Monthly Archives: September 2020

Hymans questions UK government’s notion of pension board ‘expertise’

first_imgIt also raised concerns that many of those deemed to have sufficient experience could be excluded by virtue of being elected members, who would not be allowed as scheme member or employer representatives.“Whether through guidance or the regulations,” the response continued, “we would like to see the definition of experience and capacity worded in such a way so as to strike the balance between ensuring people of suitable ability are appointed without setting so onerous a threshold such that administering authorities are unable to populate their boards.”However, a second response warned that time was of the essence in clarifying all required details, as the proposed LGPS (Amendment) Regulations 2014 are set to come into effect from 1 October.Lauren Jackson, associate at law firm Sackers, said clarity from the DCLG would be required soon.She said that while the draft regulations said pension funds would be able to convert the existing pensions committees into the new boards, all such conversions would require approval from the secretary of state for communities, Eric Pickles.“We do not currently know what this is going to mean in practice, and also how easy it will be to get agreement,” Jackson said.“It may be that this issue will be addressed in more detailed guidance, but, until it is, it will be difficult for administering authorities to make decisions.“Given the potential challenges of getting arrangements in place before 1 April 2015, time is running out.” Regulation proposing UK local authority pension board members possess the requisite experience for the role could prove problematic, Hymans Robertson has warned.The consultancy said proposals for new board members of local government pension schemes (LGPS) to have the “capacity and expertise” for the role was proving “unpopular in some quarters”.While arguing that it would view both requirements as welcome when considering appointments, it raised concerns about the lack of definition as to what would make an appointee experienced.“Clearly, some experience of pension schemes would be useful for a pension board member, but if the expectation is set too high, it will make it impossible to fulfil,” the response to the Department for Communities and Local Government (DCLG) said.last_img read more

AODP lambasts pension funds for ‘failed post-COP 21 test’

first_imgThe resolutions were voted on at ANZ Bank’s AGM in Adelaide, Australia, on 17 December and were defeated.The climate risk-related resolution drew only 5.4% of votes.It had been the focus of a shareholder campaign in Australia, with superannuation fund members encouraged to urge their funds to vote for the resolution.CalPERS, the Californian public sector pension fund, and two Australian institutions – Vision Super and Australian Ethical Investment – are reported to have supported the motion.The outcome of the vote triggered scathing criticism from the AODP, which said institutional investors were failing to follow through on their climate change commitments, and so soon after the global agreement reached in Paris.Julian Poulter, chief executive at the AODP, said: “With the ink not yet dry on the investor commitments from COP21, I imagine UNFCCC and the investor groups are scratching their heads.“COP21 was packed to the rafters with investors talking up climate risk, but, give them their first chance to prove they can actually follow through, and they fall dramatically short.”He went on to refer to a “major accountability problem” for pension funds and “an even worse climate risk issue”, and called for “a complete overhaul” of how pension and superfunds disclose their voting intentions.“Regulators can’t allow them to deceive their members over climate change by creating promises and then voting in the other direction or, worse still, making poor excuses for the banks,” said Poulter.New Zealand sovereign wealth fund NZ Super was one of the ANZ Bank shareholders to vote against the resolution.BlackRock, Northern Trust and State Street Global Advisers manage the superannuation fund’s global equity holdings, and all three opposed.NZ Super Fund does not have members but set out to IPE its reasons for not supporting the motion.A spokeswoman for the superannuation fund said that, when selecting managers, it places a strong emphasis on responsible investment and engagement capabilities.“We note that ANZ has been reported as a leader in climate change disclosure according to the Carbon Disclosure Project, to which we are a signatory,” she said.“We prefer to focus our engagement efforts on companies that are not so transparent, encouraging them to improve their disclosures.”NZ Super has a long-term strategy to increase its exposure to alternative energy and energy with low carbon intensity, she pointed out.The fund is part of the Carbon Disclosure Group and Investor Group on Climate Change and has directly invested $305m (€281m) in alternative energy over the last two or so years.It disclosed why its external managers voted against the resolution.BlackRock and Northern Trust both said it called for reporting already provided by the company, so its approval would lead to “unnecessary duplication of legal and voluntary disclosures”.State Street Global Advisors, meanwhile, voted against the shareholder proposal “based on our assessment and understanding of ANZ’s current approach to climate change”.The manager came to the decision after engaging with ANZ on the matter of the resolution.It also noted that “a global taskforce on climate-related financial disclosures is expected to issue recommendations and best practices for financial institutions at the end of 2016”.This appears to be a reference to the taskforce announced by the Financial Stability Board (FSB) on 4 December.IPE understands that the scope of its work is likely to be larger than just financial institutions’ reporting and to include non-financial companies’ disclosure, but this has not yet been decided. The Asset Owners Disclosure Project (AODP) has slammed global pension funds, saying they failed their “first post-COP 21 test”, a climate risk-related shareholder resolution at ANZ Bank.A sovereign wealth fund that voted against the resolution has set out its defence to IPE.The AODP and Australian Centre for Corporate Responsibility (ACCR) proposed the resolution, which asked the bank to report on its exposure to climate change risk and carbon-intensive businesses and to set reduction targets.A separate resolution was lodged calling for greater shareholder rights.last_img read more

