Month: September 2020

Russian pension funds set for more secure future

first_imgThe Russian press additionally reported that there would be no further moratoriums on pension contributions in 2016.Medvedev explained that he based his decision on expert advice and public opinion.In a recent poll conducted by Public Opinion Foundation, 62% of those surveyed opposed the abolition of a funded pension system.The main reasons for their view were poorer retirement prospects and losing the opportunity to save for their retirement.Medvedev’s announcement is a victory for the finance and economy ministries and Bank of Russia over the government’s “social” bloc, spearheaded by Olga Golodets, deputy prime minister for social affairs, and Maxim Topilin, minister of labour and social protection.The social bloc’s arguments for either making the second-pillar voluntary or even abolishing it included what they considered to be poor returns generated by the scheme.In 2014, according to Bank of Russia, NSPF nominal returns averaged 4.9% compared with an inflation rate of 11.4%, although individual fund returns ranged between 0.2% and 52%.However, the fund run by the state-owned Vnesheconombank (VEB) for those citizens who did not choose a private NSPF returned only 2.68%.Last year proved disastrous for conservatively orientated funds investing in government securities, notably VEB, as sharp interest rate hikes by the central bank pushed up bond yields.Meanwhile, the 24 NSPFs that had, as of 1 March, converted from non-profit to joint-stock company status, gained central bank accreditation and signed up to the guarantee scheme administered by Deposit Insurance Agency (DIA) will receive the contributions frozen in the second half of 2013 and held at VEB by the end this May.Funds that register later will get their contributions from the third quarter of this year.In April, the central bank approved two more funds to join the DIA.The collective RUB947bn (€17bn) in pension savings accounts for some 85% of the total.Mandatory second-pillar funds that fail to complete this process by the start of 2016 will be liquidated. Russia’s non-state pension fund (NSPF) system appears more secure after the government ended months of speculation over its fate.Today, Russian prime minister Dmitry Medvedev announced at a government meeting that the country would continue with the accumulative mandatory second pillar.Medvedev has instructed Igor Shuvalov, first deputy prime minister, to produce proposals to balance the budget and produce more effective measure for the long-term use of pension fund assets.The decision follows on from yesterday’s announcement by the Kremlin’s press service that, following a meeting with government members at the start of the month, president Vladimir Putin instructed the government and Bank of Russia, the central bank and pensions regulator, to devise mechanisms for channelling NSPF assets into long-term investment projects, and to assess financing volumes.last_img read more

Bernardino confirmed for further five-year term at EIOPA

first_img“We will proceed with building a modern, dynamic and credible supervisory authority, working for the public good with a truly European spirit,” he said.Bernardino began his European career at CEIOPS, being elected its chairman in 2009.Prior to taking on the role of chairman at CEIOPS, and later being named as EIOPA’s inaugural chairman, he was director general for development and institutional relations at the Instituto de Seguros de Portugal (ISP), which he joined in 1989.He has already offered a glimpse of his second term’s focus, proposing the development of a framework for cross-border occupational defined contribution.The chairman has also repeatedly called for an overhaul of EIOPA’s funding model and, according to officials at the European Commission, is likely to reveal details of a new funding model early next year. The European Parliament has endorsed Gabriel Bernardino for a second term as chairman of the European Insurance and Occupational Pensions Authority (EIOPA).In a statement released following a vote by the parliament’s economic and monetary affairs committee (ECON), Bernardino said he was thankful for the trust of both the parliamentarians and EIOPA’s board of supervisors, which in October extended his term until 2021.“In the past five years,” Bernardino added, “EIOPA has grown into an entity with a strong voice and has been a driving force in regulatory convergence.”He said EIOPA’s next journey would be to deliver a “strategic shift from regulation to supervision” and to focus on consumer protection and the financial stability of the EU.last_img read more

