IPNederland, Financieele Dagblad join forces on pensions news

first_imgFinancieele Dagblad, the Dutch financial daily, and IPNederland (Investments & Pensions Nederland) will be joining forces to further improve their services to the Dutch pensions industry.Jointly, they will be able to optimise their offerings and meet Dutch pension professionals’ needs in terms of independent, reliable news, background stories and analysis.In addition to the daily IPN Newsletter and bi-monthly IPNederland print magazine, the weekly e-magazine FD Pensioen Pro will be part of the joint portfolio.Mariska van der Westen, editor of IPNederland, said she was delighted by the plans to collaborate with FD. “The pensions industry is facing a range of challenges resulting in an ever-increasing need for solid, independent information,” she said.“FD is the leading business daily in The Netherlands, while IPN is the leading information provider for the pensions industry. Collaborating with FD will allow us to optimise our ability to meet those needs.”Eugenie van Wiechen, publishing director at FD Media Group, believes the product offerings are complementary.“By combining IPNederland’s daily news, the weekly FD Pensioen Pro, IPN print magazines and a number of joint events, we will be able to further improve our services to Dutch pension professionals and help them connect directly with their peers.”last_img read more

Telefónica reconsiders illiquid alternatives in light of ageing membership

first_imgAn ageing membership base has forced the pension fund of Spain’s Telefónica to opt for exposure to alternative beta strategies over illiquid holdings in private equity and hedge funds, according to its CIO Jaime Martinez-Gómez.             The €3bn fund currently invests in commodities, hedge funds and real estate, with private equity investments accounting for the largest share of its alternatives portfolio.However, Martinez-Gómez, speaking with IPE in the December issue of How We Run Our Money, said the allocation would be changing – with the 5.5% exposure to private equity gradually reduced to 3% over the coming three years.The scheme will keep its overall alternatives exposure steady at 15% of assets. Martinez-Gómez said the “maturing” nature of the defined contribution (DC) fund required it to reduce its illiquid exposure over the long term.“We want to focus on a more liquid portfolio instead,” he said. “Hence, we are committing less to private equity and are increasingly moving into fewer illiquid strategies.”However, he said the current 2.5% exposure in real estate would be maintained, while the share of direct hedge fund holdings would be reduced.#*#*Show Fullscreen*#*# Jaime Martinez-Gómez (right) with Telefónica’s IPE Award for best commodities investment at the ceremony in Noordwijk on 21 November.“Instead of adding more hedge fund vehicles, we are trying to increase our exposure to alternatives though what we call an alternative beta portfolio,” he said.He said the strategy should, in theory, allow it to “harvest” the risk premium of the commodities and volatility curves.“This should generate higher returns in comparison with the traditional assets in the current low-yield environment,” he said, “especially as we are aware of the fact equity returns cannot continue their good run forever.”Martinez-Gómez also said that, following changes to the fund’s investment mandate in early 2013, he was now able to integrate socially responsible investment (SRI) policies into the equity portfolio’s investment decisions.“This is the first time we have an explicit mandate from our trustees to integrate SRI policies, which led to a major change in the investment policy,” he said.“We are currently working on this integration, but most of it will be done next year.”For more on Telefónica, see How We Run Our Money in the current issue of IPElast_img read more

Finnish premier expects retirement age to increase by 2015

first_imgKatainen expects the retirement age to go up by two years from 2017 but noted the finer details of the reform will be known by autumn next year. “Rather than focusing on the additional years in working life, it is more important to tie retirement age to life expectancy. As we live longer now, it is common sense also to work longer,” he added.Finns currently retire at 60.9 years on average, although the official retirement age for a national pension is 65 years and between 63 and 68 for an earnings-related pension. The life expectancy of a 60-year-old Finn is forecast to increase by five years over the coming forty years, according to the Finnish Centre for Pensions (ETK).Jukka Rantala, managing director of ETK, agreed that the most pressing reason for an increase in retirement age is the strong growth in life expectancy.“It is possible to guarantee a sufficient level of pensions only if years in working life increase hand-in-hand with life expectancy. The retirement age should depend on the birth year of the employee. The increase should not be too great in the first instance and the starting point for the reform should be known by citizens well in advance,” Rantala told IPE.There is consensus that labour market organisations will present pension reform proposals by autumn 2014. Parliament will receive a list of the necessary legislative changes after the general election of April 2015, and the reform will come into force by 2017. The retirement age in Finland is likely to increase by two years from 2015, Prime Minister Jyrki Katainen said last week. Speaking on the current affairs television programme A-Studio, Katainen said Finland’s ageing population structure is one of the main reasons for the reform.“The crucial thing that has changed in Finland is that we have fewer working-age people paying taxes and more elderly people who deserve proper care and services. Expenditure no longer matches funds so further cuts will have to be made,” Katainen said.In the last week of November, Finland introduced a budget saving programme for 2014, which included cuts and tax increases worth €5.5bn. Services to feel the cuts include libraries and care for the elderly.“We will have to introduce further cuts in important areas to make savings. Another alternative would be to ignore the situation and let Finland’s debt grow, which would lead to uncontrollable chaos,” Katainen said.last_img read more