DC shift one of six areas of ‘significant’ change – Willis Towers Watson

first_imgDefined contribution assets represent nearly half of global institutional pension fund assets after rapid 10-year growth, according to a study by Willis Towers Watson.The findings stem from the investment consultant’s 2016 global pension assets study, which analyses pension fund assets in 19 major markets. It takes a closer look at seven of these countries: Australia, Canada, Japan, the Netherlands, Switzerland, the UK and the US.Pension fund assets in the 19 countries “crabbed sideways” to total $35.4trn at the end of 2015, according to the study. This is equivalent to 80% of the underlying countries’ GDP, and accounts for around 35% of the institutional assets available to investors in the global capital markets, according to WTW.The Netherlands has the highest ratio of pension assets to GDP (184%) followed by the US (121%), Australia (120%) Switzerland (119%) and Chile (118%).Overall, asset values were “little changed” in 2015, according to the consultancy.However, the study shows six areas of “significant” change: a move in pension design towards defined contribution (DC), the demands on investment talent, the internal focus to the pension funds’ value chain, governance improvements, increased risk-management focus, and the increased consideration of sustainability and ESG.During the last 10 years, DC assets have grown at a rate of 7.1% per annum, while defined benefit (DB) assets have grown at a slower pace of 3.4% pa, according to the study. The trend has been led by the US market, with DC pension assets now representing more than 48% of global pension assets.The study confirms several trends in pension fund investment strategy, according to WTW, such as higher exposure to alternative assets and increased globalisation in equities.Allocations to alternative assets, especially real estate and to a lesser extent hedge funds, private equity and commodities, in the larger markets have grown from 5% to 24% since 1995.Canada increased exposure the most (from 14% to 27%), followed by the UK (7% to 18%), Switzerland (18% to 29%), US (17% to 27%) and Japan (from 3% to 9%).Roger Urwin, global head of investment content at Willis Towers Watson, said asset diversification into alternatives and a shift away from domestic equities had gained momentum because they helped pension funds to manage risk.This is unlikely to change, he said.“The challenges of pension funds worldwide have been severe and onerous for more than a decade with no signs of respite,” said Urwin. “The success formula remains being tough on risk and being smart on governance.”*The other markets making up the ‘P19’ group are Brazil, Chile, France, Germany, Hong Kong, India, Ireland, Malaysia, Mexico, South Africa, South Korea and Spain.last_img read more

Mandate roundup: Foncer, Epap, Enpapi, PKH, Nottinghamshire

first_imgFoncer, the €426m Italian pension scheme for employees of the ceramic industry, is selecting managers for the largest of its investment funds.The defined contribution scheme will award four three-year mandates to manage the balanced fund, totalling just under €400m.The scheme is searching for active managers of balanced portfolios with strong ESG credentials. The current mandates expire at the end of June. Interested managers have until 1pm CET on 10 March to respond. More details on the required documentation is available at Epap, an €815m scheme, is searching for fixed income managers for a portfolio worth €320m. The scheme intends to award five different fixed income mandates. One will focus on investment grade government bonds, two will focus on a mix of government bonds and corporate bonds including investment grade and high yield, while the fourth will focus on corporate bonds. A fifth mandate will be focused on convertible bonds.The mandates will run for three years, with a possibility of renewal for another three years. Interest parties have until 12pm CET on 10 March to send their offers. More information is available from the scheme’s, is a “cassa di previdenza”, a first-pillar fund for white-collar workers. It provides retirement and other benefits to employees of various sectors, including agricultural engineers, chemists, geologists and actuaries.Elsewhere, Enpapi, the €820m cassa di previdenza for nurses, will choose a new investment advisor between two Italian firms, Prometeia Advisor Sim and MangustaRisk. The value of the contract, which is being awarded under EU rules for public procurement, is around €385,000 plus VAT.Earlier this week, PKH, the NOK22bn (€2.4bn) Norwegian pension fund for health authorities, seeded a global high yield environmental, social, and governance (ESG) themed bond fund run by BlueBay Asset Management. The fund launch was prompted by a mandate from PKH for an ESG strategy for their global bond portfolio.Last week, Nottinghamshire County Council Pension Fund awarded Kames Capital a £300m buy-and-hold fixed income mandate that was designed to help the pension fund implement its infrastructure investment plans. Kames will invest the £300m in a portfolio of corporate bonds with a target yield of 1.25% over Libor after fees, “with the aim of providing periodic cash flow” to meet the pension fund’s five-year infrastructure investment plan.last_img read more

