: § First € 15, 000 Exempt § Next € Public Sector: PENSION LEVY RATES: § First € 15, 000 Exempt § Next € 5, 000 @5% § Next € 20, 000 - € 60, 000 @10% § Above € 60, 000 @10. 5% 17

Government Pension Fund Levy § New levy to be charged to pension funds at Government Pension Fund Levy § New levy to be charged to pension funds at a rate of 0. 6% per annum on the value of the fund each year. § 0. 6% of the fund (AVC), valued on 30 th June 2011 and subsequent years until 30 th June 2014. § Payment to be made each year on 25 th Sept 2011, 2012, 2013 and 2014 by Fund Manager/Administrator to Government. § This Levy is being used to fund the new “Jobs Programme” 18

Early Retirement Benefits Retirement Age 60 § Employee on salary of € 50, 000 Early Retirement Benefits Retirement Age 60 § Employee on salary of € 50, 000 joined after 1995 - early retiring at 55 § Service completed 22 years § Pension : 77. 8% x 22/ 80 ths x€ 26, 049= € 5, 573 § Tax Free Lump Sum : 90. 7%x 66/80 ths x € 50, 000 = € 37, 414 19

Actual AVC Member – Example Mary Murphy Retired in April 2010. 29 yrs service. Actual AVC Member – Example Mary Murphy Retired in April 2010. 29 yrs service. Age 65. Salary € 59, 000 NUIG Pension € 12, 705. 38 p. a. NUIG Tax free lump sum € 64, 162. 50 AVC Fund built up in 5 yrs @ € 300 pm = € 21, 075. 30 TAX free lump sum from AVC is € 21, 075. 30 Could have been € 24, 337. 50 from AVC if it was in her fund. 20

How much can I contribute ? § Maximum Incomein 2011/12 § (Max income in How much can I contribute ? § Maximum Incomein 2011/12 § (Max income in 2009/10 (max income 2008 € 115, 000 € 150, 000) € 275, 239) § Income is taxable earnings § Less any contributions being paid to NUIG Scheme 21

Example § Employee aged 45 on a salary of € 60, 000 who joined Example § Employee aged 45 on a salary of € 60, 000 who joined post 1995 § Maximum contribution is: 25% of € 60, 000 Less 1. 5% of € 60, 000 Less 3. 5% of € 60, 000 - € 23, 951 AVC amount is € 15, 000 € 900 € 1, 262 € 12, 838 § Periodic contributions of pay equal to 1. 5% x pensionable remuneration PLUS 1% of reckonable pay at death/retirement (each year 1. 5% not deducted) 22

Tax Relief § Monthly Contribution § Tax Relief § Net Cost € 400. 00 Tax Relief § Monthly Contribution § Tax Relief § Net Cost € 400. 00 € 80. 00 € 320. 00 € 164. 00 € 236. 00 § Contributions and tax relief operated at source 23

Making it easy to track your Fund Pensions Schemes Online § Password protected website Making it easy to track your Fund Pensions Schemes Online § Password protected website § Information on premium history § Information on fund value § Information on fund choice § It is easy to use § It is free § Review yearly – especially if circumstances change 24

Options at Retirement § Tax Free Lump Sum § Ongoing Pension – Personal – Options at Retirement § Tax Free Lump Sum § Ongoing Pension – Personal – Spouses § Approved Retirement Fund ( ARF) – – – Minimum income of € 18, 000 Free to invest as you wish Withdrawals taxed as income AMRF (Approved Minimum Retirement Fund) € 119, 800 limit 25

Investment of Contributions § Individual Retirement Investment Service § Plus 13 alternative pension choices Investment of Contributions § Individual Retirement Investment Service § Plus 13 alternative pension choices 26

Individual Retirement Investment Service § New Ireland’s unique lifestyle investment option § A single Individual Retirement Investment Service § New Ireland’s unique lifestyle investment option § A single fund can’t provide the right strategy for all members § Removes the need for the member to make complex investment decisions 27

