CPB: Defined benefit schemes generate 20% better outcomes than DC

first_imgDefined benefit (DB) pension funds in the Netherlands can achieve 20% better outcomes at retirement than individual defined contribution (DC) plans, according to a study by the Dutch Bureau for Economic Policy Analysis (CPB).The CPB reached its conclusion after considering the combined effect of extra returns and the hedging of interest risk on liabilities at DB schemes.At the request of pensions think-tank Netspar, the CPB compared the Social and Economic Council’s (SER) two preferred options for a new pensions contract – collective DB without guarantees and individual pensions accrual with shared investment risk, as well as individual DC contracts without risk-sharing.Marcel Lever, programme leader at the CBP, said 7 percentage points of the extra return produced by DB plans were due to shared investment risk between current and future generations, which enables DB schemes to take on more investment risk. He attributed the remaining 13 percentage points to a 25% interest hedge through swaps, on top of the interest cover through bond holdings.“At individual contracts, it is uncommon to hedge interest risk this way,” Lever said.He explained that, with interest swaps, pension funds always receive the long-term rate and pay the short variable rate.“Because the long rate is almost always higher, this construction delivers an additional return of 1.5% on average in the long run,” he said. “In most of our scenarios, a hedge of between 60% and 100% is beneficial.”Lever said it was still unclear whether an interest hedge would also apply to a pensions contract based on individual accrual with risk-sharing.“The question is whether all participants with individual contracts could provide sufficient collateral such as AAA bonds,” he said.In other news, a Dutch court has ruled that the decision of Verloskundigen, the €300m occupational pension fund for midwives, to apply a rights cut of 0.4% next year was not at odds with European legislation.In the case, brought by a pensioner who had referred to the European Charter for violation of ownership rights, the court concluded that the code did not apply, as there are no European rules for local pension systems.In the opinion of the court, a violation of the European Convention for Human Rights was not relevant either because the rights cut is covered by local law and is not disproportionate.Commenting on the ruling, Marlies Bartels, the scheme’s chair, took pains to emphasise that the pension fund had taken a balanced decision, taking the effects for all 3,730 participants into account.Last month, the funding ratio at Verloskundigen stood at 83%.last_img read more

Dodgers’ Clayton Kershaw wins the NL Cy Young Award

first_imgThough he declined to comment on the contract talks, Kershaw said he isn’t considering what teams he might want to play for if he reaches free agency.“I do love L.A. I love being there. I’ve loved my six years there so far. I don’t have any problems with that at all,” he said. “Right now, I am in L.A. for one more year, and that is kind of as far as I am looking,” he said.“No talks have happened yet this offseason. That is really all I want to talk about as far as that goes.”Whatever it takes to keep him a Dodger, Kershaw has a resume worth every dollar.This season his 192 ERA-plus, a statistic that measures ERA against the league average and adjusts for a pitcher’s park, was the best ever by a Dodgers hurler. His 1.83 ERA was the lowest by a major leaguer since Dwight Gooden’s 1.53 mark in 1985. His career ERA of 2.60 is the lowest ever by a starting pitcher in baseball’s modern era (since 1920).Kershaw went 14-9 with a 2.53 ERA in 2012. He placed second in the NL Cy Young Award voting to R.A. Dickey, who garnered 25 of 32 first-place votes.In 2011, Kershaw led the league in wins (21), ERA (2.28) and strikeouts (248) — pitching’s Triple Crown, and won his first Cy Young at age 23.He was recognized last year with the Roberto Clemente Award, becoming the youngest player ever to earn the honor at age 24. The charity he founded with his wife, Arise Africa, has helped establish an orphanage in Zambia called “Hope’s Home.”This year, Kershaw was given the Branch Rickey Award for exceptional community service.Kershaw said he is returning to Zambia Nov. 20 for a week-long visit to the orphanage with his wife. He said the money raised by his charity, Kershaw’s Challenge, has allowed the orphanage to add five more classrooms.“All the money we’ve raised this year is going toward the school,” he said.Kershaw started two games four days apart in the National League Division Series against the Atlanta Braves, allowing just one run over 13 innings as the Dodgers won both games.He didn’t fare as well in the National League Championship Series. Kershaw allowed seven runs to the Cardinals in four innings in his last — and shortest — start of the year.To that end, Kershaw believes Wainwright got the last laugh.“At the end of the day, if you don’t win a World Series, it’s not the same,” he said. “Adam Wainwright, he’s finished second a few times before. But he’s won two World Series. I bet he’s doing just fine. I’d give anything to win one of those.” If Dodgers pitcher Clayton Kershaw can spare some time away from baseball and his charity in Africa, he would make a natural celebrity endorser for Home Depot.These days, he’s bringing home more hardware than any pitcher in the land.Kershaw won his second National League Cy Young award in three years Wednesday, given annually to the league’s best pitcher. The only pitcher more decorated in team history is Sandy Koufax, who won the award three times (1963, 1965, 1966).Kershaw went 16-9 with a 1.83 ERA in 2013, leading the major leagues in earned-run average for the third consecutive season — a first since the Atlanta Braves’ Greg Maddux from 1993-95. The 25-year-old left-hander was named an All-Star in June and finished with a National League-leading 232 strikeouts in 236 innings, a career high. Newsroom GuidelinesNews TipsContact UsReport an Errorcenter_img “It’s just a whirlwind of emotions today,” Kershaw said by telephone from his home near Dallas, Texas. “Whether you expect to win or not, to hear your name called, it does something to you. I’m not big on stats or awards because ultimately we play the game to win the World Series. It really is pretty special and I don’t take that for granted.”Kershaw was listed first on all but one of the 30 ballots, with one writer from Cincinnati giving his vote to the St. Louis Cardinals’ Adam Wainwright. Wainwright finished second and the Miami Marlins’ Jose Fernandez finished third. Dodgers pitcher Zack Greinke finished eighth.Koufax, who is now a Dodgers special advisor, said in a statement released by the team: “Congratulations to Clayton on a great year and a most deserving Cy Young honor. This is the second of many more to come. He’s got quite a future ahead of him.”Where will the future take him?The Dodgers and Kershaw began negotiating a long-term contract extension earlier this year. He is currently set to become a free agent after the 2014 season. At some point in the next year, Kershaw is expected to become the game’s highest-paid pitcher, with many evaluators predicting a long-term contract in the range of $200 to $300 million.last_img read more