IORP II to require assessment of environmental, resource risk of investments

first_imgPension funds will be forced to conduct assessments of the climate, resource and environmental risk associated with holdings under proposals outlined in the revised IORP Directive.The revised Directive offers details on how pension funds should assess risk, stating that they should be required to produce risk evaluations any time there is a “significant” change in the institutions’ risk profile and examine overall funding needs, sponsor support and operational risks.In what will be viewed as a victory for asset managers including Generation Investment Management and the UK lobby group ShareAction, those subject to new risk-evaluation requirements would also need to place an emphasis on environmental concerns.Generation IM has previously called on investors to sell all their fossil fuel investments due to the risk of “stranded carbon assets” – essentially the financial risk posed by companies being unable to exploit carbon-heavy natural resources due to greenhouse gas reduction targets. The Directive calls for a “qualitative assessment of new or emerging risks relating to climate change, use of resources and the environment”.Caroline Escott, head of government relations at UKSIF, said the risks to investment from climate and environmental trends were “material”.“Responsible investors have long led the way in incorporating ‘stranded asset’ issues into their thinking, and the Commission’s proposals appear to be a positive step towards providing EU countries with the sustained economic recovery they desperately need,” she said.“It is particularly vital for pension funds as significant asset owners to lead the way and use their purchasing power to effectively channel the funds in ways that protects value and drives a more sustainable economy.”ShareAction chief executive Catherine Howarth also welcomed the move.“If the European Commission is taking steps to make pension funds evaluate and manage these risks carefully in the interests of the future income and security of European pension savers, it is an important development and one that we welcome,” she said.Responsibility to specify the elements covered by the new risk evaluation system will fall to the European Commission, which, through a forthcoming delegated act, will instruct the European Insurance and Occupational Pensions Authority to draw up the required technical standards.However, in a seeming admission that the introduction of solvency requirements could only occur through a further revision of IORP, Article 30 of the Directive stated that the delegated act would not seek to impose “additional funding requirements beyond those foreseen in this Directive” – potentially a recognition of the industry’s fears that EIOPA could introduce solvency requirements through the “back door”.The Commission has scheduled to review IORP II four years after its implementation to “assess in particular the application of the rules regarding the calculation of the technical provisions, the funding of technical provisions, regulatory own funds, solvency margins, investment rules and any other aspect relating to the financial solvency situation of the insitution”.last_img read more

PensionDanmark dismisses green bonds, increases grid investments

first_img“We look at the ones that have been issued as corporate bonds – the term green bond is very difficult to grasp.”Corporate bonds issued in the past by national energy provider DONG would now be classed as green bonds in today’s market, he added.Issuance of green bonds has surged in recent years, with the total value of the market having grown from around $7bn (€5.6bn) in 2012 to more than $35bn in 2014, according to the Climate Bonds Initiative.New issuance in 2014 is now more than $17bn compared with $10bn a year earlier.“Green bonds are a very large spectrum,” Stougaard said. “Some are project specific, but there are different variations.“It is very much a marketing thing and convenient thing to put around an issue. I am not sure if it adds capital to what is already going on.”In exchange, Stougaard said the fund was continuing its exploration of offshore wind farms and renewable power plants.Stougaard said demand for “greener” real assets was increasingly competitive, affecting pricing.But he said PensionDanmark would continue to look at energy-grid investments as energy providers struggle to shrink balance sheets, providing good-value assets.In February, the fund announced a DKK2.9bn investment into a power-grid for wind power in the North Sea.Steve Waygood, chief responsible investment office at Aviva Investors, backed Stougaard’s analysis of the green bond market and said setting a standard for green bonds should become a regulatory issue.“My problem with the issuance is whether it is additional,” he said. “Are the projects being funded ones that would have been funded anyway from a conventional bond? If they are and then being issued with a premium, then it is wrong.”Christopher Kaminker, an economist with the OECD, said the rapid growth of the green bond industry was not as much of an issue as its composition – with an increasing amount from corporates.“There are still sovereign supranational agencies, but there is more corporate issuance or labelled issuances ring-fenced for projects the corporate is involved in,” he said.“What is really important is that we get to a place where the capital being raised is contributing to projects.”He said the OECD would study how the market continued to grow, its composition and its overall contribution to a low-carbon economy. PensionDanmark has dismissed the “explosion” in the issuance of green bonds as the dressing up of corporate issuance, as the fund increases its focus on energy production and distribution.The DKK170bn (€23bn) Danish labour-market pension scheme said the term used collectively for green bonds was a difficult concept to grasp given its overlap with normal commercial issuance.Speaking at the OECD Roundtable on Long-Term Investing in Paris last week, the scheme’s director, Jens-Christian Stougaard, said he was unconvinced by the latest growth in the market.“Even when we are talking about the explosion, it is still a very small amount,” he said.last_img read more

