Irish Public Pension Fund Chief to Retire

JohnCorrigan_ChrisBuzelli (Art by Chris Buzelli)John Corrigan is to retire from his position as chief executive of Ireland’s National Treasury Management Agency (NTMA).

Corrigan—a veteran of CIO’s Power 100 list—will step down on January 4, 2015, having led the NTMA through Ireland’s recession, financial crisis, and bailout. The NTMA oversees the management of the country’s National Pension Reserve Fund.

Corrigan will be replaced by Conor O’Kelly, deputy chairman of Investec’s Ireland operations.

“I would like to thank John Corrigan for his leadership of the NTMA and for his counsel to me during an extremely challenging period in Ireland’s recent history,” said Michael Noonan, Irish minister for finance.

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Noonan said Corrigan had helped the NTMA make “a very significant contribution to Ireland’s recovery,” citing its role in helping the country exit an €85 billion ($106 billion) bailout programme, instigated by the European Union and the International Monetary Fund in 2010.

Willie Walsh, chair of the NTMA’s advisory committee, also thanked Corrigan for “the tremendous commitment and surefooted manner in which he managed Ireland’s full return to the sovereign debt markets” in 2012.

Before joining Investec, O’Kelly was chief executive of Dublin-based NBC Group and led a management buyout of the company in 2003. NBC Group was later bought by Investec.

Walsh said O’Kelly’s experience “will be invaluable to the NTMA as it manages the wide range of commercial and market-facing mandates that Government has entrusted to it.”

The funding ratios of German pension funds have declined sharply following falling market interest rates, in many cases wiping out portfolio gains for 2014.

Liabilities of pensions linked to DAX-listed companies hit €353 billion ($442 billion) this year, an all-time high, according to a survey by Mercer in Frankfurt. This figure is 86% higher than the €190 billion recorded in 2008.

German funds have had a strong 2014, with investment returns averaging roughly 6.7% between the start of the year and the end of October. Mercer estimated that returns could average 7.5% for the whole of 2014, putting overall assets at roughly €213 billion.

But the effect of these returns has been all but wiped out by the knock-on effects of the European Central Bank’s record low base interest rate. This has led to a downward trend in actuarial interest rates, which have declined from 3.7% at the start of 2014 to 2.3% at the end of October.

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As a result, the combined liabilities of the 30 companies’ pensions have risen to a record level. Mercer estimated that the average funding ratio for DAX company pensions had fallen from 66% at the end of 2013 to 60% at the end of October 2014. This ranges from Deutsche Bank’s 99% funding ratio to Deutsche Telekom’s 22%.

German pension funds' liabilities

However, Thomas Hagemann, chief actuary at Mercer, said 60% was still “a good rate” for these pension funds. The majority of pension funds covered by the study are contractual trust arrangements, a non-regulated pension model that allows greater flexibility for investments. There is no requirement to keep these plans fully funded as pension payments are insured by the country’s Pensions-Sicherungs-Verein in case of company insolvency.

Pension funds in the Netherlands have suffered a similar fate this year. Bernard Walschots, CIO of the Rabobank Pension Fund, writes in next month’s issue of Chief Investment Officer Europe that the volume of Dutch pensions’ liabilities has “increased significantly, exerting strong downward pressure on coverage ratios, despite positive returns from most asset classes”.

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