Pension& Investment Choices
TO: DIRECTOR OF HRM DEPARTMENTFROM: MANAGER HR DEPARTMENT MAY 5, 2014SUBJECT: PENSIONSAND INVESTMENT CHOICES
Thefollowing is a review on pensions and investment choices for thecompany.
Anasset class (i.e. equity and bonds) is one area of investment thecompany can look at. Though equities are volatile due to inflationand market changes they have tended to perform better than cash andthe company would gain more in returns in case of sharp rise at anytime (Sweeting, 2013).
Bonds(both government and corporate) on the other hand, would also beanother area we could consider for investment. There are sure way forthe company to invest its pension over time with return on interestreceived (Matthews & Berman, 2002). Changes on the bond’svalue over time also would give good returns. In case of foreigngovernment gilts, a positive fluctuation in foreign currency exchangerates will significantly affect the return on invested pension.
Accordingto Randal (2004), direct investments on land and buildings would alsobe a good investment. The incomes in form of rent and appreciation onland and properties value are good investments the department canconsider. Properties and land have been known historically toappreciate in value, an investment in this area would be guarantee onpension returns if properties are managed properly and lands sold ontime and at competitive market prices.
Lastly,the company could invest directly or indirectly in real commoditieslike gas, oil or precious metals. Profits gained from sales wouldalso be good returns on pension investments.
Pleaselet me know if you have any questions.
Mathews,J.L, & Berman D.M. (2002). SocialSecurity, Medicare and Government Pensions.New York: Nolo.
Randal,P.A. (2004). Actuaries,pension funds and investment. Journalof institute of actuaries,117 (1), 1-49.
Sweeting,P.J. (2013). Pensionschemes and fixed income investment. BritishActuarial Journal,10, (2), 353-418.