The so-called ‘middle way’ for the new Dutch pensions contract being hammered out by the government will have little impact on pension funds’ asset allocation, according to investment experts.A large majority of investment professionals attending a conference held by IPE sister publication IP Nederland said the new hybrid contract would not lead to a more “aggressive” investment policy, even if pension funds are given more options for smoothing out rights cuts, as is expected.Hans de Ruiter, head of investments at the €5bn pension fund of technical research institute TNO and a member of an IP Nederland discussion panel, said: “The new pensions contract is not meant to increase investment risks.”Hedwig Peters, professional pension fund board member and also on the panel, fully shared his opinion, pointing out that “current legislation would still apply”. Also during the conference, the audience showed no clear preference for the recently proposed new discount rate, which consists of an ultimate forward rate (UFR) of the average 20-year interest rate over the previous 10 years.The new criterion is to replace the current discount rate of the three-month average of the forward curve as of 2015, when the new financial assessment framework (FTK) is scheduled to come into force.Gerard Roelofs, head of investments for Continental Europe at Towers Watson, said: “The impact is not very different from the current discount rate.”However, the expert panel was very pleased the three-month average would disappear from the discount criterion.Both Peters and De Ruiter noticed that no financial instruments existed to hedge the interest risk on liabilities based on the UFR.Therefore, pension funds should not adjust their current interest-matching policy because of the new discount rate, Peters argued.Almost the entire audience agreed with her that market valuation of liabilities should be the guiding principle for pension funds’ investment policy.A large majority of the audience also said they did not expect a hybrid pensions contract to lead to an increase of inflation-linked products in their investment portfolios.
In her 20 years’ working in the industry, Graham has also worked at UBS, SBC Warburg and Progressive Alternative Investments, before moving to BTPS.A statement said her role would see her “managing the interlined developments across investment requirements, operations and risk control”. Kathryn Graham, a 10-year veteran of BT Pension Scheme (BTPS), is to join the Universities Superannuation Scheme in the newly created role of head of strategy coordination.Roger Gray, the £40bn (€48bn) fund’s CIO and head of USS Investment Management, said Graham would be a welcome addition to the unique scheme.“Increasingly, we are taking a whole-scheme view to investment and risk management,” Gray said, “and, through the development of this role, we hope to achieve greater synergies amongst our various asset classes and managers to deliver the most effective investment strategy.” Graham, who most recently was head of special projects at BTPS, said the university fund’s “willingness to work between the traditional and alternative asset classes” made it one of the more interesting institutional investors.
In particular, the VAG’s application of paragraph 124, concerning investment principles, to IORPs had been criticised and remains unchanged in the final 360-page draft which will now be presented to parliament.It introduces the principle of “entrepreneurial prudence” (unternehmerische Vorsicht) for investments which according to aba was superfluous as IORPs already operated under the prudent person principle.Further, aba noted that IORPs were no enterprises and did not aim to return a profit.One major criticism voiced by the association was a limit on “non-listed” vehicles, which the law said should be “kept to a cautious level”.In its comment on the original draft the aba had cautioned that this would also apply to most real estate holdings and a cap on those would prevent IORPs from accessing illiquidity premiums in future.Similarly, the German actuarial society (DAV) as well as the federal employer association (BDA) warned not to link paragraph 124 to IORPs as it introduced stricter than necessary regulatory requirements regarding supervision and in parts was not consistent with other regulations applying to this sector.The aba pointed out the limitations under the new legal draft were not in line with the “prudent person principle” which should allow IORPs the freedom to make decisions.One point welcomed by the occupational pension sector were changes to payout structure of the Pensions-Sicherungs-Verein (PSV), the industry’s buffer fund for insolvencies.According to the final draft, the PSV would also be exempt from any new Solvency II-based capital requirements placed on other insurers. In addition, it will in future be more easy to allow partial payments of the levies in years when the number of insolvencies is exceptionally high.,WebsitesWe are not responsible for the content of external sitesLink to draft version of the Versicherungsaufsichtsgesetz The German government’s final draft of the new insurance supervision law (VAG) will impose elements of Solvency II on the country’s Pensionskassen and Pensionsfonds, despite objections by industry and employer bodies. The VAG had to be amended to fulfil requirements under Solvency II but occupational pension groups lamented that the insurance framework was, in part, being transferred onto schemes.The German pension fund association aba told IPE it had not yet had the chance to check the new draft in detail but at first glance it seemed that “unfortunately” a lot of its requests for amendments, made after the first draft was published in late July, went unheeded.One of the main demands of various representatives from the occupational pensions sector had been a completely independent set of rules on the supervision of IORPs – a demand which has not been met.
