An Post agrees €100m asset-backed funding deal for DB scheme

first_imgAccording to details of the initial proposal, released last year, the contingent assets will be used to meet the incoming 10% risk-reserve requirements, coming into force in 2016.The agreement is not the first use of contingent assets to shore up underfunded defined benefit schemes in Ireland, with Greencore entering an €11m property and mortgage-backed deal with its fund last year.More significantly, Allied Irish Banks put in place a €594m contribution deed backed by loans to ensure that active and deferred members did not suffer due to a redundancy programme encouraging workers to take early retirement.An Post’s annual report also revealed that the firm’s DB scheme had further lowered its discount rate in 2013, down 0.25 percentage points over the 4% in place in 2012 and significantly down from the 5.25% applied to the valuation of liabilities in 2011.The scheme in late February finalised a €400m deal that would see it, An Post and the Ontario Teachers’ Pension Plan acquire the licence to run the Irish National Lottery for 20 years. Ireland’s An Post has entered into a €100m contingent asset deal as part of a new funding proposal for its defined benefit scheme, one of the country’s largest.The An Post Superannuation Scheme saw its deficit decline by €56m over the course of 2013, standing at €229m at the end of the year due to continued good investment returns, as well as changes implemented as part of its funding proposal, according to the company’s annual report.The report praised the changes, which will see scheme retirement age increase in line with the Irish state pension age and impose a 2% cap on pensionable pay and benefits, as an “innovative proposal”.“As part of the solution, a mortgage and charge relating to certain property assets of the company with a maximum value of €100m by 2023 will be put in place in favour of the An Post Pension Schemes for use as a contingent asset of the schemes,” the annual report said.last_img read more

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European pension fund tenders $500m equity mandate using IPE-Quest

first_imgAn undisclosed pension fund based in Europe has tendered a $500m (€399m) developed-world equity mandate using IPE-Quest.According to QN1467, the client’s preference is for a segregated account in the form of a single investor fund.The mandate calls for the MSCI World Developed index as a benchmark, with tracking error ranging between 3% and 8%.Fund managers must have an absolute minimum track record of two years, and preferably five. They should also have at least $2bn in assets under management (AUM) for the mandate itself and $20bn in AUM as a company.The client has said that track record and minimum AUMs limits are “fairly strict”.Interested parties should state performance, gross of fees, until the end of September.The closing date for applications is 20 November.For full information, please go to http://www.ipe-quest.com/search.htmlast_img read more

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NAPF loses DC policy head to UK Financial Conduct Authority

first_imgWilson told IPE: “I’m really excited about joining FCA and contributing to their growing programme of work on pensions. The current reforms make this a particularly important time for pension regulation and supervision.”In addition to his work at the NAPF, Wilson was a long-standing member of Haringey Council in London, losing his seat as councillor and leader of the Liberal Democrat opposition at the elections in May 2014.While in office, he was also a member of Hanringey’s pensions committee, responsible for supervision of the local authority pension scheme.Before joining the NAPF in 2008, Wilson spent three years as policy adviser on pension matters at the Association of British Insurers (ABI) and four years working in policy at charity Help the Aged.Graham Vidler, director of external affairs at the NAPF, praised Wilson’s work at the organisation.“Richard has been a valued member of our team and will be missed,” he said. “Our members have particularly appreciated his expertise in the run-up to the pension freedom reforms. We wish him every success in his new role.”The NAPF is currently recruiting for Wilson’s replacement. The UK’s National Association of Pension Funds (NAPF) is losing one of its policy team to the Financial Conduct Authority (FCA).Richard Wilson, who has been with the industry group since 2008, confirmed to IPE he would be joining the FCA in July as pensions technical specialist.In his time as defined contribution (DC) policy lead at the NAPF, Wilson has overseen its work on the introduction of auto-enrolment and managed the Pension Quality Mark initiative, a certificate for DC funds to demonstrate they meet certain standards of governance and communication.His departure will come months after the largest reforms to DC pensions in a lifetime, with members from this month on allowed to draw down the entirety of their pot from 55 onwards.last_img read more

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Denmark’s ATP returns 6% despite ‘unusual’ markets

first_imgCommodities also suffered losses, due to the fall in oil prices, while its interest rate risk class suffered losses of DKK500m relating to holdings in domestic mortgage bonds.However, Stendevad struck a positive note.“It has been an unusual quarter, especially in the European financial markets, with interest rates reaching almost unthinkable levels, currency turmoil and surging equity prices,” he said.Despite all-time low interest rates, ATP will be able to deliver “the good future pensions we promised our members”, Stendevad said, citing the fund’s hedging portfolio.The hedging portfolio, which sits outside of the five investment risk classes, returned close to DKK77bn, offsetting an increase in liabilities of more than DKK64bn that resulted from changes in longevity and lower discount rates.The results compare favourably with some of the larger European investors, although several large Dutch pension funds proved less able to absorb the increasingly low rate environment.ABP, the €373bn fund for civil servants, saw its funding at the end of the first quarter decline 2.1%, falling further below the minimum required by the regulator.However, the largest Dutch pension fund and its counterparts all saw strong returns on the back of rallying equity markets.Double-digit equity returns have also been common for Finland’s pension investors, but the results often praised as outstanding – and hitting 17.7% in the case of Ilmarinen – are often contrasted with low returns from all other asset classes.Read ATP CIO Henrik Gade Jepsen’s thoughts on private markets in the current issue of IPE Denmark’s largest pension investor ATP has boasted one of the best quarterly results in five years as investments returned 6%, despite “unusual” market conditions.Chief executive Carsten Stendevad praised the fund’s domestic equity holdings, with their performance accounting for most of the DKK6.1bn in growth seen by its equity risk class.Of the five risk classes comprising the investment portfolio, only credit and equities saw positive returns, despite a strong performance from ATP’s infrastructure and real estate holdings.The two asset classes, which sit within its inflation risk class, saw their combined increase in value of DKK0.9bn wiped out by a loss stemming from part of its hedging strategy, the result of falling interest rates and inflation.last_img read more