Alecta returns 11% on back of rising Swedish, European equities

first_imgSwedish occupational pensions provider Alecta has reported a steep increase in investment returns in the first quarter, driven in particular by its focus on Swedish and European equities.The return on defined contribution pensions, Alecta’s Optimal Pension product, rose to 11.1% in the January to March period, from 3.1% in the same period last year.Meanwhile, defined benefit pensions returned 7.8%, up from 2.8% in the first quarter of 2014.Per Frennberg, CIO, told IPE: “Our portfolio did well this quarter, and, market-wise, we are focused more on Europe and Sweden than others.” Equity performance had been in the right place, with listed equities generating a return of 15.3% between the beginning of January and the end of March.Fixed income performed well over the three-month period as well, Frennberg said.He added that Alecta was satisfied with its low cost level.Group management costs on a rolling 12-month basis fell to 0.10% from 0.12%, it reported.“The portfolio is fully active, even across fixed income, and we do that in-house at very low cost – and, so far, with very good returns,” Frennberg said.He said costs could be kept low because of the economies of scale possible with the high level of capital Alecta manages.Rather than add more staff as the value of the portfolio grows, the organisation has opted to keep relative costs low.The group solvency ratio was unchanged at 164, while collective funding for defined benefit pensions rose to 148 from 147.Alecta had group assets under management of SEK682bn (€73.4bn) at the end of last year.last_img read more

RPMI grows alternative risk premia team with EDHEC hire

first_imgCommenting on the hire, a spokesman for RPMI said: “We are delighted Tony Guida has joined RPMI to boost the internal research capacity within our alternative risk premia (ARP) team.”The hire comes after RPMI overhauled its investment strategy and established a dedicated ARP team in the wake of its investment transformation programme, launched in 2013.The spokesman noted that ARPs would be a “core element” of its new approach to investment.The shift to ARPs came after the manager examined the cost associated with active management.Steve Artingstall, investment manager at RPMI, told IPE in March RPMI would consider it a “good outcome” if it achieved 80% of the benefit at 20% of the cost.He added: “Active managers would need to persuade us that more than 80% of the excess return they generate is not replicable systematically and cheaply.” RPMI has boosted its internal research capacity, hiring a former Unigestion portfolio analyst as part of its alternative risk premia team.Tony Guida joined RPMI Railpen, manager for the UK’s £21bn (€28.9bn) Railways Pension Scheme, this month after spending nearly a year at ERI Scientific Beta, the Nice-based smart beta platform launched by the EDHEC-Risk Institute in 2013.Prior to joining the EDHEC venture, where he was senior consultant, Guida spent nearly eight years at Unigestion in Geneva, initially as senior vice-president and portfolio analyst.He later also took on responsibility for research projects.last_img read more

