Month: September 2020

Three Danish pension funds enter DKK430m public-private partnership

first_imgThe five businesses said in 2012 they were setting up a “one-stop shop” to help public authorities plan, build and finance construction projects and envisaged investing up to DKK5bn together in infrastructure and real estate PPPs.PensionDanmark said the consortium was chosen by the Region of Southern Denmark municipality in what would be the first public-private hospital construction project in Denmark, and one of the biggest standalone PPP projects of any kind in the country.The three pension funds will provide the financing while MT Højgaard will be responsible for construction and operation for a 25-year period in conjunction with DEAS. Work on the new hospital, which will be connected to Vejle hospital via a 200m tunnel, is planned to start this summer. MT Højgaard said the new facility would have a total value of about DKK930m.It will have 91 beds, plus eight beds in an emergency unit, as well as a psychiatric outpatient clinic for children and young people.The project consists of eight cluster houses gathered around common areas and recreational patios. The buildings will be two storeys high with a total area of 17,000sqm and be ready for use by the end of 2016. PensionDanmark, PKA and Sampension are investing DKK430m (€57.6m) jointly in a public-private partnership (PPP) deal to build and operate a new psychiatric hospital in the city of Vejle.The project is the first to be undertaken by the consortium of the three labour market pension funds, Nordic contractor MT Højgaard and property administrator DEAS since the firms announced a partnership in December 2012.Torben Möger Pedersen, managing director at PensionDanmark, said: “We are really glad to have the opportunity to invest in this ground-breaking PPP project.“The investment will give members a good and stable return for many years and at the same time ensure patients and staff get high-quality physical conditions.”last_img read more

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Bernardino backs pensions stakeholder group amid merger concerns

first_img“Our position, and my personal position, is very clear on this – I would definitely advocate the current situation and to continue to have a specific pensions stakeholder group,” he told IPE.“When we started at EIOPA we were concerned about the complexities of managing two stakeholder groups, and the dimensions of this.“It is of course complex, but to be frank, after the three and half years I definitely see the value in having individual stakeholder groups for insurance and pensions.”The Commission proposed the idea alongside funding ESAs through a direct industry levy rather than the EU budget.At the time, members of the current occupational pensions stakeholder group (OPSG) told IPE a merged group would become dominated by insurance, leaving debate on pensions issues very restricted.Representative groups from the UK, Ireland and Netherlands all said their organisations would be concerned if a merger went ahead as the specificities of pensions needed addressing.The review into ESAs will now form part of the brief for new financial stability, financial services and capital markets union Commissioner, Jonathan Hill, who is expected to take up his post later this year.However, Bernardino remained adamant and said once consulted, his organisation would express the desire to operate two working groups.“Of course there are common issues, such as the work on personal pensions, and the two stakeholder groups and working together on this. “The collective work is good and we welcome that,” he said. “But there are differences. They are different types of markets and there are different types of issues.”The review into ESA working groups also looked at the proportion of representation from pension funds and small and medium size businesses, causing further issues for pensions representatives. The chairman of the European Insurance and Occupational Pensions Authority (EIOPA) has spoken out against plans to merge the organisation’s separate insurance and pensions stakeholder groups.The European Commission (EC) recently published a review of the European Supervisory Authorities (ESAs), of which EIOPA is one, and said all authorities should only operate one stakeholder group.EIOPA is the only ESA to operate two groups, meaning the EC’s plans would effectively see a merger of the insurance and pensions divisions.Gabriel Bernardino, chairman of EIOPA, said he was strongly against the Commission’s idea and stressed it originated from an industry consultantation and not from his organisation.last_img read more

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Malta warned against compulsory second-pillar savings