PGGM works on improving impact investment metrics

first_imgHe added that PGGM already has monitored many areas, such as production of healthier food, but that companies sometimes were unable to produce the relevant data.PGGM wants to involve approximately 40 companies earmarked as providing solutions, because of their positive impact on environment, water, food or health, the focus points of PFZW’s policy for impact investing.At the moment, PGGM has combined impact investments in listed companies of €1bn for PFZW, whereas the asset manager’s total stake in investments in such solutions stands at €9bn.Impact investments and measuring their effect are to play an increasing role in PGGM’s investment policy, as noted by Piet Klop, the manager’s senior advisor, responsible investments. Speaking as the Global Impact Investing Network launched a report on the business value of impact measurement, Klop said that measuring impact had numerous benefits, including motivating PGGM’s staff, but also allowing its clients to demonstrate how pension savings were being used for societal good.”PGGM sees impact measurement – and its standardization – as an important step towards the impact we are really after: signaling to our peers, our investees and the market as a whole that institutional investors are interested in positive, tangible impacts and that those impacts can be brought about at market-rate returns,” he said.PGGM aims to have deployed €20bn into the area by in 2020. The €200bn Dutch asset manager PGGM is to work with a local provider of social impact management metrics to boost its understanding of the social impact of its portfolio.To date, the Amsterdam-based provider, Sinzer, has largely worked with Dutch charities and family offices, but its work with PGGM comes after the manager’s main client, the €179bn PFZW, pledged to quadruple its exposure to sustainable investments – including investments meant to improve food security and combat food scarcity. Cedric Scholl, corporate trainee at PGGM said: “The co-operation with Sinzer enables us to improve registration of impact data reported by companies.”According to Scholl, PGGM will work on new metrics for impact measurement, “including reduction of the carbon footprint or the amount of water saved by new technology”.last_img read more

Trade body takes pension policy ‘wish list’ to Dutch coalition partners

first_imgThe Pensions Federation explained that mandatory participation was crucial for sharing risks, would enable pension funds to invest for the long term, and would prevent marketing costs as a result of competition between schemes.The Federation’s letter comes in the wake of the collapse of coalition talks between the liberal party VVD, the Christian Democrats (CDA), the liberal democratic D66 party, and the left-wing Green party GroenLinks.Elsewhere on its wish list, the industry organisation said it only supported a one-off payment at retirement date as an additional choice for participants. Deploying pension assets during the accrual phase for paying off a mortgage would be undesirable, it said.The Pension Federation advocated a new “entry mechanism” for self-employed workers, who lack automatic access to pension saving in the second pillar.It also urged the new government to provide clarity on the legal feasibility of an average contribution combined with gradually-decreasing pensions accrual. The Federation said its own research suggested that this would be difficult.The lobbying organisation also asked the government to create a merger option for mandatory sector schemes and limit pension funds’ VAT burden and supervisory costs.It reiterated that a new pensions system can’t be introduced in a “big bang” and that every pension fund would need a tailor-made transition.Last week, Gerard Riemen, the federation’s director, said that it was unlikely that a new pensions system could be established before 2020, adding that the whole implementation could take up to 10 years. The Netherlands’ new coalition government should keep mandatory participation in industry-wide pension funds, the Dutch Pensions Federation has argued.In a “wish list” to parliament, the pension fund trade body also urged politicians not to further reduce tax benefits during pensions accrual.The Federation said further fiscal limitation would mean a “false start” for a new pensions system, and would erode faith in both the system and the reforms.Currently, scheme members can accrue 1.875% of annual salaries into their pension tax-free, down from 2.25%.last_img read more

UK roundup: UBS awarded £11bn passive LGPS mandate

first_imgACCESS, a collaboration between 11 UK local government pension schemes (LGPS), has awarded UBS Asset Management an £11bn (€12.3bn) passive management mandate.It means the asset manager will be responsible for nearly a third of the ACCESS pool’s £34bn in assets. The move is expected to save roughly £5m a year, the pool said.The mandate has also been made available for other LGPS funds and pools through its national framework.The contract between UBS and ACCESS is for an initial 10 years until the end of March 2028, with optional extensions to 2033 and 2036. Andrew Reid, chairman of the ACCESS Joint Committee, said: “I am delighted we have started the process of pooling early with some tangible, long term savings and look forward to a smooth transition to UBS.”UBS is expected to take on the assets from March 2018, a month before the government’s target date for schemes to begin pooling assets.ACCESS’ LGPS members comprise the Cambridgeshire, East Sussex, Essex, Hampshire, Hertfordshire, Isle of Wight, Kent, Norfolk, Northamptonshire, Suffolk and West Sussex pension funds.Wolseley strikes £600m buy-in with PIC“The bulk annuity market, driven by high levels of demand and competitive pricing, is currently experiencing a period of significant activity”Mitul Magudia, PICThe pension scheme for plumbing company Wolseley UK has agreed a buy-in worth roughly £600m with Pension Insurance Corporation (PIC). The deal covers the scheme’s pensioner liabilities.The Wolseley Group Retirement Benefits Plan had roughly £1.3bn in assets at the end of July 2016, according to IPE’s Top 1000 Pension Funds survey.David Illingworth, chairman of Wolseley’s trustees, said the move was “the logical next step in our derisking strategy for the plan”.“Over the past couple of years we have matched an increasing amount of our assets and liabilities and this strategy has now allowed us to take advantage of market conditions and fully insure these liabilities,” Illingworth added.Mitul Magudia, head of business development at PIC, said low government bond yields meant the majority of derisking transactions had been buy-ins, rather than full buyouts. “The bulk annuity market, driven by high levels of demand and competitive pricing, is currently experiencing a period of significant activity,” he said.Allianz backs LGPS codeAllianz Global Investors has become the latest fund manager to sign up to the LGPS’ cost transparency code. It joins the likes of BlackRock, UBS, Fidelity, and Legal & General Investment Management.last_img read more