KLM pension funds lose altitude despite strong first-quarter results

first_imgCoverage ratios at KLM’s three pension funds plunged over the first quarter despite their reporting strong investment returns over the period.KLM Cabinepersoneel, the €2.8bn pension fund for cabin staff, returned 9.6% in Q1, yet its coverage fell by 4 percentage points to 117.1%.Over the same period, Algemeen Pensioenfonds KLM, the €8bn scheme for ground staff, returned 8.6%, while its coverage ratio decreased by 3.1 percentage points to 117.4%. From the beginning of this year, Dutch pension funds have had to use the 12-month average of their daily coverage, rather than the three-month average, to determine their ‘policy funding’, the new criterion for indexation and rights cuts. Both schemes have failed to achieve their minimum funding targets of 126.2% and 124.6%, respectively, as stipulated under the new financial assessment framework (nFTK).As such, they must now submit recovery plans to the pensions regulator.Meanwhile, Vliegend Personeel, the €8.3bn pension fund for KLM cockpit staff, reported a 6.9% return and closed out the first quarter with a coverage of 127.5%, 3.1 percentage points down from December but above its minimum ratio of 123.4%.All three KLM schemes have contracted out their asset management and pensions administration to Blue Sky Group.In other news, Progress, the €5.8bn pension fund of Unilever, reported a quarterly return of 14%.Progress director Rob Kragten said all asset classes, with the exception of commodities, made positive contributions to the scheme’s first-quarter performance.He added that equities and private equity had performed particularly well.Its funding of 139% at March-end equated with a coverage ratio in real terms of 103%, making Progress one of the best-performing large company schemes in the Netherlands.last_img read more

KAS looks to ‘export’ Dutch transparency standards to Germany

first_imgVogel acknowledged that the bank, after holding talks with the industry, could conclude that this would make sense only for certain Durchführungswege – including Pensionskassen and Pensionsfonds – but this, he said, “remains to be seen”.He stressed that KAS Bank would take “small steps” on the question of transparency in Germany, as the industry was “not nearly as experienced” in collecting these data sets as its Dutch counterpart.Vogel said that, eventually, more in-depth data such as, for example, target fund costs in fund-of-hedge-fund structures, could be used in a portfolio optimisation analysis.“The pension industry knows it has to increase cost transparency,” he said.“The question is how.” The financial assessment framework (FTK) for second-pillar pensions in the Netherlands could be successfully “exported” to Germany with a few “adaptations”, according to KAS Bank.Frank Vogel, managing director of KAS Bank Germany, told IPE the banking group’s Germany subsidiary was now considering to “bring Dutch expertise” to the country.One of the models he wants to apply is the FTK’s cost-transparency regulation, which includes “a simple catalogue on how to collect data on costs”.“We are now in talks with German pension funds and associations trying to gauge which data can be reported, which makes sense and what is possible for which form of pension fund,” he said.last_img read more

Dutch roundup: Investment fund returns, DNB priorities

first_imgDutch investment funds have lost 4% over the third quarter, due largely to a drop in value across most asset classes, according to De Nederlandsche Bank (DNB).In its statistical report, the regulator attributed the lion’s share of the decrease to an overall 10% loss on equity holdings.It added that investment funds targeting emerging markets and Asia lost 17.1% and 12.9%, respectively, compared with the MSCI Emerging Markets loss of 18.9% and the MSCI World loss of 9% over the same period.Fixed income funds and property funds reported slight positive quarterly results of 0.3% and 0.6%, respectively, according to DNB. The regulator noted that investors increased their combined stakes in mortgages and fixed income funds, while divesting from equity and property funds.In other news, the regulator announced that it would focus its supervision next year on the balance in pension funds’ financial set-up, as well as on the sustainability in their policies.In particular, the regulator will assess how pension funds deal with parts of the financial assessment framework, such as “risk attitude” and the cost-covering level of contributions.It said it would look at how pension funds execute their search for yield, adding that schemes will have to explain their considerations if changes in their investment mix increase their risk profile. It will also continue to assess potential conflicts of interest, with a focus on networks, outsourcing and additional jobs.last_img read more

