PensionsEurope warns of ‘continued threat’ of IORP capital requirements

first_img“To me this does not sound very single-market but rather like a problem on a national level,” Segars added.According to the PensionsEurope chairman, EIOPA plans to present Barnier’s successor – to be appointed next year following the European elections – with a fully-fledged proposal for solvency requirements for pension funds.“There is a continued threat of new solvency rules for occupational pensions, she warned.EIOPA has previously said it would be conducting a total of five consultations on issues impacting the Holistic Balance Sheet (HBS), including the recently concluded one on sponsor support.Segar stressed that Europe could not “have a one-size-fits-all solution” and pointed out a risk and solvency assessment for pension funds (ORSA) could lead to a lot more work for pensions funds, as well as increased need for external advice by consultants – which was “good news for consultants”.She called on the European Commission to focus more on the “real pension crisis Europe was facing” rather than increasing regulation.“Sixty percent of EU citizens have no access to workplace pensions, but I seldom hear the Commission talking about expanding occupational pensions,” criticised Segars.Meanwhile, she noted the market still expected a new IORP II proposal to be published before Christmas but added that she expected “they [the Commission] meant this Christmas”, referring to previous delays. The threat of the European Commission introducing solvency rules for pension funds remains, the chairman of PensionsEurope has warned.In May, internal markets commissioner Michel Barnier announced that the Commission would postpone the introduction of capital requirements, part of the revised IORP Directive’s first pillar. Joanne Segars, also the chief executive of the UK’s National Association of Pension Funds, told the PensionsEurope conference in Frankfurt this week: “The proposals are not dead yet and EIOPA [the European Insurance and Occupational Pensions Authority] continues to do work on that issue.”She added Barnier still wanted to see a level playing field established for the various pension providers.last_img read more

PGGM calls for integration of ESG ‘veto’ for all asset classes

first_imgDutch pension fund manager PGGM is to develop its ESG integration by expanding its expert “veto” policy into all asset class investments.The €178bn asset manager currently operates a policy where ESG-dedicated investment staff sit on investment committees with the right to veto transactions that do not meet set standards.Eloy Lindeijer, CIO at PGGM, said this policy allowed the manager to incorporate ESG and responsible investment decisions at the core of its business.However, the manager is now looking to expand this policy and have responsible investment staff sitting in all asset class departments. Speaking at the World Pension Summit in The Hague, Lindeijer described the policy as a “powerful change”.“[ESG staff] have strong representation on investment committees with the ability to veto transactions if they do not meet the standards we have set on perhaps remuneration,” he said.“We are now thinking about integrating this group further.”He said the team had been kept separate for many years but added that, as the fund moved from “responsible investing 2.0 to 3.0”, it needed more integration.“We are thinking about integrating the staff into the [asset class] departments,” he said.“We have not quite figured out we might do this, but, ultimately, we want to have [responsible investing] fully integrated into the whole process.”He also called on other investors wanting to increase or develop their approach to responsible investing to copy the system.“[The team] are a powerful force,” he said. “If you’re starting to think about setting up ESG practices, you should give this power to someone in your organisation who can work on develop policies and has a veto.”Lindeijer also praised the support of client PFZW, adding that its goal to be ESG-focused had given the asset manager a strong foundation to incorporate these policies.PFZW, the pension scheme for healthcare workers, recently committed to quadrupling its sustainable investments and halving its carbon footprint in six years.Peter Borgdorff, managing director of the €152bn fund, earlier told delegates a scheme’s responsibility was not only to provide income in retirement but also to help build a world members want to retire in.PGGM also reaffirmed its commitment to the Dutch housing market, as Lindeijer said the manager was now very much on the buy-side, after reducing exposure in recent years.“It is a good example of what a long-term investor should be doing,” he said.“When the market was overheating and overvalued, we were pulling back. It has dropped 20% in value, and rental incomes are good value, so we are on the buy-side.”Other Dutch pension funds have also delved into real estate and mortgages, with growing demand for the asset class, replacing government bond holdings.last_img read more