first_imgMalta has been urged to place greater emphasis on third-pillar pension saving rather than a compulsory or semi-compulsory system of occupational provision.The Malta Employers’ Association (MEA) suggested the government should introduce incentives to encourage workers to save into third-pillar provision, or nudge employees into action.It reiterated its long-standing opposition to any element of compulsory pension saving.The government-backed Pensions Strategy Group (PSG) previously suggested this should be the next step if current proposals to encourage saving into individual savings accounts failed to boost participation. In its position paper, the MEA argued that the government needed to do more to ensure Maltese workers understood that the first pillar would only ever act as a safeguard, unable to guarantee the same purchasing power enjoyed while in employment.“The Association reacts positively to the fact that, rather than introducing a second pillar, the [PSG] is recommending incentives for more persons to invest in third-pillar products,” it said. The MEA’s paper implied that pensioner poverty was due to “individual choices” made by pensioners, driving them towards poverty.“The MEA has been claiming that a culture of dependency is detrimental to our society, and that people cannot expect the state to provide for all their needs through handouts,” it said.“The general public must be made to understand this point through educational campaigns.”Under the current Supporting Retirement Scheme proposed by government, workers will be offered a tax rebate on annual contributions up to €1,000, which it was hoped would offer an average replacement rate of 9% after 40 years of contribution.In the event that the system fails to boost participation, the PSG recommends the consideration of a mandatory opt-in, voluntary opt-out scheme, with administration and other elements overseen by employers.,WebsitesWe are not responsible for the content of external sitesLink to MEA position paper ‘Strengthening the pension system’last_img read more

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Sovereign wealth funds team up with hedge fund group on transparency

first_imgThe new relationship will see a greater focus on collaboration in areas of governance, transparency and financial stability, all areas where HFSB chair Amelia Fawcett said both groups were “very much aligned”.The partnership would also see the HFSB work more closely with sovereign funds when drafting its industry standards.Fawcett said: “The HFSB relies on hedge fund managers and investors to work together to set industry standards, and we welcome closer dialogue with sovereign wealth funds, which are a large and influential hedge fund investor group.”HFSB trustee David George, head of debt and alternatives at Australia’s AUD118bn (€78.7bn) Future Fund, said the Australian investor was working to reshape the investment environment to “prioritise the interests of the asset owners”.He added: “The Future Fund supports the HFSB and the IFSWF, which provide platforms to foster constructive dialogue within the SWF community and between hedge fund managers and asset owners, and we look forward to helping shape the joint initiatives between the HFSB and the IFSWF.” Sovereign wealth funds (SWFs) worth $5.5trn (€4.8trn) have joined the Hedge Fund Standards Board (HFSB), allowing for greater influence on the disclosure framework of the funds.The International Forum of Sovereign Wealth Funds (IFSWF), covering more than 30 of the world’s sovereign investors, has agreed to be an observer to the HFSB.Adrian Orr, chief executive at the NZD28bn (€16.9bn) New Zealand Super Fund and IFSWF chair, said he was “delighted” to forge a closer relationship with the HFSB to share the knowledge and experience amassed by the sovereign funds.“This relationship will help ensure sovereign wealth funds have a voice in the hedge fund standard-setting process,” he said.last_img read more

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​UK master trusts collaborate to launch pensions dashboard

first_img“So that’s why we need a pensions dashboard to unleash this kind of potential,” the minister for the City of London said.Speaking at an event hosted by Aviva, among the dashboard’s founding members, Kirby said he wanted the pensions industry to collaborate on how data should best be shared.The minister said he hoped the whole process could be achieved through “excellent voluntary collaboration” but did not rule out a more hands-on approach by government if the industry did not unite.“If there are difficulties getting everyone on board, then we’ll certainly look at legislation or regulation instead,” he added.“So I would encourage everyone to start on this [discussing data] as soon as possible.”Kirby said the website would be free of charge and that the Association of British Insurers would be overseeing its development, with the 11 organisations set to discuss details such as the governance structure operating the dashboard.A number of European countries already have websites in place to display all of a worker’s pension saving, such as Mijnpensioenoverzicht.nl in the Netherlands and PensionsInfo.dk in Denmark – both successful industry-led initiatives.Patrick Heath-Lay, chief executive of the People’s Pension, said the dashboard had the potential to drive greater efficiency within the industry.“But it must be built first and foremost for savers and have strong, independent, ownership and governance,” he said. The People’s Pension, along with Now, have long backed the introduction of a dashboard, and Now chief executive Morten Nilsson noted that the rollout of auto-enrolment would see an increase in pension pots.“Over 40 years of saving, it will be easy to lose sight of these pension pots, and a pensions dashboard will make keeping track of pension savings a less onerous task,” he said.“A dashboard will also help savers better understand what their income is likely to be in retirement, allowing them to build a realistic savings plan for the future.”A number of European providers, including the People’s Pension, have been working on the launch of a Europe-wide tracking service, which recently received funding from the European Commission. Nearly a dozen master trusts and UK insurers are to launch an online portal detailing pension savings, as the government stands by its target of having a full pensions dashboard operational by 2019.The voluntary collaboration aims to have a pilot version of the dashboard live by March 2017, according to Simon Kirby, economic secretary to the Treasury, who said the website would also display the state pension entitlements accrued by each worker.Master trusts Now Pensions, The People’s Pension and the National Employment Savings Trust are among the 11 founding providers, as are consultancies Aon and Willis Towers Watson, mutual insurer Royal London, HSBC and four for-profit insurance companies.Kirby questioned how savers’ levels of engagement with pensions would change if a pension pot’s balance were displayed when logging into a bank account, or if personalised pension forecasts were generated when using certain mobile apps.last_img read more

