Month: September 2020

Dutch watchdog forces chairman of painting sector scheme to step down

first_imgThe Dutch pensions regulator, the DNB, has taken the controversial decision to force the chairman of the €5bn painting sector pension fund to step down.Jan van Walsem departed the fund as of 1 July after 12 years’ service as employer chairman.“The DNB’s enforcement department said I had ‘the wrong attitude’,” said Van Walsem, who is 67.“They told me I was too reliant on trust and that I had to go. I was totally surprised.” Van Walsem’s departure comes six months before he was due to step down anyway.A number of pension funds and providers have complained about excessive regulatory pressure from the DNB of late, which they say is concerning itself in detail with the procedures and decisions of pension funds.Among them are Blue Sky Group, the pension fund for the tyre and wheel sector and the Co-op pension fund.The DNB was particularly critical of the relationship between Van Walsem and A&O Services, the fund’s administration arm, which was taken over by PGGM in 2013.The regulator wanted to see more control on the part of the pension fund through a separate management office.Van Walsem thought this was not immediately necessary, as the administration provider is owned by the social partners and works exclusively for the painting sector.Following the takeover by PGGM, the funds thought it sufficient to appoint two external directors and make greater use of external advisers.“We would rather have the knowledge and manpower on the board,” said Van Walsem.“Apart from that, a management office is rather expensive and would cost €750,000 a year. That is all participants’ money.“The DNB eventually agreed to this, but it hasn’t aroused much sympathy.“The DNB wants to take on the role of the trustee board. I sometimes ask questions, and I don’t just do everything the DNB wants.“I would say the DNB thinks I am not sufficiently compliant.”The painting industry pension fund has assets of €5bn, providing pensions to 170,000 members in the painting and related sectors.Its coverage ratio is around 114.5%, above the average in the Netherlands, and the fund has not had to make cuts to pension benefits, having only briefly recorded a deficit during the financial crisis.Van Walsem said both the board and the administrator A&O had protested against his forced departure.The chairman representing employees in the fund, Dick van Halster, said he regretted the way the matter had been resolved.The fund and A&O Services were unwilling to provide further comment.The DNB would not comment on the matter.Van Walsem has been succeeded by Cathrin van der Werf, previously a director of the fund.last_img read more

Head of Swedish buffer-fund inquiry joins Lombard Odier IM

first_imgMost recently, Langensjö was chief executive at Brummer Life Insurance Company, and head of clients at Brummer & Partners in Stockholm. He has also held senior roles at companies including Unicredit Group, Aon Consulting Worldwide, Mercer and Goldman Sachs. Swedish pensions industry heavyweight Mats Langensjö has been hired by Lombard Odier Investment Managers (LOIM) to develop the advisory business for its insurance and pensions industry clients.Langensjö – who was special adviser to the Swedish Ministry of Finance and headed the much-debated AP Funds inquiry in 2012 – is based in London in the new role and will report to Hubert Keller, chief executive of LOIM and a managing partner at Lombard Odier.The company said Langensjö would “help meet the changing demands of insurance and pensions industry clients”.He will start the job officially on 1 December and focus on the Nordic region.last_img read more

Pension funds’ ETF allocations driven by diversification, study shows

first_imgPension fund allocations to exchange-traded fund (ETFs) are driven by diversification and tactics over short-term transition management, research shows.Schemes’ allocations have grown in recent years but are perceived to be used mainly in investment strategy transition and overlay management.However, research from Greenwich Associates found that pension funds hold onto ETF investments for an average of 29 months, the highest of all institutions in Europe.Its survey of 120 European institutional investors, of which 68 were pension funds, found that one-quarter actively allocate to ETFs. Between the insurance company, asset manager and pension fund respondents, investors allocate an average of 7% of assets to ETFs, the study showed.Greenwich said differences in pension fund regulation within Europe meant it was difficult to make country comparisons, but that public and industry-wide schemes were more likely to use ETFs than company schemes.The study, sponsored by BlackRock, also found 69% of pension fund investors used ETFs for international diversification.More than half (53%) used the funds for tactical adjustment in portfolios, as well as part of a core allocation.Only 9% used ETFs for transitional management, with roughly one in 10 using the strategy for interim beta or overlay management.The report said: “Despite the widespread use of ETFs for tactical applications, few institutions are employing ETFs as true short-term investments.“Less than 2% of study participants report average holding periods of a month or shorter. In practice, European pension funds seem to be employing ETFs in the most strategic manner.”The study also anticipated a growing interest from pension funds, with more than one-fifth of institutions expected to increase ETF exposure over the next three years.However, Greenwich said the actual rate could be higher, as investors – particularly those on the Continent – continuing to diversify away from European government bonds.“As they do so, [investors] are moving beyond the area of expertise and the capabilities of the internal investment departments that have managed sizeable portions of those assets,” the report said.“These changes will likely create demand for new means of achieving desired investment exposures and for new tools for risk management, transition management and other functions associated with more diverse and complex portfolios.”Greenwich also said it expected ETF usage to expand further away from equities, where it is primarily used.“Robust adoption rates in fixed income and experimentation with ETFs in new asset classes such as commodities will also drive ETF growth,” it said.Research from PwC said 78% of asset managers and investment companies surveyed in its report expected total assets in ETFs to increase from $2.6trn (€2.3trn) to $5trn in 2020.last_img read more