Dutch experts reject passive management as ‘new default option’

first_imgPassive management in the Netherlands is not becoming the new default option despite the fact active asset management is declining, pension experts have argued.During the annual congress of IPE sister publication Pensioen Pro, they argued that the approaches of “actively as standard” or “passively unless” were being replaced by measured choices per asset class, and that costs were becoming a serious criterion.Gaston Siegelaer, senior consultant at Towers Watson, said that while nobody disputed the principle of a performance fee, the scale and – in particular – the structure of a fee should be open to scrutiny.“Otherwise, the asset manager would receive an expensive call option, while also getting a fixed fee in the case of underperformance,” he said.  In Siegelaer’s opinion, pension funds should increase their negotiation efforts, “as the market is open for bargaining”.His view was echoed by John Crees of active manager Columbia Threadneedle, who said underperformance had to be cancelled out in the next 1-2 years, before a performance fee was paid.During the discussion, it became clear that convergence of interests, costs transparency, meeting a pension fund’s targets and beliefs, as well as the net result, were at least as important as the financial costs of an active strategy.In the opinion of Chris Wagstaff, trustee at two UK pension funds and head of Pensions and Investment Education at Columbia Threadneedle, the net added value should also be factored into the result of an active strategy.“Passive and active management are rather complementary,” he said. “Based on their individual investment beliefs, targets, governance budget and risk appetite, pension funds should decide on the best ratio between active and passive strategies.”Tower Watson’s Siegelaer added that this policy should also apply to individual asset classes.Pension trustees confirmed the importance of an individual approach and suggested that governance costs were a decisive factor.Siegelaer noted that, as pension funds’ scale increased following ongoing consolidation – and they could deal with more complex investments – this was not leading to an increase in active investment.An emerging investment approach was a predominantly passive style combined with a very active one – such as a private equity investment – for a small part of the portfolio.Christiaan Tromp, chief executive at pensions adviser Ipfos, recommended having 80% of a scheme’s assets actively managed, “as at least 80% of the overall return is a consequence of the strategic allocation”.“The remaining 20% could be invested under a very active style, with a tracking error of 10% rather than 4%, in order to reap proper benefits from active management,” he said.last_img read more