The UK government has finalised its plan for setting up an automatic transfer system for defined contribution (DC) pension pots built up during auto-enrolment. The so-called ‘pot-follows-member’ system will be implemented by October 2016 after legislation permitting its set-up passed last year.A paper from the Department for Work and Pensions (DWP) said it had opted for a ‘Federated Model’, with DC pots worth less than £10,000 automatically following a saver from one scheme to another as they change employer.The paper also said the system would only apply to savers within default investment funds, as any active engagement from a member would make them ineligible for automatic transfers. The Federated Model will consist of a network of registers holding information on all DC pots available for a transfer, the government said, which reduced concerns over a single point of system failure and issues arising by forcing pension schemes to communicate with one another.It will be implemented in two stages beginning next year, with solely auto-enrolment savings in default arrangements and members ‘opting-in’ to the new automated system – while its structure and integrity is tested.A second phase will then switch to an opt-out system, meaning all pots will be automatically transferred in the absence of member engagement.The DWP said it would consider expanding the policy to savings outside of default investment funds and larger pots but not until technological advancements had been made.Pensions minister Steve Webb said there could be 50m dormant pension pots without government intervention in the market.“I want to introduce pot follows member as soon as possible so we don’t lose the momentum that automatic enrolment has delivered in turning around pension saving,” he said.Elsewhere, The Pensions Regulator (TPR) has launched a new package of measures to assist trustees of UK schemes with changes coming into force in April.Later this year, the new pensions freedoms will become available for DC members, allowing them to access their savings without having to purchase an annuity, likely to result in uncertainty over retirement products and transfer requests from defined benefit (DB) members.The regulator is to begin consulting on new guidance for DB trustees on managing member transfer requests, with the Brighton-based body accepting feedback until 17 March.It has also created an ‘essential guide’ for DC schemes about the new rules regarding pensions freedoms, new governance requirements for insurance-based schemes and a 75 basis point charge cap for auto-enrolment default investment funds – also coming into force in April.There are additional communication materials for scheme managers and trustees to educate members over the risk of pension and investment scams.Stephen Soper, TPR’s interim chief executive, said: “The pensions system is undergoing one of the biggest shake-ups in generations.“As well as our own material, we’re working with the DWP, Treasury, FCA, Money Advice Service, Pensions Advisory Service and others to make sure a suite of information about the new pensions flexibilities is available, and we will signpost trustees and managers to this as it develops.”
British Airways (BA) has refused to renew the contract of Paul Spencer, chairman at both of the airline’s pension funds, due to an apparent disagreement over investment policy. Spencer has been chair of the £11.7bn (€16.6bn) New Airways Pension Scheme (NAPS) and the £7.3bn Airways Pension Scheme (APS) since 2010 on a five-year contract.The industry veteran also chairs the £40bn BT Pension Scheme and the Rolls-Royce Pension Scheme, some of the UK’s largest corporate pension funds.According to a source close to the trustee board, BA’s decision stemmed from a disagreement between the airline and Spencer and his board over the de-risking of the NAPS. Spencer supported de-risking and a shift towards liability-matching, the source said.However, with fewer growth assets, this would have entailed a reduction in expected return calculations, as well as potentially higher contributions from BA.The NAPS had a deficit of £1.9bn at the end of March 2013, as the scheme currently undergoes its triennial review, with results expected in a few months.The trustees agreed a funding plan with the airline to eliminate the deficit by 2026 that saw £242m in deficit contributions in the year to April 2014.The NAPS opened prior to the airline’s privatisation by the UK government in 1987 and replaced the APS with higher contributions and less generous indexation.Its last annual report to April 2014 said it had around 70% of its assets in equities, private equity, alternatives and property.It also has 25.7% in bonds, 10.9% of which is in index-linked UK Gilts, with around 32% of its 67,000 members actively accruing benefits.Spencer and his board have butted heads with the airline in the past, as British Airways sued its own trustees for offering a discretionary increase in the APS.BA argued that the trustee board lacked the legal right to act without its permission.