Risk reporting among new emphases in updated PLSA guidelines

first_imgThe Pensions and Lifetime Savings Association (PLSA) has updated its corporate governance and voting guidelines to emphasise the importance of corporate reporting on strategic risk and non-executive directors’ time commitments.The new edition of the guidelines, released on Saturday, reflects recent work carried out by the association and its intention to “advance market best practices”, said Luke Hildyard, policy lead on stewardship and corporate governance.The 2015-16 version does not introduce any new principles but differs from last year’s guidelines in the emphasis that has been placed on certain principles and the detail added, he told IPE.He said there were additions in three main areas, addressing company and shareholder responsibilities. One of the areas concerns corporate reporting, the focus of work carried out by the association earlier this year.Following on from this, the PLSA revised the guidelines to emphasise that corporate reporting “should enable an investor to understand how the company is maximising the long-term value of the human capital it has at its disposal”.The guidelines refer specifically to the “composition of the workforce” and “the sustainability of the employment model” as aspects that merit particular attention to allow shareholders to develop a more “holistic view” of the risks and opportunities facing a given company.Companies are also called on to develop and refine their understanding and reporting of strategic risks continually.The guidelines were amended to stress the importance of ensuring non-executive directors have sufficient time and energy to be able to discharge their role properly.This is not a new concern for the association and its members, but the new edition of the guidelines includes a note calling on shareholders to be “mindful of concurrent directorships” and to take into account the nature of the director’s commitments.It also gives specific examples of what could constitute a director’s being what Hildyard referred to as “overcommitted”, in which case a vote against the (re-)election of a director could be warranted.The PLSA’s views on best practice surrounding the issuance of shares without pre-emption rights have also evolved, with the 2015-16 corporate governance and voting guidelines incorporating a new call for companies to give shareholders as much advance notice as possible if they intend to dis-apply pre-emption rights.“Companies should clearly signal their intention to undertake a non-pre-emptive issue at the earliest opportunity and establish a meaningful dialogue with their shareholders,” the guidelines state.“They should also keep shareholders informed of issues related to an application to disapply their pre-emption rights. Shareholders, in turn, should review the case made by a company on its merits and decide on each case individually using their usual investment criteria.”,WebsitesWe are not responsible for the content of external sitesLink to 2015-16 PLSA Corporate Governance and Voting Guidelineslast_img read more

New Dutch pension system ‘to be delayed until after elections’

first_imgThe SER has been assessing a new pensions contract for three years, and is currently assessing two alternatives, comprising a target contract and individual pensions accrual and both with some degree of collective risk-sharing.Although the Pensions Federation – the trade body for the Netherlands’ pension funds – has concluded that both variants would be potentially viable, it said additional research for improvements was needed.According to the FD’s sources, however, the debate within the SER is still ongoing and many decisions still need to be taken.Among the hurdles is the fact that the unions don’t like the concept of individual pensions accrual. Opinions also differ on the degree of risk-sharing with the varying effects on pensions accrual and workers’ generations.Another tricky issue is the transition to a new pensions system. The costs of replacing the current average pensions accrual with an age-related “degressive” one, as the current cabinet wants, are estimated at up to €100bn.Corien Wortmann-Kool, chair of the €382bn civil service scheme ABP, recently expressed the sense of urgency in the sector by stressing that the discussions should not get bogged down in a tug of war about details.“Rather an [actual] eight out of ten than a theoretical nine, which is unlikely to be scored,” she said.“It is important to come up with a framework now and do the work under the bonnet later,” echoed Kees Goudswaard, chairman of the SER’s pensions committee.Meanwhile, calls have started from within the pensions sector to keep the current system, albeit with improvements.Albert Akkerman, former chief executive of the €19bn pensions provider and asset manager SPF Beheer, noted that “time and time again, we have seen that new alternatives are not really better than the current system”.In an opinion piece in IPE sister publication Pensioen Pro, he argued that a new system wouldn’t increase pensions.Akkerman said that, among other things, participants needed convincing that a pension was no guarantee but a target, and to increase the options for pensions saving for the more than 1m self-employed. The Social and Economic Council (SER) is unlikely to come up with the long-awaited blueprint for a new pensions system ahead of the elections for parliament on 15 March, according to Dutch financial news daily Het Financieele Dagblad (FD).The FD quoted “insiders” as saying that the representatives of employers and workers in the SER aimed to present their plan for a new pensions contract ahead of formation talks for a new cabinet.This way they aimed to prevent a new government from developing plans for a new system that aren’t aligned with the sector’s views, according to the paper.Based on recent polls, a new coalition would need the co-operation of four, and possibly even five, political parties – all of which have different views on pensions.last_img read more

