International

Global wrap-up

By Natalie Cogan
Thu 26 Feb 2009

Scottish Widows slashes pensions, Madoff fallout continues, Barclays unveils profits amid downturn, Standard Life compensates lost pensions.

Standard Life compensates lost pension
Britain's Standard Life will compensate investors who lost money after the insurance group admitted it had misled them about the safety of its £2.1 billion ($4.7 billion) Pension Sterling Fund.

Some 97,000 Standard Life customers who understood their investments were held in cash were faced with a cut in the value of their holding by 4.8 per cent on 14 January as Standard Life revealed nearly half the fund was tied up in mortgage-backed assets and risky sub-prime home loans.

In a statement published on its website in February, Standard Life acknowledged customers were not made fully aware of the investment mix in the fund. "With hindsight, some of the literature we provided in respect of this fund fell short of our own high standards," it said.

Customers will share £100 million ($222.8 million) in reimbursement. Anyone who switched to another fund after the 14 January cut will have the value of their current investment adjusted.

Scottish Widows slashes bonus rates on pensions
Scottish Widows has cut bonus rates on its with-profits policies after revealing the return on its £14 billion ($31.2 billion) with-profits fund fell by 17.5 per cent through 31 December 2008.

A 20-year pension policy with assumed savings of £200 ($445.60) per month will pay out £75,140 ($167,418) on maturity in January 2009, compared to £85,722 ($190,995) maturing a year earlier.

Endowment policies and pensions taken out after February 1999 have had their bonus rates halved, while investors who bought a Scottish Widows pension prior to that date will receive no bonus.

Barclays unveils profits amid downturn
Banks may be bad currency right now but a few are seeking to reassure investors there is at least a glimmer of hope in the current market.

Despite writedowns to the tune of £8 billion ($17.82 billion), Barclays Bank announced a pre-tax profit of £6.1 billion ($13.6 billion) for 2008, down 14 per cent on 2007 but in line with market expectations.

Instead of capital injections from the British government, Barclays has instead boosted its balance sheet with £5.3 billion ($11.8 billion) from investors in Qatar and Abu Dhabi in exchange for a 30 per cent stake in the bank.

Shares in Barclays have fallen nearly 80 per cent over the past year.

Dutch pensions receive French dividend
Investments & Pensions Europe reports the Netherlands' second biggest pension fund, Pensioenfonds Zorg en Welzijn (PFZW), has challenged its European neighbours on tax rebates for foreign pension funds.

Now Dutch pension funds are set to receive a dividend tax refund from the French tax office following a ruling by France's Supreme Court on 13 February. In France, foreign pension funds are not entitled to a refund of withholding tax to invest in French companies as are their French counterparts, but the court ruled French administrative guidelines were in conflict with the EU Treaty and had given the government three months to issue new directives.

PFZW has argued foreign pension funds are treated unfairly at a fiscal level outside their local market and is prosecuting several EU countries as well a number of Dutch pension funds.

Madoff list published
With retirement savings diluted and the economy stumbling, the state of pensions and investments in the United States has garnered many headlines.

None more so than the fallout from the pyramid scheme helmed by US investor Bernard Madoff. Compared to the infamous Charles Ponzi, who scammed millions of investors  in the 1920s, Madoff has admitted to losing over US$50 billion ($77.96 billion) and is currently under house arrest in New York.

The trustee liquidating Madoff's fund released an extensive list in February naming nearly 14,000 victims ranging from big name institutions to individual investors. The Wunderkinder Foundation - set up by Steven Spielberg - was one of several Jewish charitable foundations, incuding the Elie Wiesel Foundation for Humanity, affected. Several banks were exposed via collateralised lending, included Royal Bank of Scotland and Fortis Bank. Others are ordinary pensioners who have seen their entire life savings wiped out.

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