London, Lancashire partnership launches infrastructure fund

first_imgThe £12.5bn (€14.2bn) Local Pensions Partnership (LPP) has launched a global infrastructure fund.It combines the assets of the Lancashire County Pension Fund and the London Pensions Fund Authority (LPFA), the two local government funds that established the partnership in 2015.The new fund has £688m invested, including existing assets owned by the two pension funds. It is expected to raise more than £1.5bn by its final close, scheduled for September 2017, LPP said in a statement.Susan Martin, LPP’s chief executive, said: “Infrastructure is a core investment focus for LPP. This new fund capitalises on our extensive knowledge and experience in what is a highly illiquid asset class. “In pooling the infrastructure allocations of our shareholder pension schemes, the fund will also be an attractive vehicle for other investors looking to build their exposure to cost-efficient, diversified infrastructure assets.”LPFA has a separate infrastructure collaboration with the Greater Manchester Pension Fund, focusing on UK assets.LPP said its fund would focus on assets based in the UK, Europe, and North America, via infrastructure funds, co-investments, and direct investments.LPP launched its first joint fund in November, pooling its two member funds’ global equity allocations. It followed this with a private equity pooled fund in April. It plans to launch credit, fixed income, and total return funds “in the coming months”, the statement said. The partnership preceded the UK government’s 2015 push for collaboration between the country’s 89 local authority funds. The pools must be ready to accept assets from their member funds from April 2018.last_img read more

Dutch retailer’s scheme boosts funding despite hedging loss

first_imgThe €4.6bn Dutch pension fund of retailer Ahold Delhaize missed out on 2.1 percentage points of additional return due to the effect of rising interest rates on its 60% interest rate hedge.Its final return was 3% for the year, it said in its annual report. However, the impact of rising rates on its liabilities meant its funding ratio improved by 5.7 percentage points to 109.7%.The Ahold Pensioenfonds said its coverage was also boosted by an additional contribution by the employer, which paid more than €28m to raise funding to the minimum required level of 104%.Despite the improved coverage ratio, funding was not sufficient to grant indexation, the board said. Ahold Delhaize’s headquarters in Zaandam, the NetherlandsAlternatives (18.4%) and emerging market debt (18.2%) were the Ahold scheme’s best returning asset classes. Equity and non-listed real estate delivered 11.7% and 15.1%, respectively.In contrast, listed property and high-yield bonds had generated losses of 2.1% and 2.3%, respectively.Its 28.3% allocation to credit – with a significant exposure to the US – lost 3.6%.The scheme’s holdings in AAA-rated government bonds and mortgages yielded 0.3% and 3%, respectively.The Ahold Pensioenfonds said it was continuing to divest its holdings in non-listed real estate and alternatives, as it had concluded that they “added insufficient value to its investment mix, were relatively expensive as well as less easy to trade”.The pension fund is to rebrand to Ahold Delhaize Pensioen this year, in line with the name of the merged company that was established in 2016.However, according to Renate Pijst, the scheme’s director, there are no plans to merge the company’s Dutch and Belgian pension funds.The Ahold scheme has 37,455 active participants, 11,350 pensioners and 37,875 deferred members. In 2017, the pension fund continued its dynamic investment policy, with 35% of its assets invested in risk-bearing asset classes such as equity (21.4%), property (3.1%), alternatives (1.9%), high-yield bonds (5.4%) and emerging market debt (3.6%).The scheme’s investment policy allows it to increase its risk exposure as its financial buffers improve, and vice versa. The pension fund said that an asset-liability management study to be carried out this year would establish whether its current asset mix needed adjusting.last_img read more