Public pension fund adopts equity protection for £1.2bn portfolio

first_imgWorcester CathedralCredit: jimmyjay Worcestershire chose a static equity protection strategy rather than an active one. According to Sue Alexander, chief financial officer of Worcestershire County Council Pension Fund, research had shown that a static options strategy would be better value and more straightforward to implement.Masroor Ahmad, managing director of River and Mercantile Derivatives, said that after an extended period of positive returns in equity markets to the beginning of this year, an increasing number of LGPS funds had shown interest managing the downside exposure in their portfolios while maintaining their allocation to equities. Mike Faulkner, CEO of River and Mercantile Group, added: “We have seen significant weakness in equity markets and a consequent rise in volatility. Our view is that we are in the ‘apprehension’ phase of the market cycle. We have been advising clients of this view and have been helping them develop plans to prepare to defend.”Worcestershire Pension Fund is a member of LGPS Central , one of the eight asset pools that have been formed by local authority pension funds on instruction from central government. An equity protection solution was deemed the most suitable way to maintain equity market exposure and reduce the likelihood of further contributions from the sponsor in 2019, when the scheme’s next triennial valuation is due. In the UK, triennial valuations are used to plan employer contribution levels. The £2.5bn (€2.9bn) pension fund for Worcestershire County Council has implemented a structured equity protection strategy for its £1.2bn passive equity portfolio.The strategy is intended to protect the local authority fund – part of the Local Government Pension Scheme (LGPS) – from a downturn in the equity markets while still allowing it to benefit from gains over an 18-month period.It was applied to the fund’s portfolio of UK, US and European stock investments, which is passively managed. River and Mercantile Derivatives was appointed to run the position. According to a statement, the fund decided against derisking by moving out of equities to another asset class due to fears that this would have reduced return expectations.last_img read more

Industry urges caution as UK government mulls ESG rules for trustees

first_imgIndustry experts have broadly welcomed the move by the UK government to consult on the legal duties of trustees with regard to environmental, social and governance (ESG) risks, but warned any prospective rules or regulations must not be overly prescriptive.In a written statement published on the Department for Work and Pensions’ (DWP) website on Tuesday, Guy Opperman, the UK pensions minister, confirmed the consultation would be published in June. He said its purpose was to “clarify the legal duty of trustees of occupational pension schemes to take account of environmental, social and governance risks, among others, wherever these are financially material”.Tim Middleton, technical consultant at the Pensions Management Institute, which represents employee benefit and retirement savings professionals, said the move was “a very positive development”. Credit: Chris McAndrewGuy Opperman, undersecretary for pensions and financial inclusion“From the outset there was scope for trustees to comment on the extent to which ethical issues would form part of the investment decisions.“I would suggest that going forward we would see a more sophisticated approach to ESG.”Tom McPhail, head of retirement policy at FTSE 100-listed broker Hargreaves Lansdown, argued that Opperman’s initiative showed that the role of trustees in delivering governance and good outcomes for pension scheme investors was “clearly at the forefront of DWP thinking at the moment”.There were two main factors currently underpinning thinking around ESG issues, he said. “It is partly about the assessment of investment risk… and the other is that this is about good social policy. Should we be looking to the trustees of pension schemes to act as agents for social good, putting pressure on companies to improve their ESG performance?”However, Alan Pickering, chairman of BESTrustees, an independent trustee firm, warned of “applying prescriptive rules on how trustees should fulfil their fiduciary duties”.While he said he was positive about ESG, he added: “Prescription – even when it is benign prescription – has unintended consequences. Politicians should go with the flow and avoid legislating at a time when pension scheme governance is taking us in the right direction.”DC schemes were to grow rapidly in the coming years and DB schemes were likely to either consolidate or transfer assets and liabilities to the insurance sector, Pickering said. “Trustees of large schemes are ideally placed to secure the right support needed to fulfil their ESG aspirations,” he said. “Political encouragement yes, prescriptive legislation no.”ESG and ethical considerations have been part of occupational pension trustees’ obligations following the 1995 Pensions Act and further investment regulations implemented in 2005.A statement of investment principles by the trustees must detail “the extent… to which social, environmental or ethical considerations are taken into account in the selection, retention and realisation of investments”, according to the 2005 Occupational Pension Schemes (Investment) Regulations Act. He added: “Considerations for ESG will result in better outcomes for members as the kind of companies that trustee boards [opt for] will be more soundly managed and more successful over the long term.last_img read more