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Nordic roundup: Sustainable Value Creation, Folksam, KLP, Oslo

first_imgSome 10% of firms had linked sustainability goals to remuneration or bonuses for management, the poll showed.However, a quarter of companies were revealed to be doing no monitoring of direct suppliers and 30% to 35% said they only carried out basic internal controls.Nadine Viel Lamare, spokesperson for the investor project, said: “It is cheering to see that more and more companies are working strategically on sustainability questions.”The results of the latest questionnaire showed that this was even true for many medium-sized companies, she said.“In the globalised economy that the companies are operating in, however, it is worrying that there is not enough control over suppliers,” she said.Elsewhere, the pensions business of Swedish insurer Folksam doulbed its investment returns last year compared to 2015, to 8.4% from 3.7%.All asset classes contributed positively to the 2016 return, Folksam said in its annual report, but equities and real estate had given particularly high returns at 15.1% and 21.9% respectively.Assets under management at Folksam Liv rose to SEK176.2bn (€18.6bn) by the end of December 2016, from SEK164.5bn a year before.Solvency increased to 165% from 162%.Premiums fell, though, to SEK9.8bn in 2016 from SEK13.5bn in 2015, which the company put down to a planned continued slowing of one-off premiums following changes it introduced during 2015 to the traditional life insurance business. Different rates of return were applied to new and old capital pools in order to safeguard long-term, stable returns for customers.KPA Pension, a subsidiary of Folksam, made a 6.7% return on investments last year, according the to report, up from 3.7% in 2015.Total assets rose to SEK148.4bn at the end of December from SEK132.3bn.In Norway, public sector pensions provider KLP released its annual results, showing an increase in its return on capital to a value-adjusted 5.8%, up from 4% in 2015.Total group assets grew to NOK596bn (€67.6bn), up from NOK543bn at the end of 2015.KLP said high returns on its equity and property investments were the biggest contributors to profit in 2016.Sverre Thornes, KLP’s group chief executive, said: “With such high returns we are able to give our customers more than NOK4bn of the profit to their premium fund, while at the same time further improving our solvency [so] we can maintain a higher level of premium than the currently low interest rates would suggest.”KLP said it had seen substantial growth over the past few years in the number of new customers in its public sector occupational pension.“Even though the situation in the public sector occupational pension market is perceived to be stable, the ongoing municipal reform could impact on KLP’s customer base,” it cautioned, adding that the company was following developments closely.In the corporate segment, KLP said it was seeing increased interest in the transition from public sector occupational pensions to defined contribution pensions within the corporate market.“KLP wants to be a good provider to these customers and is pleased that more and more companies are picking KLP for their defined contribution pension schemes,” it said.Separately, Oslo Pensjonsforsikring (OPF), Norway’s largest municipal pension fund, reported a rise in investment returns to 5.3% for 2016.Infrastructure produced the highest return out of all asset classes last year, generating 12.5%, with the whole real assets portfolio producing 8.3% in returns. Real estate on its own made an 8% return in 2016.Real assets made up 22.8% of OPF’s collective portfolio at the end of December.Fixed income, which accounts for 51.5% of the collective portfolio, ended the year with a 3.4% return, and equities – which have a 25.6% weighting in the collective portfolio – made 6.5% for the fundThe company’s group profit fell to NOK732m (€83m) last year from NOK1.19bn in 2015. Assets under management climbed to NOK83.9bn at the end of December from NOK79.6bn the year before.OPF provides pensions for public sector employees in Norway’s capital city. Sweden’s biggest pension funds have helped promote sustainable business practices among locally-listed companies through joint efforts on engagement, according to a survey.A joint venture between 17 of Sweden’s largest investors in cooperation with the Nasdaq Stockholm, called Sustainable Value Creation (Hållbart värdeskapande), was set up in 2009 and has had a significant impact on Swedish publicly-quoted companies’ sustainability work, the survey said.The joint venture includes the four main buffer funds (AP1, AP2, AP3, AP4) as well as AMF, Alecta, Folksam, and Länsförsäkringar.Sustainable Value Creation’s third survey of companies confirmed that the work had resulted in more than 85% of companies having processes to identify opportunities as well as risks related to sustainability. This was an increase of around five percentage points since 2009.last_img read more