Netherlands roundup: Political youth branches push for reform proposals

first_imgDutch political youth organisations have called for the government to break the deadlock on pensions reform and come up with proposals itself.During a networking meeting organised by PwC and the Dutch Association of Insurers (VvV), the youth branches of the Netherlands’ four coalition partners expressed concern that the stalemate over a new pensions contract would continue, after the government’s deadline for an agreement passed without result.The groups said they had found common ground on the introduction of mandatory pensions saving for all workers, including the self-employed (known as zzp’ers). This contradicted the position of the liberal VVD party and liberal democratic D66 party.“General mandatory pensions saving will lead to equal competitive relations between all workers,” argued Daan Looij of the VVD’s youth branch JOVD. The youth organisations said they favoured individual pensions accrual combined with “continued solidarity”.They also supported the government’s decision to abolish the average pension contribution model “as this provided for a unilateral income transfer from younger to older workers”.The organisations explained that they favoured progressive contributions – with younger workers paying in less than their older colleagues – rather than contributions reducing as workers got older.In their joint declaration, the youth organisations also highlighted the need for clarity about who was entitled to what. They cited demographic changes in the Netherlands and said that the pensions system had become disconnected from the labour market.They also argued that “the concept of opaque anonymous pension pots must disappear”.The youth organisations also demanded “much freedom of choice”, ranging from the investment profile to the pensions provider, and from premium holidays to the ability to take a lump sum.Women’s organisation demands legislation for board diversityThe Dutch government must introduce legislation to force pension funds to appoint at least 30% of women on their board if they keep on failing to adhere to a voluntary code for pension funds, a lobbying organisation has argued.In an interview with IPE’s Dutch sister publication PensioenPro, Marjon Brandenbarg and Larissa Gabriëlse, chair and vice chair of Women in Institutional Pensions (Viip), argued that the legislator must come up with a legal quota of female trustees, if naming and shaming also failed.They concluded that the ‘softly, softly’ approach hadn’t worked and further measures were necessary.“The pensions sector has been trying to improve diversity for years,” said Brandenbarg. “At the moment, no more than 15% of trustees are female, while many pension funds don’t even have a single woman on their board.”In her opinion, the code’s recommendation of at least one woman on a board was too little “as half of humankind comprises women”.The Dutch government was already considering a 30% quota for female trustees at large companies, Brandenbarg said. “If this were to materialise, the pensions sector can’t stay behind,” she added.Recently, D66 – one of the partners in the Netherlands’ coalition government – said it would initiate legislation for diversity rules for pension fund boards next year, if schemes failed to implement agreed changes voluntarily. Other parties are said to support the move. Trade unions and AkzoNobel on collision course over extra contributionDutch trade unions are heading for a confrontation with chemicals giant AkzoNobel after the firm declined a demand for a one-off €400m additional contribution to its pension fund.According to Dutch financial daily FD, the company has told unions that such a contribution to its defined contribution scheme was not allowed under international accounting rules.FD reported that the unions had declined the company’s offer of a salary increase and one-off payments as part of a new collective labour agreement.“This is to become war,” the newspaper quoted Erik de Vries, the FNV union’s trustee for the process industry, as saying.The unions had based their demand for the additional contribution on the sale of AkzoNobel’s specialty chemicals arm to US private equity firm Carlyle, saying that they wanted the assets to be used to improve the pension fund’s financial position.However, AkzoNobel had indicated it would channel most of the €7.5bn proceeds to its shareholders.The company’s €5.3bn pension fund has a coverage ratio of 108.9%. It has an ageing membership and has only been able to grant limited inflation compensation.The indexation in arrears for active participants is 7%, while its pensioners and deferred members have lost out on 14% of purchasing power.In addition to the unions, the scheme’s board and its pensioners association have asked for the capital injection, albeit as a subordinated loan, to be paid off within 10 years.last_img read more

German investor seeks global fixed income manager via IPE Quest

first_imgManagers pitching for the mandate should state performance to 31 March gross of fees, and should have a track record of at least three years. The maximum tracking error is 4%, measured over a rolling three-year basis. Managers should also integrate environmental, social and governance considerations in their process.According to the details of the search, the objective of the allocation is to outperform the benchmark net of costs by at least 50 basis points a year.The benchmark is a blend of three indices:50% Bloomberg Barclays EuroAgg Corporate Total Return Index Value Unhedged EUR 30% Bloomberg Barclays EuroAgg Corporate 10+ Year TR Index Value Unhedged 20% Bloomberg Barclays EuroAgg Treasury Total Return Index Value Unhedged EURThe strategy will be housed in a segregated mandate within a Master KVG structure.The deadline for submissions is 10 May at 5pm UK time. More details are available at https://www.ipe-quest.com/ under search QN-2433.The IPE news team is unable to answer any further questions about IPE Quest, Discovery, or Innovation tender notices to protect the interests of clients conducting the search. To obtain information directly from IPE Quest, please contact Jayna Vishram on +44 (0) 20 3465 9330 or email [email protected] A German investor has launched a search for a global fixed income manager to run a €30m mandate via IPE Quest.According to search QN-2433, the allocation is expected to grow to between €500m and €1bn in the next three years.The mandate is for a euro-denominated, actively managed core sovereign and corporate credit strategy, limited to 75-85% in corporates and 15-25% in government-related instruments.Bonds in the strategy should not be rated lower than BBB- or Baa3 upon purchase.last_img read more