The European asset owners aiming to make an ‘impact’

first_imgThe Luxembourg reserve fund and Unilever’s Dutch pension funds are among a number of European institutional asset owners that are either considering or explicitly preparing impact-related investment moves. In the Netherlands, the organisation that manages Unilever’s two Dutch pension funds is looking to increase its allocation to impact investments to around 5% of the total portfolio over the next couple of years, according to Michael Kaal, the CIO.It would fund this allocation with cash returned from its private equity portfolio, which it is running down, he said.He emphasised that the pension funds were in the early stages of the process to grow their impact investment allocation. They had hired an external adviser to help find managers, but had not yet identified anyone. That should happen in the next couple of months, according to Kaal.The pension funds had chosen three themes for impact investments: hygiene, sustainable agriculture and clean energy. These were taken from Unilever’s corporate sustainability plan. Kaal said the pension funds started making impact investments about two-and-a-half years ago to “dip our toes in the water”. The allocation was around 1% and the portfolio was currently invested in green bonds and carbon-optimised listed equities.However, the pension funds wanted investments with more impact and were finding that the most interesting opportunities were in private equity or other illiquid assets, according to Kaal.The investments would still need to offer an attractive risk-adjusted return but the pension funds could consider opportunities with slightly lower return expectations because they were so well funded, the CIO added. The coverage ratio at both funds, which have €5.5bn in assets under management between them, is nearing 150%.Luxembourg’s FDC preps €1bn sustainability allocationIn Luxembourg, the reserve fund Fonds de compensation (FDC) is moving ahead with impact investment plans it unveiled last year.FDC has tendered three mandates with a sustainability or environmental angle, one of which explicitly refers to impact investing. The total allocation amounts to more than €1bn.The fund said it wanted to allocate some €200m to “global equity sustainable impact” investing to generate “a sustainable and measurable impact by investing in the equities of listed companies that have the intention to generate, alongside a financial return, a social or environmental impact”.The other mandates are for “global equity sustainable approach” (€750m) and green bonds (€100m). FDC said it was open to a range of implementation strategies for the former, citing best-in-class selection, thematic selection, and engagement.The majority of the FDC’s €17bn portfolio is invested via its investment vehicle €15.7bn Fonds de Compensation de la Sécurité Sociale, SICAV-FIS.French public scheme eyes water investmentIn France, meanwhile, ERAFP is exploring the possibilities of impact investing with thematic focuses on water and food.Philippe Desfossés, CEO of the €30bn pension fund for public servants, told IPE that the pension fund did not have a specific allocation size in mind, but it would have to be “sufficiently big” otherwise the pension fund would not attract sufficient interest. He suggested it could be around €50m.Implementation would depend on a number of things, he added, such as whether the scheme would have the right to invest directly in funds or whether it would have to launch a tender and what asset classes it would be able to invest in.This would in turn depend on the outcome of its outstanding request to the government for a less restrictive investment regulation framework.NEST sets out green bonds planIn the UK, the £2.5bn (€2.9bn) defined contribution master trust NEST plans launch an investment grade credit mandate that may include a section on green bonds, according to Diandra Soobiah, head of responsible investment at the pension fund.It also has infrastructure on its radar, which could include renewable energy investments if these meet the pension fund’s requirements for risk-adjusted returns.Sioobah said impact was at the centre of every asset class decision and fund manager selection NEST made.However, she said NEST did not currently have an allocation that it would specifically call ‘impact’, and she indicated some hesitation within the master trust about labelling certain investments specifically as impact investments.“We’re quite reluctant to pigeonhole ourselves in a definition of impact for fear of upsetting other purely impact-focused investors,” she said.“I think there is some worry and apprehension in the industry at the moment about watering down what ‘impact’ actually means. We do think it’s important that the term is upheld and we wouldn’t want to do disservice to that.”last_img read more

