Who is managing these people's pensions?

woodseb

Earlier, the bank's Extraordinary General Meeting was briefly interrupted by an angry shareholder who threw eggs at the Board.

The eggs hit the wall behind where members of the AIB board were sitting.

The shareholder identified himself as 66-year-old Gary Keogh from Blackrock in Dublin; he told RTÉ News that his pension income had been wiped out by the collapse in bank shares.


Many of the shareholders who spoke were elderly and said they had lost huge amounts of their income.

i feel sorry for these people but it begs the question are they taking any professional advice at all? It's a basic premise of pension investing to weight your portfolio towards bonds as you reach retirement but these bank's EGMs seem full of people who have been wiped out by the banks....

DJDC

The key mandate of a pension fund manager is to deliver steady returns to the pension fund without having high VAR. The problem is that in the low yield envirnoment of 2004-2007, managers wanted high returns and so many invested in bespoke structured products from the "arranging" banks. The only companies that generally have the sophistication to hedge these products are the well known investment banks like JP Morgan, GS etc. A great example is the Structured Bond arranged by JP in 2007 that caused serious outrage in Greece when it was the issue of a mis-pricing scandal.

It was basically a yield curve play,offering the difference between the 5*(10 year € swap rate and the €2 year swap rate). There was also inherent optionality embedded in the note in terms of a floor on negative interest rates etc. So why did the pension funds invest in this complicated note? JP used teaser rates for the first 2 years, 6.5% which was very high at the time.

The truth is many pension fund manager end up buying products that they dont fully understand and are enticed by high intitial yields.