​Irish association questions new trustee qualification thresholds

first_imgThe Irish Association of Pension Funds (IAPF) has raised concerns about the impact of stricter trustee-qualification thresholds proposed by its regulator, after a consultation suggested trustees have at least two years of experience.The consultation, released by the Pensions Authority on 18 July ahead of detailed reform proposals to the government by the end of the year, seeks to bring Ireland’s oversight of trustee boards into line with the revised IORP Directive.It recommends that trustee boards possess a certain level of collective knowledge – including the potential for an entry threshold of two years’ experience for trustees lacking formal qualifications.Jerry Moriarty, chief executive of the IAPF, questioned how trustees would be able to gain the minimum two years of experience without completing formal qualifications, and noted that the cost and time commitment involved in completing the Irish Institute of Pension Managers’ courses could deter lay trustees. “Unless you do [the qualifications], or have two years’ experience, I don’t see how you can become a trustee,” Moriarty said. “And I don’t see how you can get two years’ experience without being a trustee with no experience at some stage.”However, Moriarty did welcome the Authority’s pledge it was not seeking to professionalise trusteeship, with the consultation saying lay trustees could bring “a significant amount to their role as a trustee”.Brendan Kennedy, who heads the Authority, told IPE the body had attempted to “strike a balance” when drafting its proposals.“We are aware of the fact lay trustees are a very important part of the system, and there would be a great deal of opposition to removing a place for lay trustees from our system,” he said. The IAPF has been among those resisting rigid requirements for trustees, warning a professionalisation of the field risked imposing “group think”. However, the proposals, as drafted, would not completely exclude lay trustees, as the new requirements would only apply to the trustee board as a collective.The Authority set out that a trustee board should consist of at least two members – one with at least two years’ experience, and a second member who had revised and “enhanced” qualifications.However, the emphasis on the requirements applying to a trustee board “on a collective basis” would likely allow for inexperienced lay trustees to join boards with two or more qualified trustees.Scheme ‘rationalisation’Kennedy admitted the new trustee-qualification requirements were, in part, to bring about “rationalisation” within the sector, which would not be required if a larger pool of trustees were available.“The trustee pool is finite, which may encourage consolidation – one of the reasons we want to see consolidation is because the trustee pool is finite,” he said, likening it to a “chicken and egg” situation.The Authority was also considering other measures to bring about scheme mergers in the defined contribution (DC) space, including how the industry reimburses the regulator’s running costs.Kennedy said it was always possible to see a shift to a fund-based fee, which would remove any disincentive to create large-scale DC master trusts.The Authority has said any such multi-employer trustees should expect to be subject to stricter requirements than individual company-sponsored funds, including minimum capital requirements, which would cover any costs associated with a scheme’s wind-up.last_img read more