Dutch schemes PME, PMT cut admin costs by 30% with joint IT system

first_img“As a single large pension fund, we would have a greater political voice, as we would represent a large part of the business community,” he said.He said the merger was necessary as the two other large pension funds in the Netherlands – the €373bn civil service scheme ABP and the €178bn healthcare scheme PFZW – were “strongly associated” with the government.Last year, PME incurred administration costs of €95 per participant, a 1% increase compared with 2013, while ABP and PFZW reported costs of approximately €73 per participant.Citing figures from CEM Benchmarking, which showed that costs at large pension funds were €91 per participant on average, PME put the difference with ABP and PFZW into perspective by noting that these schemes were three times as large on average as PME.“Moreover, with 0.39% of assets under management, PME’s asset management costs are lower than those of ABP and PFZW, which are 0.73% and 0.54%,” it said.PME does not invest in hedge funds and tends to prefer passive investments.However, it made new commitments to private equity last year and made clear that it aimed to increase its allocation gradually.Because buyout funds typically charge relatively high fees, PME has arranged a maximum performance fee.Last year, its private equity holdings accounted for 2% of its investment portfolio, returning 11%. A new IT system will allow PMT and PME, the large pension funds for the Dutch metal industry, to cut administration costs by 30%, according to PME chairman Frans-Willem Briët. Writing in the schemes’ annual report for 2014, Briët said savings resulting from the new system would translate into an increase in pensions rights of at least 2% over the coming years. Since the start of this year, PME and PMT have implemented a single pension plan for the Dutch metal and technical industries.Social partners are still assessing whether PMT, the €63bn scheme for the metalworking and mechanical engineering industry, and PME, the €43bn pension fund for the metal and electro-technical engineering sector, should merge, but Briët said such a union already enjoyed his support.last_img read more

Denmark’s Lægernes rejects deeper investment link with JØP, DIP

first_imgThe Danish pension fund for doctors, Lægernes Pension, has decided against merging its investment operations with those of two other professional pension funds that are already merged, citing differences in processes that have proved to be too great.Lægernes Pension, which has DKK115m (€15.5bn) in assets, said it had hired an external consultancy to find out whether it made sense to merge its investment with that of JØP, the lawyers and economists’ pension fund, and DIP, the civil and academic engineers’ pension fund.DIP and JØP merged their investment operations in 2013 and followed this in 2015 by amalgamating their administrative operations.Chresten Dengsøe, chief executive at Lægernes Pension, said: “In conjunction with the consultancy Oliver Wyman, we have discovered what we could gain by having an actual joint investment operation, which we don’t already benefit from in the current cooperation. “In the course of this, we found out that the differences in our processes are too significant for it to be to the advantage of all parties.”The three pension funds had therefore chosen to keep the current form of their cooperation, which is based on, inter alia, JØP and DIP’s investing via Lægernes Pension’s subsidiary Lægernes Invest.Lægernes Pension said it set up Lægernes Invest in 2004 to make its investment simpler and cheaper and also to reap economies of scale by investing alongside others.In the last few years, the three pension funds had also linked up on larger alternative investments – in wind energy and logistics properties, for example.The pension fund said it had been investigating the possibility of deepening its cooperation with JØP and DIP for the last few months and that this exploratory work was now at an end.“To be competitive, it is important you question your business model now and then,” Dengsøe said.Having someone else look at its affairs had been a healthy thing to do, he said, and added that the consultancy’s analysis had resulted in a series of recommendations about the best way the pension fund could operate.“We are now in full swing implementing these recommendations in our investment processes,” he said.The doctors’ fund said it cooperated with various different pension funds over investment.Apart from the link-up with JØP and DIP, Lægernes Pension said it worked with Nordea Pension, Danica and Lønmodtagernes Dyrtidsfond on certain investments.last_img read more