Ahold scheme funding slumps despite 22.6% return

first_imgThe pension fund incurred a 2.2% loss on its currency hedge, which had initially fully covered the risk on its dollar, sterling and yen-denominated bonds as well as 50% of its equity holdings nominated in dollars and sterling.As part of new investment policy, however, it decided to limit the currency hedge to American and British holdings representing more than 2.5% of its entire assets in December.Last year, the asset owner increased its risk profile aimed at an inflation compensation of at least 75%. It raised its strategic securities allocation from 44% to 50%, while reducing its fixed income holdings from 56% to 50%. At the same time, it introduced dedicated portfolios for returns and liabilities.Ahold Delhaize Pensioen said that equity, property and high yield bonds were the best returning asset classes last year, with yields of 27.4%, 22.3% and 17.2%, respectively.Emerging market debt, worldwide credit and alternatives gained 14.8%, 14.3% and 17.1%, respectively.The pension fund said that, as part of its current crisis management in dealing with the COVID-19 pandemic, it is assessing the options of hiring temporary workers to replace own staff falling ill.Eric Huizing, the scheme’s executive trustee for investments, said the board had decided to stick to its strategic asset allocation at the start of this month, despite exceeding the set bandwidth of 2.5%.However, he declined to provide details, explaining that the necessary rebalancing process hadn’t been completed yet.Ahold Delhaize Pensioen reported asset management costs of 0.23% and transaction costs of 0.14%.It explained that a 8bps rise of the latter relative to the previous year, was due to portfolio adjustments in the wake of an increased risk profile.The scheme has 35,365 active participants, 42,770 deferred members and 11,865 pensioners. At the end of February, its funding stood at 107.2%. Ahold Delhaize Pensioen, the €5.6bn Dutch pension fund of the Dutch-Belgian supermarket chain, saw its funding position deteriorate last year, despite a return of 22.6%.Its 2019 annual report said its funding ratio had declined by 1.7 percentage points to 107.9% as a consequence of continuously falling interest rates, the criterion for discounting liabilities.However, it said the slump in interest rates had also contributed to the fund’s annual result, predominantly through the 43% gain of its 28% holdings of government bonds and interest rate swaps as a hedge for its liabilities.The scheme said that, as part of its dynamic hedging policy, it had reduced its interest cover from 60% to 50% in August, when the 20-year swap curve had dropped to less than 0.75%.last_img read more

​Crisis measures to cut Finnish pensions contribution income by €1bn

first_imgThe organisation – which is the central body of Finland’s statutory earnings-related pension scheme – said the employer contribution reduction would be fi­nanced by the system’s economic and monetary union (EMU) buf­fer, whose purpose is to maintain employers’ social security contributions during the crisis.But Kian­der warned contribution income was also set to decrease significantly this year due to job losses, with the Finnish Centre for Pensions expecting to see around 300,000 employees laid off for different durations during the first half of this year.He also said the ear­nings-re­la­ted pen­sion sys­tem has been wea­ke­ned by falling share prices amid turbulent market conditions, which had con­si­de­rably re­duced pen­sion pro­vi­ders’ sol­vency buf­fers.Population projections resulting from the pandemic were likely to leave their mark on the pension system as well, he said.“The emergence of a pandemic and the increase in mortality are factors that may affect estimates of an increase in life expectancy. On the other hand, it is not impossible for the coronavirus crisis to have a positive effect on birth rates,’ he said.To read the digital edition of IPE’s latest magazine click here. Moves by the Finnish government to help businesses cope with the immediate economic fallout of the coronavirus outbreak will wipe out €1bn of contributions to occupational pension providers this year, and the sector faces other potential hits too, according to the Finnish Centre for Pensions.The government has temporarily lowered earnings-related pension contribution requirements from employers by around 2%, and allowed businesses unable to operate during the crisis to postpone contributions completely for up to three months – a measure agreed with la­bour-mar­ket organisations, it said.Jaak­ko Kian­der, director of the Finnish Centre for Pensions in charge of research, statistics and planning, wrote in an analysis article: “The measures which have been decided upon will reduce the premium income of pension institutions by about €1bn for the current year.”This loss would be made up for by rai­sing emplo­yer cont­ri­bu­tions in 2022–2025, he said, in a new publication from the centre.last_img read more