Swaps, swapped: Switzerland’s AHV moves into physical gold

first_img“The supervisory board has decided we are to invest in physical gold bars from now on,” the fund told IPE in a statement.In 2016 the supervisory board of the buffer fund decided to raise its the commodities exposure from 1% to 2% while divesting from energy-related commodity exposure.The fund explained last year that gold was better suited to add “diversification and hedging in certain situations (inflation or recession)” than the previously preferred energy commodities.In March the investment committee confirmed the decision to change the precious metal mandate from swaps to physical gold.The fund told IPE: “The mandate has not been changed yet. The investment committee asked for the change to be implemented by year-end 2018.”No further details were given on the mandate or the shift in strategy.As per March 2018, the fund held CHF682m in gold and a minor investment in silver, with a target allocation to precious metals of 2%.This means by year-end the swaps exposure to silver would have to be phased out and the precious metal portfolio would consist of physical gold only.The IPE news team is unable to answer any further questions about IPE Quest, Discovery, or Innovation tender notices to protect the interests of clients conducting the search. To obtain information directly from IPE Quest, please contact Jayna Vishram on +44 (0) 20 3465 9330 or email [email protected] Switzerland’s AHV/AVS fund is shifting to physical gold for the commodity exposure in its CHF35.2bn (€30.5bn) portfolio.At the end of last week the first pillar buffer fund tendered a custodianship and storage for CHF700m in gold bars via IPE Quest.The bars are to be stored in Switzerland either collectively or individually, the tender (QN-2447) states.The tender marks a shift in the investment strategy for AHV/AVS, as it previously only invested in gold and silver via swaps.last_img read more

Asset management roundup: Natixis to buy 25% stake in US manager WCM

first_imgPaul Black, co-CEO of WCM, said: “After a lot of thought and collective input, we concluded the smartest way to enhance our stability, and to guard our investment temperament, was to partner with a world-class global distribution platform.“For some time now we’ve known that diversifying the product mix within the firm – by raising the profile of our global strategy, our emerging markets strategy, and various other investment strategies – is the key to making this happen.”BMO drops F&C brandBMO Global Asset Management is to remove the F&C brand from all its products four years after its acquisition of the UK-based asset manager, it announcd today.All open-ended funds and corporate entities in Europe will adopt the BMO name, as will the direct-to-consumer channel, the Canadian investment group said.BMO GAM bought F&C Asset Management in 2014 and it has been expanding across Europe since then. It has opened seven offices in six countries, including France, Germany, Italy, Sweden, Spain and Switzerland.David Logan, head of distribution at BMO Global Asset Management, said: “Having more of our global and local capabilities under a single brand helps us to deliver on that as well as further simplifying the way we communicate with clients across all of our regions.”New signatories to UK gender diversity pushFranklin Templeton Investments, Intermediate Capital Group and Investec Asset Management are among 67 additional signatories to the UK government’s Women in Finance charter, according to an update published today. They signed up in the second quarter of the year, taking the total number of signatories to 272.Those signed up to the charter – an iniative of the UK treasury department – commit to four actions “to prepare their female talent for leadership positions”, according to the government.The four actions are:to have one member of the senior executive team responsible and accountable for gender diversity and inclusion;to set internal targets for gender diversity in senior management;to publish progress annually against the targets in reports on their websites; andto “have an intention” to ensure pay of the senior executive team is linked to delivery against the internal targets on gender diversity.The treasury is to update the signatory list with links to their targets in September. Natixis Investment Managers is to acquire a minority stake in $29bn (€25bn) WCM Investment Management and become its exclusive third-party distributor.Under the terms of the agreement, Natixis will acquire a 24.9% in WCM, which is based in Laguna Beach, California.The distribution arrangement means WCM will be added to Natixis’ global multi-affiliate platform, giving clients of the French asset manager access to a “high-conviction, high-active share investment manager with a distinctive investment culture and process”, according to a statement.WCM is employee-owned and runs concentrated equity portfolios covering global, emerging and small cap markets.last_img read more