“We have a solid basis within traditional labour-market pensions, which is now being supplemented by new customer groups, which are slowly but surely becoming integrated as part of our overall business,” Jørgensen said.Ongoing contributions rose by DKK123m to DKK4.95bn in the first nine months of 2015 from the same period last year.Sampension said it was very positive that this growth had happened despite there now being fewer employees working for the state and municipalities – workers who make up the lion’s share of Sampension’s customers.It said it aimed to build up its business outside the traditional groups.In the third quarter, it launched a new corporate pensions product suitable for small and medium-sized companies.“The growth in customers,” Jørgensen said, “will help keep our costs for all client groups among the lowest in the industry, and we are convinced there is good synergy between our traditional customers from state and council workplaces and the customer base we are in the process of building up in the corporate pensions market.”Sampension said returns for traditional with-profit pensions came to 0.1% in the first nine months of this year, down from 16.6% over the same period in 2014.Returns for unit-link pensions were negative, at between -0.2% and -0.5%, after positive returns of 6.4-9.2% in January to September 2014.Sampension put the performance down to general instability in the financial markets.Solvency coverage, however, rose to 394% at the end of September from 270% at the end of last year.Sampension attributed this shift partly to the decision by many customers to move out of guaranteed products, as well as a fall in credit spread risk.Total assets rose to DKK246bn at the end of September from DKK230bn at the same point last year but were down from the DKK257bn value stated at the end of December. Denmark’s Sampension has reported a 78% rise in one-off contributions over the first three quarters of this year, which it said was a sign of the increased corporate pensions business it has been working towards.Hasse Jørgensen, chief executive of the DKK250bn (€33.5bn) labour-market pensions provider, said: “We can now confirm our aim towards growth in the corporate sector is bearing fruit.”Interim figures showed that, between January and September, contributions overall rose to DKK6.3bn from DKK5.8bn in the same period last year – a rise of 7.6%.This has been driven by a 78% increase in one-off contributions to DKK868m.
Five US asset managers have fallen out of the top 10 providers in Germany, according to an influential ranking published by Scope Analysis.Around one-fifth of Legg Mason’s funds offered on the German market lost their A-rating from Scope. Goldman Sachs Asset Management, State Street, JP Morgan Asset Management and Invesco also did not hold on to their positions at the top of the ranking.The German rating agency Scope annually ranks providers of KVGs, institutional funds on the German market.In this year’s analysis of the large asset managers, the rating agency reported that Legg Mason had suffered the biggest drop, with only 34.5% of its funds still labelled A by Scope, compared to 54.5% last year. SKAG 5 8 62.5% MEAG 8 14 57.1% Investec 14 25 56% DNCA Finance8 8 100% Robeco 19 35 54.3% Kepler-Fonds23 37 62.2% Vanguard Investments 11 21 52.4% Fidelity International 34 70 48.6% Small asset manager ratingsSource: Scope Analysis, 31 March 2018Asset managerFunds with top rating No. of funds rated% top rated Vontobel Asset Management 14 29 48.3% Deka8316849.4% Metzler 14 25 56% Alliance Bernstein 19 37 51.4% German providers including Metzler, Union Investment, Vontobel and Allianz Global Investors replaced them in the top 10 list, alongside Investec.Both Vontobel and Investec were rated among the top large asset managers (with more than 25 evaluated funds) for the first time this year.“An increased German presence is significant because the purely quantitative KVG ranking tends to favour foreign managers,” Scope said in its analysis.The analysts said that major international asset managers usually only offered a fraction of their funds – usually their most successful – to the German market.