USS proposes 41% contribution hike to plug funding shortfall

first_imgThe increases come as USS faces an uncertain future. A valuation of the scheme completed last year led to a proposal to close the defined benefit section to future accrual, which in turn prompted widespread strike action across UK universities.A joint expert panel was then set up to scrutinise the contested 2017 valuation of USS, and is due to report back to Universities UK (UUK) and the University and College Union (UCU) – the employer and employee representative groups, respectively – in September.The cost sharing that has been proposed is the default process set out in the scheme’s rules, and is being pursued because the USS joint negotiating committee (JNC) did not reach an agreement on how to address the increased cost of meeting benefits. Under the scheme rules, the increase in the total contribution rate is to be shared between members and employers on a 35:65 basis.A spokesperson for UUK said: “The increases in contributions being proposed will be challenging for both employers and scheme members. This temporary fix will lead to difficult decisions at many institutions over financial priorities. Over the summer we will be working with employers and other stakeholders to fully understand the implications.”The UUK spokesperson added that UUK and UCU were committed to reaching an agreement on the 2017 valuation following the joint expert panel’s report.“We hope this agreement will allow the higher levels of contribution increases proposed to be avoided,” the spokesperson added.From September there will be a 60-day consultation with employers and affected employees about the contribution increases. The UK’s largest pension fund has proposed raising combined employer and employee contributions by 41% by April 2020 in order to fund an estimated £900m-a-year (€1bn) funding gap.Under the proposals, members of the £60bn Universities Superannuation Scheme (USS) would increase their contributions in three steps from 8% of salary currently to 11.7% by April 2020, starting from April next year.Employer contributions would increase from 18% to 19.5% from April 2019, ultimately reaching 24.9% from April 2020. In total this would result in combined contributions increasing by 10.6 percentage points, from 26% to 36.6%.The USS trustees have also decided to scrap a policy of matching scheme members’ voluntary contributions to USS Investment Builder – the scheme’s defined contribution section – from April next year. According to a USS spokesman, this would have the effect of reducing the total contribution required from 37.4% – equivalent to £900m – to 36.6%, or £800m.last_img read more

Chart of the Week: Which asset managers have the most ESG analysts?

first_imgRussell Investments, PIMCO and Vontobel have the most dedicated ESG or responsible investment analysts, according to data gathered as part of IPE’s Top 400 Asset Managers survey.The 2019 survey for the first time questioned managers on the number of dedicated specialists in environmental, social and governance (ESG) investing issues, as well as the number of corporate governance specialists.Russell Investment came out on top of the ESG-related ranking, with 38 professionals fully dedicated to sustainable investment. PIMCO and Vontobel reported 36 each, while PIMCO also reported the highest number of corporate governance specialists. ESG/SRI/responsible investment specialistsChart MakerCorporate governance specialistsChart MakerA number of managers have hired for senior ESG or responsible investment roles in recent months. Last month Allianz Global Investors appointed Beatrix Anton-Groenemeyer as its first chief sustainability officer, while UK-based Majedie Asset Management hired Cindy Rose as head of responsible capitalism.Brunno Maradei recently joined Aegon Asset Management as global head of ESG, having previously worked at the European Investment Bank. Natixis Investment Managers – France’s second-biggest asset manager – hired Harald Walkate last month as its first head of corporate social responsibility and ESG.IPE’s survey asked asset managers to quote the number of dedicated ESG and corporate governance specialists, and compared the figures with the figure for total investment professionals at each firm. Companies that quoted the same figures for dedicated ESG or corporate governance specialists and total investment professionals were not included in the ranking.The number of dedicated analysts does not reflect the level of dedicated ESG assets reported by investment groups, however. IPE asked asset managers to report how much of their European institutional assets were run on ESG principles.Legal & General Investment Management reported that all of its €808bn in European assets were run to ESG principles, as did NN Investment Partners.European institutional ESG assetsChart MakerClick here to download the complete Top 400 table Further readingTop 400 Asset Managers 2019: Cultures Change Is asset management a technology business, a people business, or both?Artificial intelligence: Let me tell you what you really think How are managers deploying natural language processing to analyse management sentiment in earnings calls?center_img IPE Top 400 Asset Managers: Your source for institutional market intelligenceIPE offers unrivalled intelligence on over 400 global asset managers covering over 100 categories of products, strategies, asset classes, and key data areas. The data set is available to buy with a variety of purchase options.For more information please contact [email protected]last_img read more