Strathclyde returns 23%, completes first phase of strategy shift

first_imgAsset allocation against Step 1 targetsThe pension fund used proceeds from equity sales to fund new multi-asset credit mandates run by Babson Capital and Oak Hill Advisors, an emerging market debt portfolio run by Ashmore Investment Management, and investment in an Alcentra direct lending fund and Babson global private loan funds.It also amended its PIMCO absolute return strategy (PARS) mandate to move to a new PARS product, and sold nominal gilts that helped fund an increase in exposure to credit strategies.The maximum capacity of the fund’s direct investment portfolio, which typically invests in illiquids, was increased to 5% of the fund’s net asset value.During the past financial year Strathclyde agreed £120m in commitments for its direct investment portfolio, including £40m to a UK mid-market lending fund run by Pemberton.Renewable energy (30%), infrastructure (25%), and credit (20%) make up 75% of the overall direct investment portfolio.The total investment return of 23.1% represents the fund’s eighth consecutive year of investment growth.Average annual return over the last year amounts to 11.8% per annum, ahead of the strategic benchmark’s return of 10.9%. The actuary’s long-term investment assumption is 4.9% per annum. The UK’s largest public pension fund returned 23.1% in the year to the end of March, driven mainly by strong equity market performance.The return partly offset the impact of the Strathclyde Pension Fund having implemented the first phase of a new strategic asset allocation.The Scottish fund grew in assets by £3.6bn to reach £19.7bn as at 31 March 2017.Equity portfolios were the most significant contributors to the fund’s strong absolute performance, while property holdings contributed most on a relative basis. Its equity investments returned 18.4%, according to figures in its unaudited annual report for 2016-17.The Scottish local government pension scheme also benefitted from sterling’s depreciation in the wake of the UK’s vote to leave the European Union, as the majority of its holdings are overseas and their sterling value increased significantly.Strathclyde is shifting away from equities in favour of a more broadly diversified strategy including private debt, emerging market debt, global credit, and UK infrastructure, the latter with a focus on renewable energy. The first phase of the asset allocation shift was completed over the past year. Changes included reducing the fund’s exposure to public equity and implementing revised regional and managed public equity allocations.Its equity allocation fell from 72.9% to 68.6% as at the end of March. This is above the target level of 62.5% as a result of the strong performance in the equity markets. It is planning to reduce its equity allocation to 52.5% over two stages, and may in future consider further cuts.It also increased its exposure to short-term “enhanced yield” strategies, from 6.6% to 8.3%. This was below the target of 15%.last_img read more

German, Swiss and Austrian investors report spike in ESG investments

first_imgAustrian asset owners mainly used excluson criteria and ‘best in class’ approachesFor Austria, FNG reported a significant level of best-in-class investment approaches, only rivalled by exclusion-based strategies. Both approaches were applied to almost all sustainable investments surveyed for the report.Pinner said: “Well-done best-in-class approaches amount to a detailed sustainability analysis of an industry.”He added: “In many cases ESG-integration is the strategy used by asset managers approaching sustainable investments for the first time.”However, Pinner emphasised that with all styles the most important aspect was how they were applied and how the data behind them was analysed. “Depending on how it is done it can be very profound or very superficial,” he said.Across the DACH region, carbon has become the most-applied exclusion criteria this year. Pinner put this down to the general rise in climate awareness but added that social criteria such as human rights and labour rights consistently remained on investor’s exclusion lists. Different stylesThe report tracked the application of various ESG investment approaches, including exclusion criteria, best-in-class, norm-based screening, engagement, ESG integration, shareholder voting, impact investment and themed sustainability funds.The application of these styles varied from country to country, but Pinner said “very often several of these approaches are combined” by investors or asset managers. German investors preferred exclusion-based approaches to ESG investingThroughout the region, ESG integration and norm-based screenings saw the highest growth by assets, almost doubling the volume of assets invested according to those styles year-on-year.In Germany, exclusions were still the most widely used approach, applied to more than half of all sustainable investments in the country. Norm-based screening, ESG-integration and engagement were applied to around €100bn of sustainable investments.In Switzerland, ESG-integration and norm-based screening took the lead, being applied to almost €200bn and €175bn respectively.In all three countries impact investment and sustainable-themed funds were at the bottom of the list, with only minor levels of application. Total 158€474bn Austria 23€21bn Germany 58€233bncenter_img Switzerland 77€219bn The former amounted to just over €2.8bn, with this figure having grown by 6% year-on-year.  Credit: Erich Westendarp Switzerland accounted for 77 investors and €219bn of assets in FNG’s surveyAcross the DACH region, the volume invested in sustainable investment funds increased more significantly than that in specialist investment mandates for institutional investments.Investment funds amounted to €223.6bn (up by 88%), while mandates accounted for €162.6bn (up by 38%). The remainder was invested by specialist banks or in individual client portfolios. Overall, institutional investors made up by far the largest share of institutional investors in the sustainable segment.The growth of sustainable investment in the DACH region (€bn)Chart MakerAt a press conference in Vienna, Wolfgang Pinner, head of FNG Austria, pointed out the increase was also down to the fact that more and larger institutional investors – mainly from the insurance sector – took part in the survey this year.FNG’s latest annual sustainable investment market report is available here (in German).Source: FNG surveyCountry Investors surveyed Assets  The total volume of sustainable investments increased across Germany, Austria and Switzerland over the course of 2018, according to research from the Forum Nachhaltige Geldanlagen (FNG).FNG, which promotes sustainable investment in the DACH region, surveyed more than 150 investors and found that the application of ESG-integration and norm-based screening approaches surged significantly over the whole region when compared with the organisation’s previous report.The survey showed an overall increase in the volume of sustainably invested assets by 50% to more than €474bn. In the report, FNG differentiated between sustainable and responsible investments: responsible investments were defined as industry entities adhering to certain standards at a company level, while sustainable investments were defined as products with ESG investment standards set down in writing.last_img read more