“German managers, on the other hand, are represented by their entire product offering in the KVG ranking,” Scope added.At the beginning of last year only one German provider, Deka, had been among the top 10, The first place in the ranking was maintained by Austria’s Kepler-Fonds: 62% of its funds currently hold an A-rating from, Scope compared to 56% for Investec and Metzler.In total, Scope evaluated 5,900 UCITS funds on offer in Germany from 313 asset managers with a KVG license. Only 8.5% of this total held A-ratings.This also included funds from smaller asset managers, with between eight and 24 rated funds.In this ranking Comgest lost its top position despite 12 of its 17 evaluated funds (70.6%) holding an A-rating. This was down from 90% last year.Comgest was overtaken by two small boutiques with only eight evaluated funds each: DNCA Finance – which achieved an A-rating for all eight of its products – and Sparinvest (six out of eight).Large asset manager ratingsSource: Scope Analysis, 31 March 2018Asset managerFunds with top rating No. of funds rated% top rated T Rowe Price142263.6% JO Hambro Investment Management 8 15 53.3% Union Investment 53 109 48.6% SparInvest 6 8 75% Degroof Petercam Asset Management 9 14 64.3% Allianz Global Investors 48 108 44.4% Comgest 12 17 70.6% Wellington Management 16 23 69.6%
Clare Scott, outgoing CEO of Lothian Pension Fund“We expect the role will attract a lot of interest,” it said, “especially as the fund has established a position as one of the leading LGPS funds in the UK.”The fund had “an attractive platform from which a new CEO can address future challenges,” it added, noting that it had a strong-in house investment capability with regulatory authorisation and “collaboration activities with other LGPS funds”.Lothian Pension Fund works with the pension fund for the neighbouring council of Falkirk on investments, having so far made collaborative private market investments in infrastructure and private debt. The pension fund for the council of Fife has now also joined the collaboration. The chief executive of Lothian Pension Fund, Scotland’s second largest local authority pension fund, is to step down at the end of the year.Clare Scott has been working for the local government pension scheme (LGPS) since 2005, rising through the ranks from pensions administration manager to investment officer to chief executive.Scott trained as an actuary at Norwich Union – now Aviva – and then worked as an investment consultant for many years at Hymans Robertson. In a LinkedIn post yesterday, Scott said she had thoroughly enjoyed her time at Lothian Pension Fund and was very proud of the fund’s achievements, but that “it’s time for me to move to pastures new”. According to her post she does not have a new position lined up, but will be “using the next few months to look at… options”.The £6.7bn (€7.6bn) multi-employer pension fund, which is administered by Edinburgh Council, said it had started the search for a new CEO.
Joanne Segars, chair of a £45bn (€49.5bn) UK local government asset pool, said the continuation of pensions investment work despite the COVID-19 lockdown has been a revelation – and a testament to people’s resilience.Segars told the audience at the IPE Summer Pensions Congress 2020: “I think we’re all adjusting to how we can do things, and one of the remarkable things we’re discovering about lockdown is that we can do things we never thought we would be able to do before.”LGPS Central – which manages the combined £45bn of assets belonging to eight UK local authority pension funds across the Midlands and is chaired by Segars – launched a corporate bond fund in March when the lockdown began.“If you’d asked me a year ago, could you possibly do this remotely, I’d have said, don’t be ridiculous of course we can’t – but actually what this crisis has shown is just how resilient people are,” she said in a panel discussion between pension fund leaders on future agendas. Joanne Segars, chair, LGPS Central“I think what we can see already is that coming out of this crisis there will be those companies that have managed well […] and that puts the onus on the board. But it also puts the onus on us as owners of those companies to engage with those companies,” Segars said.Asked about the issue of diversity in pensions and asset management, she said the pensions industry was not particularly diverse as a sector across a range of metrics, but that at LGPS Central, she was pleased to report that 75% of the non-executive directors were women.