How does IRIS Work ? Two Simple Rules § The longer the term to How does IRIS Work ? Two Simple Rules § The longer the term to retirement, the higher the proportion invested in equities. § As retirement approaches, benefits are secured by switching into fixed income assets and cash. 28

Example – Progression of the IRIS Fund 2018 (asset split) § Member continues to Example – Progression of the IRIS Fund 2018 (asset split) § Member continues to invest in the same fund § Asset mix of fund gradually changes as retirement approaches 29

New Funds Added: Medium Risk § Response to requests from Trustees and Members § New Funds Added: Medium Risk § Response to requests from Trustees and Members § Requirement for equity participation with lower risk / volatility – Protected Assets Fund – BNY Mellon Global Return Fund – 5. 15% Secure Cash Fund 30

31 31

Evolution of investment markets Greater risk management required! 32 Evolution of investment markets Greater risk management required! 32

BNY Mellon Global Return Fund 33 BNY Mellon Global Return Fund 33

BNY Mellon Global Return strategy for long-term growth – the process explained. Allowable assets BNY Mellon Global Return strategy for long-term growth – the process explained. Allowable assets Strategy type Absolute / Target return Fund Can invest in: Return targeted EURIBOR +4% over rolling 5 year periods Equities Government Bonds ●Unconstrained Corporate Bonds ●Flexibility Cash ●Active risk management Derivatives ●Long term Alternatives 34

Libor + 4 % p. a. – a challenging target Periods to 31 January Libor + 4 % p. a. – a challenging target Periods to 31 January 2012 (Sterling Fund target) 10 Year (p. a. ) 20 Year (p. a. ) 30 Year (p. a. ) Return MSCI World (NDR) 3. 30 6. 84 10. 12 FTSE Govt. All-Stocks 6. 40 8. 01 9. 88 1 month Libor 3. 48 4. 98 7. 34 UK RPI 3. 32 2. 90 3. 81 1 month Libor +4% pa. 7. 61 9. 16 11. 61 Source: Newton, as at 31 January 2012 35

Unconstrained multi-asset investing The process……. . Newton's starting point is the target… Return (LIBOR Unconstrained multi-asset investing The process……. . Newton's starting point is the target… Return (LIBOR +%) 3 4 5 1 2 Risk (Volatility%) Global Strategy … and provides the building blocks… Research Recommended Lists • Bond characteristics • Asset allocation Model Portfolios … to construct a single, flexible portfolio Global Return strategy A BNY Mellon Financial Company SM H HIG LOW MEDIUM …which defines the portfolio structure… • Stock characteristics … and Newton's view of the world… • Regional mix • Volatility • Currency Absolutely focused 36

The practice behind theory………. . Illustrates the difference between this fund a typical market The practice behind theory………. . Illustrates the difference between this fund a typical market portfolio MSCI World – Financials 24. 7%!! FTSE 100 – Financials 17. 73%!! 37

Asset Split – it’s like Consensus? ! But not a Market portfolio! Pension Gilt Asset Split – it’s like Consensus? ! But not a Market portfolio! Pension Gilt Fund: 31 st Dec 11: – Italian Bonds 20. 25%, Spanish Bonds – 8. 83%, Belgian Bonds 6. 15% - examples!! 38

BNY Mellon Global Return Fund (EUR) Positioning at December 2011 By geography and asset BNY Mellon Global Return Fund (EUR) Positioning at December 2011 By geography and asset type Derivatives and other 4. 0% By currency Equities 48. 8% Cash & equivalents 26. 4% Bonds 19. 0% Corporat e bonds Convertibles UK/Europe 1. 8% *Other (CAD, DKK, HKD, IDR, PLN, ZAR, THB) Source: Newton, December 2011 Managing currency risk within a global unconstrained portfolio 39

Newton Real Return Fund (GBP) Longer term results Key Ex Post 1. Return less Newton Real Return Fund (GBP) Longer term results Key Ex Post 1. Return less risk free rate (LIBOR 1 month) divided by standard deviation 2. Standard deviation Ex Ante 3. Value at risk: worst case of 95% confidence (normal distribution assumed), 1 month investment horizon Source: Newton, as at 31 January 2012, total return, gross of management fees, gross income reinvested Figures are based on sterling returns. Past performance is not a guide to the future Please remember that the value of shares and the income from them can fall as well as rise and investors may not get back the full amount originally invested. †Restyle date ‘Equity like’ performance with lower volatility 40