​Companies behaving badly will be post-crisis losers, say USS, BTPS

first_imgFellow panelist Morten Nilsson, CEO of the BT Pension Scheme, said that in his view, ESG was becoming much more important as a result of the pandemic.“In this situation we are in where the government response has been so bold and so extreme, paying salaries to private sector employees for quite a while – the other side of this is the expectation that these companies will do their duty and be good corporate citizens and actually repay society,” he said.This pressure would only increase, he predicted.“I think we’re seeing in quite a few countries part of the population starting to be more accepting of tax rises potentially coming out of this crisis, but I don’t think they will be more accepting of companies not behaving well on the other side of this.“I think we’re seeing in quite a few countries part of the population starting to be more accepting of tax rises potentially coming out of this crisis”Morten Nilsson, CEO of the BT Pension Scheme“My view is that will be increasingly both on the corporate side of behaving well, but also that asset owners are behaving well and perhaps the more aggressive types of capitalism won’t have a place here,” Nilsson said.Looking further ahead, Nilssen said he believed in the notion of a green post-COVID-19 recovery as a huge opportunity.“I think that if we implement that successfully, that will change the world in numerous ways and actually through growth and investment returns, it will be the right thing,” he said.Interesting opportunities in infrastructure could arise over the next few years out of the current crisis, he said, having mentioned that the BT scheme was still in the process of a long move to shift its low-yielding traditional assets to more “cashflow-aware” assets.Right now, the BT pension fund was also interested in technology investments, he said, with that sector having been performing well though the crisis.On the subject of reallocation decisions pension funds had made so far in the coronavirus crisis, Pilcher said USS had taken the opportunity to shift much of its US fixed income assets to UK equivalents.“We held quite a lot of US conventional long-dated fixed income instruments and as those frankly went to the moon and outperformed all assets – particularly as there was a flight to safety, a flight to liquidity – we used that as an opportunity to reposition a lot of those back into the UK where those equivalent assets had not performed as strongly,” he said, adding that this meant the UK debt had more scope for upward moves.USS had also had relatively little investment grade credit before the crisis, he said.“We’ve seen that as an opportunity to buy repriced and cheaper assets that we think have a structurally strong place in our pension plan so we’ve used that as an opportunity as well,” Pilcher told the panel.Looking for IPE’s latest magazine? Read the digital edition here. The chief executive officers of two major UK pension schemes told an online audience yesterday that companies behaving in a socially-irresponsible way during the coronavirus crisis will not be supported by government, consumers – or pension funds.Speaking in an online investment panel discussion, Simon Pilcher, CEO of USS Investment Management, said: “Those businesses that are going to look to exploit the current situation, and say just because I can, I will cut my workers’ wages by 20% and thus grow my bottom line […] I think they will be met with savage opprobrium.”They would be scorned in the press and probably by their consumers who would vote with their feet, the head of the UK universities pension scheme investment arm said, adding that such companies would also be “brutally treated” by governments.“Thus I would say that is a poor business decision for them to be engaged in that and that is not the sort of business we’d be backing. That’s not the sort of activity we would be encouraging,” Pilcher told the audience at the asset owners event held by Bloomberg.last_img read more

The exclusive suburb of Trinity Park has got everything going for it

first_imgBluewater Estate. Picture: Marc McCormackTHE exclusive suburb of Trinity Park has got everything going for it.Not only is there the Bluewater Marina, which enables homeowners to moor their yachts and catamarans at their back door, there are some of Cairns’ best cafes and restaurants minutes away at Trinity and Kewarra Beaches and Palm Cove as well as bike tracks and plenty of nature.State government regulations mean the north Cairns canal development is the last for the region so continuing value is almost guaranteed.After a cardio boost? Then strap on your boots, fill up your water bottle and head out the challenging Earl Hill summit track. The one kilometre loop to the top is accessed from the north of Trinity Park. More from newsCairns home ticks popular internet search terms2 days agoTen auction results from ‘active’ weekend in Cairns2 days agoA punishing incline is worth is when you are rewarded with a spectacular view looking out over Trinity Beach and Double Island. The walk is dog friendly too. Trinity Park is also about 20 minutes from the CBD and 15 minutes’ drive to Cairns International Airport.Home to the Bluewater Estate, Half Moon Bay, Smithfield High School and Holy Cross Primary School, and within walking distance to James Cook University, Smithfield Library and the Marlin Coast Aquatic Centre, Trinity Park is an ideal family location.Local amenities include the very stylish The Bluewater bar and grill, local supermarket and takeaways, hairdresser and of course the public boat ramp at the Bluewater Marina, offering access to the Great Barrier Reef.Down the road, the dining options in Trinity Beach include L’Unico Trattoria Seafood Restaurant and Trinity Beach Tavern. This is a pretty little beach, with play areas for the kids, barbecues and plenty of undercover gazeboes.The wetlands in the area have significant environmental value and are precious, given the high levels of development that have occurred and are continuing to occur on the remainder of the northern beaches.According to data, Harbour Dr at Trinity Park was the most popular street in the city over the past three years to September 30 this year.last_img read more