“We’re very clear that diverse organisations are the ones that have much more robust decision making; they can avoid groupthink and that makes them have better outcomes,” she said.This conviction also informed the pool’s asset manager selection process, she said.“What we’re looking for is not just boilerplate responses – because it’s very easy for organisations to say yes of course we’re diverse, of course we value these things – but we’re actually looking at how those issues are taken through in practice and how they affect decisions,” Segars said.“Asset managers with poor culture and insufficient diversity aren’t going to make it onto our books at LGPS Central,” she said.LGPS Central is a member of the 30% Club Investor Group, an initiative promoting an increase in female representation on UK company boards to at least 30%.Looking for IPE’s latest magazine? Read the digital edition here. “I think it reflects on everyone who works in the sector and my colleagues at LGPS Central just how flexible we have turned out to be,” said Segars, who is also chair of UK master trust NOW:Pensions and sits on the investment governance committee of Legal & General.Segars also said it could already be seen that COVID-19 had increased the stress on the social element of ESG in investment.The signing by LGPS Central’s umbrella organisation the Local Authority Pension Fund Forum of the Investor Statement on Coronavirus Response – a joint pledge organised by the Interfaith Center on Corporate Responsibility – had been important in emphasising unanimity of support on very important issues, she said.
The view from the apartment at 432/30 Macrossan St, Brisbane.A LAVISH sky home in the heart of Brisbane’s CBD has sold for a $775,000 discount after languishing on the market for nearly three years.It’s been a long time coming, but the contemporary apartment in the riverside Admiralty Precinct has finally changed hands for $2.725 million, more than 1000 days after first being listed for sale in August 2015. GET THE LATEST REAL ESTATE NEWS DIRECT TO YOUR INBOX HERE The open plan living space at 432/30 Macrossan St, Brisbane.The master bedroom and three other spacious bedrooms all come with walk-in robes and ensuites.There’s an enormous 44 sqm entertainer’s balcony, a separate entertainment area, large study, plus a bar and wine cellar.The property offers five car spaces and use of the building’s resort-style facilities, including a tennis court, swimming pools, a gym and access to the riverside boardwalk to the Eagle Street Pier. Inside the home at 20 Victoria Pde, Clayfield, which has just sold for $2.25m.The vendor had recently obtained Development Approval for a high-end apartment building, allowing for 11 apartments over five levels. One of the four bedrooms in the apartment at 432/30 Macrossan St, Brisbane.The second biggest sale of the past week according to CoreLogic was a grand, two storey house in one of Clayfield’s most prestigious streets. SOCCEROO SETTLES ON GOLD COAST BEAUTY This property at 20 Victoria Pde, Clayfield, has sold for $2.25m. This apartment at 432/30 Macrossan St, Brisbane, has sold. Picture: realestate.com.au.It was first listed with a price in December 2016, when it was advertised for offers circa $3.5 million.That price was then dropped to between $2.85 and $3.1 million in May 2017, but without any bites the property was eventually listed for ‘all offers considered!’ UNLISTED HOME SETS NEW RECORD Inside the apartment at 432/30 Macrossan St, Brisbane.It was named the top sale of the past week by property researcher, CoreLogic.More from newsParks and wildlife the new lust-haves post coronavirus18 hours agoNoosa’s best beachfront penthouse is about to hit the market18 hours agoThe massive apartment on the 43rd floor at 432/30 Macrossan Street is bigger than most houses, spanning 315 sqm, and offers stunning, uninterrupted views of the Brisbane River, Story Bridge and the city. POWER COUPLE SLASH $3M OFF WATERFRONT MANSION Inside the property at 20 Victoria Pde, Clayfield, which has sold for $2.25m.The property at 20 Victoria Parade comprises a five-bedroom house on an 810 sqm parcel of land over two lots with 20 metre frontage. An artist’s impression of an apartment development proposed for the property at 20 Victoria Pde, Clayfield, which has just sold for $2.25m. An artist’s impression of an apartment project proposed for 20 Victoria Pde, Clayfield.