Fifth French pension fund vehicle granted regulatory go-ahead

first_imgInstitution de Prévoyance Austerlitz, one of France’s so-called provident institutions, has been given regulatory approval to set up an occupational pension fund.The number of these vehicles has been growing slowly since they were made possible by a 2016 law, with IP Austerlitz the fifth benefit provider to obtain authorisation from ACPR, the supervisor for banks and insurance entities.Aviva got the ball rolling in late 2018, followed last year by Malakoff Médéric and Sacra, while the provident institution in the Banque Populaire group got the green light in November for the creation of its own vehicle.Generally known as “fonds de retraite professionelle supplémentaire” (FRPS), the vehicles are France’s version of a pension fund and were made possible by 2016 legislation known as “loi Sapin”. The idea is to allow different categories of insurance entities to transfer portfolios out from under the Solvency II regulatory framework to a regulatory framework combining elements of the IORP Directive and Solvency II, but not the latter’s capital charges and certain other requirements.As a result of the creation of these new vehicles this year for the first time there was French participation in the pension fund stress tests carried out by EIOPA.The EU pensions supervisor identified Aviva Retraite Professionnelle, MM Retraite Supplémentaire, Société Anonyme de Consolidation des Retraites de l’Assurance (Sacra) as the participating IORPs from France.last_img read more

Private finance gets its own COP26 agenda

first_imgThere would need to be action by the private sector, but “we will work with you”, and there would be actions needed by regulators and governments to catalyse the private financial sector’s efforts.Three prongs“On the road to Glasgow, we will focus on the three Rs – reporting, risk management and return – to help unlock the private financial flows that are vital to the transition,” said Carney.He called on the private finance sector to “help refine and implement” disclosure based on the Task Force on Climate-related Financial Disclosures (TCFD) framework. At the same time, the UK COP26 presidency would “work with authorities to commit to pathways to make climate reporting mandatory”.In the meantime, the private financial institutions were encouraged to contribute to a review of the current TCFD framework to allow for any improvements before disclosures became obligatory, and to demand TCFD-consistent disclosures from companies.Pension funds were specifically mentioned in the context of the net-zero goal, with Carney saying that they as well as others in the private sector “will increasingly be expected to develop and disclose their transition plans”.He said the UK COP26 presidency would be looking to build on existing work and networks, such as the Net Zero Asset Owner Alliance, Climate Action 100+, and the Principles for Responsible Investment (PRI), “to build a large coalition of asset owners and asset managers who expect their portfolio companies to become net-zero aligned”.Fiona Reynolds, CEO of the PRI, said she was “delighted that finance will play a key role at COP26 in Glasgow”.“This is the first time a host government for the COP has fully recognised the critical role that finance has to play alongside state actors and sought to prioritise its contribution,” she said.“The COP26 private finance agenda is a clear call to action for the finance industry, setting direction for a number of initiatives that have already moved from the fringes to the mainstream of our industry since COP 21”Vanessa Bingle, senior manager, Alpha FMCVanessa Bingle, senior manager at asset management consultancy Alpha FMC, said the COP26 private finance agenda was “a clear call to action for the finance industry, setting direction for a number of initiatives which have already moved from the fringes to the mainstream of our industry since COP 21”.She said the announcement “goes right to the heart of the way asset managers do business and requires firms to fully embed environmental considerations into the core of their processes, data, technology and people development. The scale of change is meaningful and asset managers must lay out concrete plans in order to keep up”.Gill Lofts, sustainable finance leader at EY, told IPE that pulling out private finance as a separate work stream was “absolutely the right thing to do” and that Carney’s speech and the associated strategy overview document “really nicely lay out some great steps to take over the next nine months to move things forward”.And there was plenty of work to be done, she said.“The detail around what firms – both public and private – need to do to build on their current sustainability metrics or how they will report and measure is not yet clear.“Banks, asset managers and insurers need to work closely with government and policy makers on this crucially important and complex matter. They will be keenly awaiting more information before they can act with real meaning and embed climate change into every financial decision they are making.” The UK has developed a climate action agenda specifically for private finance in connection with its presidency, with Italy, of this year’s United Nations (UN) climate change summit, with a preview of the strategy yesterday welcomed for providing clear direction.The agenda was unveiled at an event in London by Mark Carney, who will step down as governor of the Bank of England next month to focus on his roles as UN special envoy for climate action and finance, and COP26 finance advisor to UK prime minister Boris Johnson.In a speech, he said private finance would have a critical role to play in a successful transition to a net-zero carbon economy, and that “with the UK COP26 Presidency, in partnership with Italy, the world is watching”.The objective for the private finance work for COP26, which will unfold in Scotland in November, was to “ensure that every financial decision takes climate change into account,” he said.last_img read more