Swiss fund to reassess private assets in strategy overhaul

first_img“Hedge funds have made a positive contribution in the past but we noticed a correlation to equities and other systematic risk factors,” he said.Additionally, hedge funds had come “under pressure from factor and style investment approaches” but fees remained high and “fee structures are not always aligned with investors”, said Dänzer.He added: “We are willing to pay higher fees for real asset management skills but these have to be proven. Over the last five years the actual alpha – especially from our long-short hedge fund exposure – was quite low and we were disappointed by the actual management skill.”However, Dänzer added: “We believe in private markets and we have profited from these investments last year and this year along with our foreign real estate exposure.“Our aim is not just to reduce costs but to pay for real skill and make use of risk premiums.”New-look allocationIn reshuffling its asset allocation Asga Pensionskasse has focused on different risk premiums: equity, term premium, credit, real estate and illiquidity.“Hedge funds are no longer a standalone asset class but they can be part of the implementation decision within each asset class,” Dänzer said.Similarly, private equity has been added to the fund’s equity risk portfolio.Asga has also added a dedicated credit risk portfolio, which comprises corporate bonds, loans and other forms of credit risk such as mortgages or asset-backed securities, although the latter two asset classes were still to be evaluated.Over the next few years Asga aimed to grow its credit allocation to make up 12% of the overall portfolio.In addition, Dänzer said its exposure to foreign real estate would be raised from 7.5% to 8.5%.“We are convinced we need an internationally diversified real assets portfolio,” said Dänzer, “and we [will] increase allocation to infrastructure by 100 basis points.”Within the equity segment, Asga reduced its home bias from 13% to 10%, but overall equity exposure increased by 100 basis points.Strategic changesAnother addition to the portfolio was a 3% “drawdown management” section.“We will implement a portfolio of convex strategies like CTAs, which could potentially be liquidated in a stress situation,” said Dänzer.Its purpose was not to protect the whole portfolio but “to allow a rebalancing within the portfolio in a stress situation,” he added.“This is necessary because we have a high exposure to illiquid investments,” the CIO said.Asga has also changed its approach to foreign exchange (FX) hedging, Dänzer said.“Previously hedging did not lower long-term returns but now there are additional foreign exchange hedging costs for Swiss hedgers like the FX basis,” he said. “This is way you have to discuss the risk-return implications of FX hedging.” FX hedging was still a main risk mitigation factor for the pension fund, the CIO said, and could significantly reduce tail risks. The CHF16bn (€14bn) Swiss multi-employer pension fund Asga sees “major need for improvement” in cost transparency and manager performance in private market investments.Speaking at a seminar for Pensionskassen representatives organised by the Swiss VPS publishing group in Zurich, Andreas Dänzer, CIO at Asga, said the pension fund was working to find and implement an assessment tool to understand better how returns in private markets are generated.“We no longer want to rely on what managers are telling us but rather check the available data ourselves – but it is still early stages,” Dänzer said.He added that a lack of real alpha was one of the reasons why the Pensionskasse reduced its unusually high exposure to hedge funds, which made up 11.3% of the portfolio at the end of last year.last_img read more

Franklin Templeton to acquire Legg Mason, forming $1.5trn manager

first_imgJenny Johnson, president and chief executive officer of Franklin Templeton, said the firm was also looking to expand its multi-asset solutions, “a key growth area for the firm amid increasing client demand for comprehensive, outcome-oriented investment solutions”.Joseph Sullivan, chair and CEO of Legg Mason, added that by “preserving the autonomy of each investment organisation, the combination of Legg Mason and Franklin Templeton will quickly leverage our collective strengths, while minimising the risk of disruption”.There are to be no changes to the senior management teams of Legg Mason’s investment affiliates following the closing of the transaction. Jenny Johnson will continue to serve as president and CEO, and Greg Johnson will continue as executive chairman of the board of Franklin Resources.Global headquarters will remain in San Mateo, CA, and the combined firm will operate as Franklin Templeton.One Legg Mason affiliate will not form part of the enlarged group. EnTrust Global, which provides alternative investment solutions, will once again become a private company, with the business to be acquired by its management at closing of the Legg Mason acquisition. EnTrust will maintain an ongoing relationship with Franklin Templeton. In the UK, Jupiter Fund Management yesterday announced it was poised to acquire Merian Global Investors. US asset manager Franklin Templeton is to buy Legg Mason for $50 (€46) per share of common stock in an all-cash transaction, forming an asset manager with combined assets under management worth $1.5trn.The all-cash consideration of $4.5bn will be funded from Franklin Templeton’s existing balance sheet cash, it said. Franklin Templeton is also to assume around $2bn of Legg Mason’s outstanding debt, taking the price tag to $6.5bn. Franklin Templeton said it would preserve the autonomy of Legg Mason’s affiliates – such as Brandywine Global, Clarion Partners, and ClearBridge Investments – ensuring that their investment processes and brands remain unchanged. Collectively the affiliates manage approximately $806bn in assets, as of 31 January.Greg Johnson, executive chair of the board of Franklin Resources, said: “This is a landmark acquisition for our organisation that unlocks substantial value and growth opportunities driven by greater scale, diversity and balance across investment strategies, distribution channels and geographies.”last_img read more