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Church Commissioners turns up pressure on ExxonMobil

first_imgThis year, the coalition of investors has been bolstered by the support of European institutions including APG, Hermes EOS, MN, Amundi, BNP Paribas Investment Partners, and HSBC Global Asset Management.The UN Climate Conference in Paris in 2015 committed world leaders to holding the rise in global temperatures well below 2°C. The shareholder proposal – to be put to the board at its annual meeting in May – asks ExxonMobil to publish an assessment of how its portfolio would be affected by a 2°C target through, and beyond, 2040.The proposal said the assessment should include an analysis of the impacts of a 2°C scenario on the company’s oil and gas reserves and resources, assuming a reduction in demand resulting from carbon restrictions.The Church Commissioners said that Exxon had acknowledged that regulatory frameworks already adopted and others under consideration could reduce demand for its products, make them more expensive, and delay the implementation of its projects. Last week, price falls forced the company to write off 3.5bn barrels of oil from a tar sands project in Canada as it became uneconomical to extract, although future price rises could reverse this decision.The Commissioners also said that since last year’s annual meeting, there had been extensive engagement with Exxon regarding the shareholder proposal.But Edward Mason, head of responsible investment for the Church Commissioners for England, said: “While our discussions have been positive, Exxon has not committed to provide the 2°C scenario analysis investors expect from the oil and gas majors, and we have therefore again co-filed New York State’s resolution. We believe Exxon’s board can and should support our reasonable disclosure request.”APG told IPE in a statement: “In Paris an agreement was reached to limit global warming to less than 2°C. We and our clients – pension funds ABP, BpfBOUW, SPW, and PPF APG – fully support this goal and we ask from the companies that we invest in, including large oil and gas companies like ExxonMobil, that they at least stress-test their portfolios and investment decisions for scenarios that lead to this 2°C limit.”APG added: “Last year we voted in favour of a resolution that asked for this type of stress-testing at the ExxonMobil annual shareholder meeting. This year we decided to co-file the resolution, since it explicitly asks the company not only to look at the impact of potential climate policies, but also at technological developments like cost and performance improvements for electric vehicles.” The manager of the Church of England’s £7bn (€8.2bn) endowment fund has co-filed a shareholders’ resolution asking ExxonMobil to disclose the impact of climate change on its business – its second attempt to obtain such disclosure.The Church Commissioners for England want the oil and gas giant to give more detail as to how it will ensure its business will remain resilient as global efforts to mitigate climate change proceed.The resolution has also been filed by the New York State Common Retirement Fund, along with a coalition of institutional investors with US$4trn under management, including CalPERS, the Vermont State Treasurer’s Office, and a number of US church organisations.A similar proposal was filed for Exxon’s 2016 annual general meeting. Exxon asked the Securities and Exchange Commission (SEC) for permission to strike off the resolution, but this was declined. However, the resolution was defeated at the meeting, despite the support of 38.2% of voting shareholders – a record for a climate change resolution at the company.last_img read more