Rental demand jumps in Qld; Mackay’s vacancy rate the tightest in the state: REIQ

first_imgThe rental vacancy rate in Mackay has fallen from 1.9 per cent to 0.9 per cent in three months. Picture: Rob Maccoll.The rental vacancy rate in Mackay fell from 1.9 per cent to 0.9 per cent in just three months, which means the city is pretty much full.Rents are also on the rise, increasing in the range of 10 to 20 per cent over the past year, with two-bedroom houses and three-bedroom units reporting annual growth in the weekly median rent of $50. Mackay has the tightest rental vacancy rate in Queensland at 0.9 per cent.REIQ chief executive Antonia Mercorella said the strength of the regional economy and the employment market were driving the increase in demand for rentals.More from newsParks and wildlife the new lust-haves post coronavirus16 hours agoNoosa’s best beachfront penthouse is about to hit the market16 hours agoAbout 3900 new job opportunities were created in Mackay in the year to August — putting downward pressure on the jobless rate, which is now just 3.3 per cent.“As the state’s economy improves and the jobs market in regional Queensland strengthens, we are seeing people returning to those areas and are looking first for rental accommodation,” Ms Mercorella said. “Markets such as Mackay, Toowoomba and Bundaberg, which are tight, are stabilising after a period of correction.” Local agents take down a ‘For Rent’ sign in Cairns, which is one of the tightest coastal rental markets in Queensland.IT has become almost impossible to find a property to rent in Mackay, with the regional city’s vacancy rate now the tightest in Queensland. The latest Real Estate Institute of Queensland residential vacancy rate report shows the coastal market’s vacancy rate tightened by a whopping 100 basis points in the September quarter. REIQ chief executive Antonia Mercorella.The report found rental markets in the largest regional centres continued strengthening during the quarter as median rents trended upwards, particularly in Mackay, Rockhampton and Toowoomba.Rockhampton’s rental market moved into the tight range for the first time in six years, as vacancies shrank from 3 per cent in June to 2.3 per cent in September.The Fraser Coast and Cairns markets are the tightest coastal rental markets in Queensland with regional vacancies of 1.4 per cent.Steady rents are boosting the rental market on the Fraser Coast, with well-priced rental properties snaring a tenant in less than a week on average.The report found only two of the major regional markets in the state — Gladstone and Townsville — were weak, with vacancies above 3.5 per cent but below 4.5 per cent.Overall, the state’s rental market strengthened again in the September quarter, with 27 markets classified as tight by the REIQ, four as healthy and four as weak.The greater Brisbane rental market held steady at 2.2 per cent, but the local government area of Redland reported one of the region’s tightest vacancies of 1.5 per cent. The Brisbane LGA rental vacancy rate has tightened to 2 per cent. Image: AAP/Darren England.The Brisbane LGA tightened to 2 per cent, with vacancies for both the inner and middle ring falling to the tight range during the September quarter.“Even though this market has tightened to 2 per cent vacancies, we are hearing that pockets of the inner city are oversupplied and tenants are still negotiating well on terms,” Ms Mercorella said.She said the state’s increasing population growth would require more rental supply.last_img read more