Sally Pearson’s Gold Coast home fetches more than $1 million

first_imgPearson has long led Australia’s athletics charge.Mr Porter also helped the couple sell their Pacific Pines home in 2015.CoreLogic data shows Pearson, who is known for leading a private lifestyle away from the track, owns one other property with her husband on the Coast.The Coast golden girl has long led Australia’s athletics charge, winning a gold medal in the 100m hurdles at the 2012 London Olympics. They have renovated the property extensively over the past few years.More from news02:37International architect Desmond Brooks selling luxury beach villa12 hours ago02:37Gold Coast property: Sovereign Islands mega mansion hits market with $16m price tag2 days agoIt was listed in January with an asking price of more than $1.199 million before being snapped up less than a month later by a local family.Marketing agent Julian Porter, of Harcourts Pacific Pines, would not reveal the sale price when the contract went unconditional in mid February as it was yet to settle. MORE NEWS: Imagine downsizing to a mansion It sold for $1.18 million – $275,000 more than they paid for it in 2015. MORE NEWS: Couple’s bizarre auction mix up It is on a 4006sq m block and has two residences and a pool.center_img Video Player is loading.Play VideoPlayNext playlist itemMuteCurrent Time 0:00/Duration 0:51Loaded: 0%Stream Type LIVESeek to live, currently playing liveLIVERemaining Time -0:51 Playback Rate1xChaptersChaptersDescriptionsdescriptions off, selectedCaptionscaptions settings, opens captions settings dialogcaptions off, selectedQuality Levels720p720pHD576p576p432p432p270p270pAutoA, selectedAudio Tracken (Main), selectedFullscreenThis is a modal window.Beginning of dialog window. Escape will cancel and close the window.TextColorWhiteBlackRedGreenBlueYellowMagentaCyanTransparencyOpaqueSemi-TransparentBackgroundColorBlackWhiteRedGreenBlueYellowMagentaCyanTransparencyOpaqueSemi-TransparentTransparentWindowColorBlackWhiteRedGreenBlueYellowMagentaCyanTransparencyTransparentSemi-TransparentOpaqueFont Size50%75%100%125%150%175%200%300%400%Text Edge StyleNoneRaisedDepressedUniformDropshadowFont FamilyProportional Sans-SerifMonospace Sans-SerifProportional SerifMonospace SerifCasualScriptSmall CapsReset restore all settings to the default valuesDoneClose Modal DialogEnd of dialog window.This is a modal window. This modal can be closed by pressing the Escape key or activating the close button.Close Modal DialogThis is a modal window. This modal can be closed by pressing the Escape key or activating the close button.PlayMuteCurrent Time 0:00/Duration 0:00Loaded: 0%Stream Type LIVESeek to live, currently playing liveLIVERemaining Time -0:00 Playback Rate1xFullscreenStarting your hunt for a dream home00:51 However, he told the Bulletin it went under contract 10 days after hitting the market.“I had a heap of interest in the property both from local and interstate buyers,” he said.“I had more than 30 groups of buyers inspect the property and many of them are still looking to purchase something similar.” Sally Pearson and her husband Kieran listed their Helensvale home in January.CHAMPION hurdler Sally Pearson has made $275,000 on the sale of her Gold Coast home.Updated property records now show the Helensvale acreage estate, which has two residences and a pool, sold for $1.18 million in February.The athletics star and her husband Kieran bought the property in 2015 for $905,000.last_img read more