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German investors warm to ESG, but barriers remain

first_imgStrategies not meeting risk/return targets was another reason identified by that sub-set of investors (56%), as was the investment universe being too limited or not appropriate (51%).Alexander Schindler, the board member responsible for institutional clients at Union Investment, said: “In future, providers will need to match investors’ requirements even more closely and offer more transparency.”He said the survey showed that sustainability had become a hard investment criterion “for portfolio management purposes”.“This change has promoted the professionalisation of the sustainable investment sector,” he added.In Union’s survey, 64% of respondents cited financial aspects as relevant to sustainability, up from 42% five years ago.However, only 37% of the investors’ assets are invested “sustainably”, according to the survey.Sustainable investment in equities gained ground, rising from 14% five years ago to 30% in the latest survey, on a par with the share of sustainable investments accounted for by bonds.  Bonds used to be the dominant asset class, accounting for 45% of sustainable investments in the 2013 survey.According to Union, the survey also showed that changing regulatory requirements have become by far the most important factor behind institutional investors’ engagement with the topic of sustainability.The asset manager referred to the new European Union pension fund directive – IORP II – saying that “company pension funds have to consider environmental, social, and governance criteria as well as climate risks in the investment funds they manage”.A majority (67%) of German institutional investors indicated they knew “little or nothing” about the UN Sustainable Development Goals, and only 20% consider the goals when making decisions about sustainable investment, the survey found.The share of investors considering climate change in their investment policies more than doubled since last year’s survey, growing from 21% to 43%.Only 20% confirmed that they had information about the carbon footprint of their portfolios, however.The survey, which is carried out annually, covered 204 institutional investors with nearly €5trn in assets under management, including investment managers, insurance companies, pension providers, banks, and charities. German institutional investors have voiced concerns about the transparency and adequacy of sustainable investment strategies on offer, according to a survey by Union Investment.Sustainable investment has become more widespread among major investors in the country, the asset manager reported, with 64% of respondents using such strategies. Five years ago the figure was 48%.Despite the growth in interest, investors still have unmet needs when it comes to sustainable investing, the survey suggested.Of those investors that expressed some dissatisfaction with the strategies on offer, nearly two thirds (62%) cited lack of transparency as a reason. last_img read more

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UK watchdog to force transaction costs disclosure for DC schemes

first_imgIt also follows the FCA’s Asset Management Market Study, which introduced a requirement for governance committees to assess value for money from DC providers.In today’s policy statement, the UK regulator said asset managers, investment banks and custodians would all be required to provide information to independent governance committees when asked. However, it emphasised that the onus was still on trustees and governance committees to request the data as part of their assessment of a provider’s value for money.The FCA said it would introduce a “slippage cost” method for calculating transaction costs – the same technique used in PRIIPs and MiFID II. In its industry consultation the FCA’s proposal proved divisive, with some respondents arguing for a calculation based on the trading spread of a fund’s units, but the FCA opted to stick with its original plan.The regulator said: “The slippage cost methodology calculates transaction costs as the difference between the price at which a transaction was executed, and the price when the order to transact was transmitted to a third-party… It identifies the loss of value, from the consumer’s perspective, that happens when a transaction takes place. It includes a comprehensive measure of implicit costs. This means that it provides an overall picture of the costs incurred and reduces the risk that some costs remain hidden.”The FCA added that the reporting of actual costs, rather than estimated costs, “should enable governance bodies to understand the costs that have been incurred in their scheme and should incentivise asset managers to transact more efficiently”.The regulator rejected the spread-based proposal, saying there was no standardised way of calculating such data.“If spread were used to estimate implicit transaction costs, there is a risk of creating incentives for the fund manager to change their judgements about what the fund spread should be,” the FCA said.The FCA’s paper also set out a number of rules regarding the calculation of costs in specific asset classes, such as bonds and property.Respondents to the FCA’s consultation in October last year said the industry would have to carry out “significant work” in order to comply, and there could still be inconsistencies in price reporting.Maria Nazarova-Doyle, head of DC investment consulting at JLT Employee Benefits, said: “While it may not be a straightforward undertaking for the asset managers, it should be seen as a positive development in the longer term. Those managers who diligently apply best practice and offer better value for money will be recognised for their efforts. Greater transparency will not only improve trust in asset management, but also drive greater competition and a better functioning market.”The FCA’s policy statement is available here. Asset managers will be obliged to provide transaction cost data to UK defined contribution (DC) funds from the start of next year under new rules published today.The Financial Conduct Authority said governance boards responsible for DC pension schemes will be able to request data from providers regarding transaction and administration costs from 3 January 2018.The regulator also set out how asset managers should calculate and report such costs.The move is designed in part to align DC reporting with disclosure rules included in EU regulations such as the Markets in Financial Instruments Directive (MiFID II) and the Packaged Retail and Insurance-based Investment Products regulation (PRIIPs).last_img read more