BNYM Global Return 1 year performance: Smoother investment journey by managing risk and volatility. BNYM Global Return 1 year performance: Smoother investment journey by managing risk and volatility. Risk containment strategies within the fund clearly reducing ‘Market risk’ throughout 2011 Source: New Ireland 41

BNYM Global Return from inception: Smoother investment journey by managing risk and volatility. Volatility BNYM Global Return from inception: Smoother investment journey by managing risk and volatility. Volatility Consensus 14. 6% Volatility BNY 7. 9% BNY strategy clearly managing short term volatility Source: New Ireland 42

Protected Assets Fund 43 Protected Assets Fund 43

What were our design goals? “My investment fell 35% in a year. Promise me What were our design goals? “My investment fell 35% in a year. Promise me that won’t happen again. ” – Manage ongoing volatility – Protect against sudden crashes – Be explicit about the protection – No fund manager risk – Improve on existing protected funds – Generate a return 44

Protected Assets fund – the concept! Increase clients exposure to equities when markets are Protected Assets fund – the concept! Increase clients exposure to equities when markets are steady and low in volatility. Decrease clients exposure to equities when markets are volatile and illustrating higher levels of risk. Low Volatility = Share prices move up and down more steadily over time High Volatility = Share prices move up and down rapidly over short periods of time 45

Equity Split – Key point not a Tracker!! Total return indices – i. e. Equity Split – Key point not a Tracker!! Total return indices – i. e. dividends reinvested 46

In any calendar year, the value of an investment in the Fund (before charges In any calendar year, the value of an investment in the Fund (before charges are deducted) will never fall below 90% of its highest value in that year. 47

So how do we provide the protection? • Derivative asset (currently approx. 2%) provides So how do we provide the protection? • Derivative asset (currently approx. 2%) provides insurance against market falls • Unlike competitor CPPI products, can’t get cashlocked as: • Protection resets once a year • Derivative pays out if markets collapse • Protection provided by Bank of Ireland 48

Protected Assets fund versus underlying equities! Protection Resets on 1 st January each year, Protected Assets fund versus underlying equities! Protection Resets on 1 st January each year, and underlying index levels remains irrelevant! Peak to trough fall of 24. 7% requires a gain of 32. 8% just to breakeven! 49

§ A quick Economic view of the world to get us started today…… 50 § A quick Economic view of the world to get us started today…… 50

Debt crises: a question of scale Greece Peak* debt year Peak* debt in USD Debt crises: a question of scale Greece Peak* debt year Peak* debt in USD bn Peak* debt proportion of GDP Russia Argentina 1982 1997 2002 40 347 489 80% 86% 181% Peak* debt proportion of global GDP * Precrisis debt peak except for Eurozone figures, which are as at February 2011 Note: Bubbles are not to scale and for illustrative purposes only Source: IMF, Bloomberg 51 S. Korea/Thailand 1997 Eurozone 2011 1, 836 36, 157 248% 297%

Crisis? What crisis? It’s not just the Eurozone that has financial problems The US Crisis? What crisis? It’s not just the Eurozone that has financial problems The US financial position: Or put it another way…let’s pretend it’s a household budget: Source: Merrill Lynch Bank of America, 2011 52

US Quantitative Easing- Market Impact Quantitative Easing X 2 in the US = Massive US Quantitative Easing- Market Impact Quantitative Easing X 2 in the US = Massive market support 53

Quantitative Easing in numbers…. . ? § Quantitative Easing (QE) 1 : Aggressive purchasing Quantitative Easing in numbers…. . ? § Quantitative Easing (QE) 1 : Aggressive purchasing of bonds by the Federal Reserve (March 2009) BILL: $2. 1 trillion ( c 20% of US GDP) § Quantitative Easing (QE) 2 : Aggressive purchasing of bonds by the Federal Reserve (August 2010) Bill: $450 billion 54