UK roundup: Union backs changes to BT Pension Scheme

first_imgBT employees have voted in favour of changes to their pension arrangements, according to workers’ union Prospect.The telecoms giant – which is wrestling with a £9bn (€10.2bn) deficit in its defined benefit pension scheme – will close the BT Pension Scheme (BTPS) to future accrual in April, with all members’ contributions moving to the BT Retirement Saving Scheme (BTRSS), a defined contribution plan.According to Prospect, its members voted to accept a pay increase of 1-2% combined with “transitional payments” for those affected by the closure of BTPS. Existing members of BTRSS will also receive an increase in contributions from the employer.Discussions between Prospect and BT are ongoing, but the union’s national secretary Philippa Childs said the ballot had given Prospect “a mandate on which to reach a final agreement with BT”. “We recognise that this has been a difficult and painful decision for those who are currently members of the BTPS,” Childs added. “However, the improvements we have negotiated and the transition arrangements will soften the blow for those having to move. Those who are already in the BTRSS, because they joined BT after 2001, will also see improvements.”Separately, BTPS has terminated a contract with its administrator, Accenture, and plans to bring the function in house. In a statement, the scheme said the two parties would work on the transition through 2018.Committee extends CDC consultationThe Work and Pensions Committee has extended the deadline for its consultation on collective defined contribution (CDC) schemes until the end of January.The committee – a cross-party of MPs from the UK’s lower house of parliament – launched an inquiry into the CDC structure late last year. Written responses will be accepted until 31 January.According to the committee, MPs want to understand the benefits and challenges of different collective models, in particular the structure used in the Netherlands.However, research by the Pensions Management Institute found that more than half of industry professionals believed CDC was not a solution for underfunded DB schemes. In additon, two thirds ranked a general lack of understanding of the structure as their biggest concern regarding the possible introduction of CDC.Only a third (36%) of the 99 professionals surveyed said the structure would lead to higher retirement incomes.PMI president Robert Branagh said: “Our results show that while there is an appetite for CDC in the UK, it is not seen as a panacea for stressed DB schemes.“Ultimately, whether CDC-style arrangements could work would be a question of political will. Supporters focus on the success of the model in other countries and argue that the system combines the more desirable characteristics of traditional DB and DC arrangements. Opponents are concerned about aspects of inter-generational risk sharing in particular.“The government must take care in assessing the evidence and distinguish properly between genuinely informed comment and simple vested commercial interest.”Consultancy firm Cardano argued in its response to the committee that “introducing CDC will add further regulatory complexity at a time when UK pensions would benefit from simplification”.The Anglo-Dutch company warned that, despite the model being firmly embedded in the Netherlands’ pension system, many savers still did not understand that their pensions were not guaranteed.Ralph Frank, co-head of Cardano’s DC business, said: “[CDC] schemes are complex and more expensive to run than traditional DC and, if anything, are likely to result in less assets being available to members as a result. Setting income levels equitably can also be very challenging. We would strongly caution against ‘going Dutch’.”Independent trustee firm rolls out cost transparency toolPTL, provider of independent trustee services to UK pension schemes, has launched a tool designed to shed light on asset managers’ transaction costs and “slippage” costs.The Clear Funds service will allow PTL to provide independent reports to asset managers that can then be shared with pension fund clients, said managing director Richard Butcher. New regulations such as MiFID II would help disclosure efforts, Butcher said, but trustees still required a way of analysing and understanding the data they received.“This will save trustees and independent governance committees [IGCs], asset managers and intermediaries time, work and, therefore, money,” he added.Trustee boards and IGCs for defined contribution funds have been obliged to assess value for money of service providers since 2016. Butcher – who is also chair of the pension fund trade body the PLSA – argued that they had so far been unable to do this, “and, frankly, this hasn’t helped the pension industry to demonstrate that they are delivering good member outcomes”.While Butcher claimed PTL’s new tool would be a “game changer”, the company is not the first to attempt to improve disclosure efforts.Custodian KAS Bank launched a cost transparency “dashboard” tool last summer, and the Local Government Pension Scheme introduced a template for the full disclosure of asset management costs that has already brought to light significant costs that were previously undisclosed.These two projects aim to catch all costs related to asset management, while PTL’s Clear Funds is focused specifically on transaction charges.last_img read more

Further French IORP vehicle on the cards as Austerlitz seeks switch

first_imgThe vehicles were introduced by a 2016 law known as “loi Sapin”, and are subject to a regulatory framework combining elements of the IORP Directive and Solvency II, but not the latter’s capital charges and other financial requirements.Institution de Prévoyance Austerlitz delivers supplementary pension plans for former employees of three lenders: Crédit National, Banque Française du Commerce Extérieur (BFCE), and Credit d’Equipement des PME (CEPME). The plans are closed. One of France’s provident institutions is looking to take on pension fund status, having requested formal authorisation as an “institution de retraite professionelle supplémentaire (IRPS).  ACPR, the supervisor for the banking and insurance sectors in France, published an official notice about the request – from Institution de Prévoyance Austerlitz – yesterday, with creditors having two months to register views on the draft authorisation.   Institution de Prévoyance Austerlitz is planning to change its name to Institution Austerlitz in connection with the transformation into an IRPS, a new type of occupational pensions vehicle.Approval would take to four the number of these vehicles being lined up in France, following moves by insurance entities Aviva and Malakoff-Médéric last year, and Sacra this year.last_img read more