Popular pad sells in a flash to determined buyer

first_imgThe property at 6 Dell Ct, Caboolture, sold in three days. Picture: Supplied.A neat three-bedroom home has sold in Caboolture in just three days, smashing the suburb average time on market of 35 days.The owner-occupied property at 6 Dell Court went for $314,900 during the traditionally slow holiday period. Marketing agent Frank Pike, of Marsellos Pike Real Estate, said the key factors in the quick sale were the condition of the property and the location. “When you advertise anything in immaculate condition with a shed in a quiet cul-de-sac, that’s gold,” he said. Mr Pike said the property attracted plenty of inquiries but an offer was submitted within days of the home coming to market from a buyer who had previously missed out on another house in the Caboolture area. More from newsParks and wildlife the new lust-haves post coronavirus14 hours agoNoosa’s best beachfront penthouse is about to hit the market14 hours ago“As soon as they saw it, they fell in love with it,” he said. Mr Pike said the Caboolture market was performing well despite a slump in investor activity. “From an investor point of view, we’ve seen a big drop off, which is not to be unexpected with the banking royal commission tipping lending upside down,” he said. Mr Pike said there were less buyers in the market at the moment as a consequence but he wasn’t concerned. “(The market) may soften a bit but that’s a good time for buyers to upgrade,” he said. “I think 2019 might be a challenge for some people but overall Caboolture and Morayfield always fair well regardless of market conditions.” Follow Courtney Todd on Twitterlast_img read more

RBA to cut rates twice in 2019, says Australian Big Four bank

first_img Champion hurdler Sally Pearson sells Gold Coast home in a matter of days Westpac has revised its GDP growth forecasts downwards and also its residential housing construction growth for 2019 and 2020. Picture: Penny Stephens.“Westpac’s growth forecast in 2019 and 2020 has been a much weaker 2.6 per cent in each year but even that number now appears too high. Our new forecast for GDP growth in 2019 and 2020 is 2.2 per cent.”Westpac had “consistently held (since the August 2016 rate cut) the line that the RBA cash rate would remain on hold for the foreseeable future (a standard two-three year window)”.More from newsParks and wildlife the new lust-haves post coronavirus14 hours agoNoosa’s best beachfront penthouse is about to hit the market14 hours ago“To an extent this view was influenced by the perception that the Bank welcomed the adjustment in the housing markets and saw insignificant spill over effects to the rest of the economy,” Mr Evans said. “The recent change of rhetoric from the Bank on that issue is important. Our revised growth, inflation and unemployment forecasts now make a convincing case for lower rates.”Among headwinds facing the country, the housing downturn was expected to spill over into consumer confidence and construction activity, but it would also have to face the challenge of tougher lending via “developments around credit”. MORE: Yacht racing millionaire’s $3m discount Westpac’s chief economist Bill Evans has predicted RBA will drop rates twice this year because of a downturn in the economy. Picture: AAP Image/Kelly Barnes.One of Australia’s biggest banks has predicted that the Reserve Bank would be forced to cut rates twice this year, bringing the official cash rate to a historic 1 per cent low.Westpac chief economist Bill Evans today predicted that RBA would cut the cash rate by 25 basis points in August and then again in November because of a downturn in the economy.Even further, he foreshadowed that any inaction on rates by RBA could see Westpac’s forecast 5-10 per cent property price drops in Sydney and Melbourne in 2019 go even further in 2020.The major move comes in the wake of Westpac cutting GDP growth forecasts for both this year and 2020 from 2.6 per cent to 2.2 per cent, which was expected to trigger higher unemployment to 5.5 per cent by the end of this year.“That makes a strong case for official rate cuts to cushion the downturn and, in turn, meet the RBA’s medium term objectives,” he said in his latest report on the market.Mr Evans said even through RBA had revised its growth forecasts down from 3.25 per cent to 3 per cent for 2019 and 3 per cent to 2.75 per cent for 2020, “momentum in 2018 slowed dramatically”. FOLLOW SOPHIE FOSTER ON FACEBOOKcenter_img Westpac believed “the need to restore affordability and the impact of tighter lending standards on prices” would see property prices fall by around 5-10 per cent in Sydney and Melbourne this year.“Absent any policy response from the RBA we expect that further falls will be necessary in 2020 before stability in these markets will be achieved.”Mr Evans said the new lending for housing correction in the second half of 2018 was “sharper” than Westpac had anticipated, down 14.9 per cent with both investors (-15.5 per cent) and owner occupiers (-14.7 per cent) affected.“These falls are a combination of both demand (concerns around falling prices and stretched affordability) and supply (new regulations and caution from some lenders in a falling market). We expect these falls, albeit at a much slower pace, to continue through 2019 representing a negative feedback loop to prices.”Westpac has also revised its residential housing construction forecast further downwards for 2019 to –10 per cent from –7 per cent, and –5 per cent in 2020 from –3 per cent predicted earlier. Foreign buyer retreat nationally, but not QLDlast_img read more