Kicking the Can Down the Road European policy has delayed not removed need for Kicking the Can Down the Road European policy has delayed not removed need for adjustment – many changes still to come. World remains risky Page 55 55

State of Play- European Bank Balance Sheet 2011 • • • Wholesale market shut State of Play- European Bank Balance Sheet 2011 • • • Wholesale market shut and maturities rolling over - € 750 billion due to be repaid in 2012 Capital to be blown apart by Sovereign Exposures Regulatory seeking bigger capital buffers Equity Markets Capital Funding Lending Wholesale Core Profitability Funding SHORT TERM ECB/ Central Bank Funding Deposits Lending Margin Loans Outstanding Personal Debt Markets (Senior/ Sub Bonds) - Cost of Money Bad Debt Provisions Commercial Eroded Capital Sovereign Exposures 56 Losses

Solution – 2012 to Bank Balance Sheet Crisis STEP 1: ECB BUY Sovereign Debt Solution – 2012 to Bank Balance Sheet Crisis STEP 1: ECB BUY Sovereign Debt STEP 2: Replace Wholesale Money with CHEAP ECB money STEP 3: Equity issuance-Rights Issues/ Contingent convertibles STEP 4: Sell/Deleverage loan books Equity Markets Capital Funding Lending Wholesale Funding Reliance Core Profitability 3 YEAR @ 1% ECB Funding Deposits Loans Outstanding Personal Lending Margin - Cost of Money Bad Debt Provisions Commercial Debt Markets Rights Issues (Senior/ Cos Co Co’s Sovereign Exposures 57 Retained Earnings

Euro – what should I do? • A break up very costly. No legal Euro – what should I do? • A break up very costly. No legal exit mechanism for any country from EMU! It’s still possible, but probable? ? • Clients need to distinguish between devaluation and break up – it requires different strategies! • Moving to other currencies is not without its significant risks! • Moving money to German Gov Bonds – you’re paying a very high price and taking risk of no inflation over coming years. • Gold –safe haven or asset bubble? Care needs to be taken with this too. • People need to take great care in understanding the risks involved in trying to avoid risk!! 58

The Safe havens can be risky too! 59 The Safe havens can be risky too! 59

So what effect has all this ‘noise’ had on Markets over the year……… 60 So what effect has all this ‘noise’ had on Markets over the year……… 60 60

Global Equities from April 11…. , Volatile but not too bad. . . did Global Equities from April 11…. , Volatile but not too bad. . . did it feel worse than this? ? 61

looking at the longer term……Time makes volatility look much smoother! 62 looking at the longer term……Time makes volatility look much smoother! 62

New Ireland Website § www. newireland. ie New Ireland Investment Centre http: //fundcentre. newireland. New Ireland Website § www. newireland. ie New Ireland Investment Centre http: //fundcentre. newireland. ie § Up to date priceperformance information § Monthly factsheets – include asset split, fund size etc § Graph performance of funds 63

New Ireland Website § www. newireland. ie New Ireland Pension Centre http: //www. newireland. New Ireland Website § www. newireland. ie New Ireland Pension Centre http: //www. newireland. iepensionscentre. newireland. ie § Comprehensive source for all New Ireland pension material 64

What Should I Do Next? Contact: Ms Triona Lydon Pensions & Investments NUI Galway What Should I Do Next? Contact: Ms Triona Lydon Pensions & Investments NUI Galway Ph 091 -524411 ext: 5028 Email : Triona. [email protected] ie Or: Noel Hackett, QFA, Pensions Consultant New Ireland Assurance Eyre Square, Galway Tel 091 -563023; Mobile 086 -8186163 Email: Noel. [email protected] ie 65

Individual Consultations Available Noel Hackett will be in available for Individual Consultations of 40 Individual Consultations Available Noel Hackett will be in available for Individual Consultations of 40 mins duration (09. 00 – 17. 00) Room AC 201 16 th , 17 th &18 th April 2012 Contact Ann in Pensions Office Extn 5901 to reserve time. 66

Any 67 Any 67