UK roundup: BT scheme buys software firm

first_imgPPF confirms levy rules for 2020/21 The UK’s Pension Protection Fund (PPF) has announced that levy rules for 2020/21, the final year in the current three-year levy cycle, will remain stable and broadly unchanged from the previous levy year.The announcement follows a six-week consultation which invited PPF levy payers and industry stakeholders to comment on the proposed 2020/21 levy rules.The policy statement, which is published on the PPF website, highlights key findings from the consultation and confirms that the levy estimate for the next levy year will be £620m (€741.6m). Established in 2002, Procentia has more than 30 clients, including many household names and FTSE100 companies, which it serves from offices in Bristol in the UK and Chicago in the US. More than two million pension scheme members are administered on Procentia’s systems. It also supplies software to third party administrators, systems integrators, technology companies and other product providers.Procentia’s founders Steven Donkin, Trevor Scurr, Ian Dowler, Paul Jones and Daniel Osicka will remain with the business. Smart Pension to provide services for Guernsey schemeWorkplace pension savings and investments technology provider Smart Pension will operate the States of Guernsey’s Your Island Pension Scheme which will see all Guernsey employees automatically enrolled for the first time.Legislation is expected to be ratified by the States of Guernsey parliament in 2020.Michelle Le Clerc, president of the States of Guernsey Committee for Employment and Social Security, said: “Throughout the tender process Smart [Pension] impressed us with their cutting edge technology and a ‘can-do’ attitude.”She added that the scheme “will change the pension landscape in Guernsey, ensuring every islander has access to a product which is affordable but doesn’t compromise on service standards.”Andrew Evans, co-founder and cheif executive officer of Smart Pension, said: “The introduction of auto enrolment in the UK has transformed the retirement savings culture for workers and undoubtedly it will have the same impact in Guernsey.”He added: “The fact that employees will make contributions from their very first pound of earnings shows the commitment that the States of Guernsey has to deliver a better retirement outcome for their residents. This element will undoubtedly be closely observed by the UK government as it evolves.”Your Island scheme detailsAlthough very similar to auto-enrolment in the UK, Your Island Pension will be a single private scheme, overseen by the State’s Committee for Employment and Social Security, more like the UK’s government-funded NEST.Under the new secondary pension legislation, employees will have the ability to opt out, and like the UK, there will be an obligation on the employer to re-enrol employees every three years. At that point the employee is, again, able to opt out.Employers will be required to contribute at a minimum level into the State’s secondary pension scheme, or a private qualifying scheme. Contributions will start at 1% and increase to 3.5% over a nine-year period so that by 2030, all employers will be required to contribute 3.5%.Employees will also start by paying in 1% increasing to 6.5% over the nine years.Those who already pay into a private pension or Retirement Annuity Trust Scheme (RATS) will not be required to pay into a new scheme as well, provided that the private pension or RATS meets the qualification criteria.The scheme is expected to launch in the first quarter of 2022.center_img BT Pension Scheme Management (BTPSM), the executive arm of the UK’s largest private sector pension scheme, has acquired a majority stake in Procentia, a market-leading pensions software company, for an undisclosed sum.BTPSM has also announced that it will be implementing Procentia’s IntelliPen system for the scheme’s member administration services, which it brought in-house last year.Morten Nilsson, chief executive officer of BTPSM, said: “In Procentia, not only have we found a market-leading system that will future proof our member services, but a great long-term investment in its own right.”The BT Pension Scheme has around 300,000 members of which 200,000 are pensioners or beneficiaries. It has approximatly £50bn (€59.8bn) in total assets and pays out more than £2.5bn in pensions and other benefits every year.last_img read more