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UK roundup: Staff changes at LGPS Central, USS, Railpen

first_imgThe UK’s biggest pension pension scheme has appointed Dominic Gibb as its new chief financial officer.Gibb joins the Universities Superannuation Scheme (USS) from Lehman Brothers, where he had worked with PricewaterhouseCoopers on the winding up of the UK operations of the failed US investment bank. He was financial controller for Europe, the Middle East and Africa for the bank before its collapse in 2008.Gibb replaces Jennifer Halliday, who resigned from USS on 31 March 2017.His appointment was announced as the £60bn (€68.4bn) scheme faces an uncertain future. The Universities and Colleges Union (UCU) today said its members had voted in favour of strike action in a dispute over changes to USS’ benefit payments. Universities UK (UUK), the representative organisation for higher education employers, wants to switch the scheme from defined benefit to defined contribution in an effort to control rising contribution costs.University staff vote for strike actionNearly all of the UK’s universities face disruption next month after staff voted for strike action. On a turnout of 58% of its members, the UCU said 88% had backed a walkout, which would affect 61 of the country’s 68 higher education institutions.UCU general secretary Sally Hunt said: “Universities will be hit with levels of strike action not seen before on UK campuses if a deal cannot be done over the future of USS pensions. Members have made it quite clear they are prepared to take action to defend their pensions and the universities need to work with us to avoid widespread disruption.“Even at this late stage we urge universities to work with us to reach an agreement that protects the defined benefit element of USS pensions.”In response, a UUK spokesperson described the ballot result as “disappointing”, and said that not reforming the scheme would be ”a dangerous gamble”. The spokesperson added: “A solution to the significant funding challenges facing USS needs to be found. UUK’s priority is to put USS on a secure and sustainable footing while offering attractive, market-leading pensions – the very best that can be afforded by both employers and employees.” USS reported an official deficit of around £5bn following its 2017 actuarial valuation, but other valuations have put the shortfall as high as £12bn-£17bn. It said the cost of funding future pension benefits had increased by 35% and that contribution increases of six to seven percentage points could be required.Public pension pool hires ex-Nestle investment chiefLGPS Central, the asset manager set up to run £42bn of assets for nine local government pension schemes (LGPS), has named Duncan Sanford as interim deputy CIO.Sanford left Nestlé Capital Management last year after a restructuring led to the international food and drink company shutting down much of its internal investment operations.LGPS Central has also hired two staff from the West Midlands Pension Fund (WMPF), one of the founder members of the asset pool. Mike Hardwick has joined as investment director for infrastructure and property, having most recently run alternatives at WMPF, while Michael Marshall is set to join as director for responsible investment and engagement. He is currently the responsible investment officer at WMPF.Finally, Omar Ghafur has joined as investment director for private equity. He was previously in charge of private investments for a charitable foundation, according to a press release from LGPS Central.Jason Fletcher, CIO, said the appointments were “critical to our delivery of the risk-adjusted return after costs that our partner funds require to meet their future commitments”.LGPS Central announced on Friday that it planned to roll out 10 investment vehicles for its pension fund clients.Investment director exits RailpenCiarán Barr, investment director at RPMI Railpen, is to leave the multi-employer scheme for the railways industry later this year.RPMI Railpen announced on Friday that Barr would step down from the investment team during the first half of 2018, having worked at the group for nearly nine years.During his tenure Barr oversaw the transformation of RPMI Railpen’s investment strategy alongside fellow investment directors Paul Bishop and Richard Williams and former CEO Chris Hitchen.The departure is the latest in a series of senior staff changes at the railway industry scheme. Chris Hitchen stepped down as CEO last year and is now overseeing the creation of the Border to Coast Pension Partnership as chairman. Philip Willcock will take over as CEO next month.Paul Sturgess joined last year from Equiniti as managing director for its administration arm, while deputy CEO David Maddison became managing director for the scheme, tasked with leading support for the trustee board. Julian Cripps was appointed managing director responsible for the investment arm in 2016.John Chilman, chair of Railpen’s trustee board, said: “I, and my fellow trustee directors, would like to thank Ciarán for the contributions he has made to the success and sustainability of the Railways Pension Scheme. He has always put the interests of our members and employers first and the scheme has benefited from his thinking.”last_img read more

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