Gold Coast auction event racks up $12 million in sales

first_imgThe property at 71 Vulcan St, Kingscliff achieved the highest sale price, fetching $1.275 million.EAGER house hunters snapped up more than half of the properties on offer at an auction event last week, racking up $12 million in sales.About 200 people attended the Ray White Gold Coast South Network’s Summer Spectacular at Currumbin RSL on Saturday where 23 properties went to auction.Ray White Gold Coast South Network agent Brendan Gibb said they sold 13 properties under the hammer and two more soon after, resulting in a 65 per cent clearance rate.“There was good bidding as well, I think there were only three (properties) that didn’t pull a bid,” Mr Gibb said. A family with five children snapped up this property at 35 Oakland Pde, Banora Point.Mr Gibb said another Kingscliff property on Sailfish Way sold for $70,000 above reserve at $1.17 million.The sale of a Banora Point property was also a standout.Mr Gibb said the Oakland Pde house sold to a family with five children.“(They) were ecstatic to be able to get into something with enough room for them,” he said.He said they had put in a lot of effort in the lead up to the event to ensure it was successful. Kingscliff dominated with multiple million-dollar sales.A Vulcan St house recorded the highest sale, fetching $1.275 million.The five-storey property, described as a treehouse, has spectacular ocean, creek and bush views because of its hillside position. Video Player is loading.Play VideoPlayNext playlist itemMuteCurrent Time 0:00/Duration 1:44Loaded: 0%Stream Type LIVESeek to live, currently playing liveLIVERemaining Time -1:44 Playback Rate1xChaptersChaptersDescriptionsdescriptions off, selectedCaptionscaptions settings, opens captions settings dialogcaptions off, selectedQuality Levels720p720pHD540p540p288p288p180p180pAutoA, 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 Rate1xFullscreenHow to bid at auction for your dream home? 01:45 The property at 59 Sailfish Way, Kingscliff sold for $70,000 above reserve.“We do (auction events) every month but every January or February we do the Summer Spectacular just to capitalise on the fact that there are so many tourists in the area.“I think this will have been the eighth year now.“January is always our strongest period.”MORE NEWS: NRL star sells Gold Coast home More from news02:37International architect Desmond Brooks selling luxury beach villa13 hours ago02:37Gold Coast property: Sovereign Islands mega mansion hits market with $16m price tag2 days agoMORE NEWS: Australia’s 10 riskiest areas to investlast_img read more

Homeowners among the happiest people in Australia: NAB survey

first_imgMore from newsParks and wildlife the new lust-haves post coronavirus13 hours agoNoosa’s best beachfront penthouse is about to hit the market13 hours agoA new survey reveals those who live in and own a home have higher levels of wellbeing. Image: iStock.More women said having a home loan impacted their wellbeing negatively than men in all age groups, while higher income earners were more stressed having a mortgage than low income earners.But while owning a home can contribute to overall wellbeing, renting can detract from it, with the survey revealing people who rent a house or apartment recording a below average wellbeing rating.NAB’s wellness index rose in the March quarter to 65.2 points, but while sense of life worth, life satisfaction and happiness all improved, anxiety also increased, with 1 in 3 people (36 per cent) surveyed experiencing “high” levels of overall anxiety. Homeowners are among the happiest people in Australia, a new survey shows. Picture: Inside Outside Design.QUEENSLAND homeowners are among the happiest people in Australia at a time when anxiety in the community is growing, a new survey reveals.National Australia Bank’s latest wellness index reveals those who live in and own a house or apartment have the highest level of wellbeing, after people who have pets. Among the states, having a mortgage had the least impact on people living in Queensland (-14 per cent) and the greatest impact on those surveyed in Tasmania (-28 per cent). RELATED: The suburbs you can now afford Owning a home is the second highest driver of wellbeing after having a pet, a new survey reveals. Image: AAP/Troy Snook. MORE: ‘Worst house I’ve ever seen’ Compiled by NAB’s economics unit, the survey quantifies how people feel across 17 factors ranging from the homes they live in, to personal safety, physical health, commute times and spare time.Nearly a third of those surveyed had a home loan — the second most common type of debt held after credit cards.last_img read more