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PGGM to launch global campaign against excessive remuneration

first_imgMuch to the annoyance of PGGM, he said, pay for the “upper echelons” is increasing, particularly in the US.The asset manager cited the return of cash bonuses, which it said failed to encourage long-term performance, as well as signing bonuses and ‘golden parachutes’.PGGM said it had employed its new directive over the first three months of this year, venting its dissatisfaction by voting against remuneration proposals in 91% of the cases in the US. Over the second quarter, it did the same in 79% of cases, it said.Jeucken argued that companies should stop comparing their remuneration levels to comparable firms and instead link pay to social targets and “PGGM’s objectives”.“If companies can’t comply with expectations for the returns we need to pay our pension obligations, a variable remuneration is out of the question,” he added.With its new remuneration policy, PGGM said it was seeking “new boundaries”.Last week, the €373bn civil service scheme ABP announced that it would also increase its focus on remuneration. Dutch asset manager PGGM is to launch a global campaign to curb excessive remuneration for the chief executives at large listed companies, financial daily Het Financieele Dagblad (FD) has reported.Marcel Jeucken and Catherine Jackson – managing director and senior adviser for responsible investment, respectively – told the FD that engagement and voting at annual general meetings had not been enough to achieve PGGM’s goals. They said the asset manager, pensions provider for €178bn healthcare scheme PFZW, was setting its sights on a dozen “repeat offenders”.“As a shareholder,” Jackson told the FD, “we want to contribute to solving the problem of income inequality and reverse practices that have increased during the past decade. The providers of capital must take back control of remuneration practice.”last_img read more

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UK trade union warns of government hijacking LGPS asset pools

first_img“The local government pension scheme should not be a sovereign wealth fund for the government to spend as it sees fit,” said Prentis.Chancellor of the Exchequer George Osborne has repeatedly referred to the new pooled arrangements as British wealth funds.The trade union notes that it has argued that the LGPS should invest in line with European law, just like other pension funds, and should not be singled out for special intervention.As part of a planned structural reform of the LGPS, the Department for Communities and Local Government (DCLG) has proposed deregulating their investment.It is looking to remove the current statutory investment rules, which set out upper limits on certain types of investments – including infrastructure – and to replace this with a requirement that funds publish an investment strategy statement. This would allow investments as long as they are prudent.As part of its consultation on the reform, the DCLG urged local authority funds to “explain” how infrastructure would feature within the new pooling arrangements, as well as how pooling could improve their ability to invest in the asset class.The proposed new regulation also gives the UK government the right to intervene in the investment function of a fund’s administering authority in certain cases, such as when it is “carrying out another pension-related function poorly”.This authority to grant the secretary of state the right to direct investments been described as “unprecedented” by some observers.  The DCLG is consulting on its proposed new framework, with a deadline of 19 February for responses.Unison has for some time argued that the LGPS should invest in line with European law.Together with the LGPS Scheme Advisory Board for England and Wales and the Law Commission, the trade union has therefore requested that the government apply the investment regulations applicable to all other pension funds. Union-nominated representatives should be appointed to the proposed UK local government pension schemes’ (LGPS) asset pools, according to Unison, which sees a risk of the government’s “dictating” the funds’ investment decisions. The trade union said it was not against the pooling of LGPS funds to make them large enough to invest in big infrastructure projects, but it “is much less enthusiastic about the government being able to direct where scheme members’ money is invested”.Unison general secretary Dave Prentis said pension funds “should not be used as a substitute” for investment that should be made by the government or the private sector.He referred to pension funds being “made to plough their assets into the latest government initiative” and said this could hurt LGPS returns.last_img read more

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Russian pension funds return nearly 11% in 2015

first_imgPensions savings grew by 51.2% year on year to RUB1,707bn (€22.5bn) as a result of earlier savings from new members and the 6% contribution rate that had been frozen in the second half of 2013.The savings’ share of GDP grew by 0.8 percentage points to 5.9%.The additional savings started flowing into the NPF system in the second quarter of 2015 but only to those funds – 33 by the end of the year – that had converted to joint-stock status and been accepted as members of the Deposit Insurance Agency (DIA) guarantee scheme.Broader investment limits, including infrastructure, alongside lower limits on investments in bank deposits and long-term securities issued by financial institutions, resulted in a marked shift in asset allocation.The share of corporate bonds grew by 8 percentage points to 46% of the aggregate portfolio, and that of stocks by 6 percentage points to 13%, while the share of bank deposits fell by 12 percentage points to 19%.The rate of savings growth will not continue into 2016 because of the continuing moratorium, initiated in 2014, on the inflow of the 6% second-pillar contribution, which is instead being diverted into the first pillar to pay existing pensions.Reportedly the moratorium may be extended into 2017.Meanwhile, the Russian press is increasingly reporting a planned overhaul for the system, including the possibility of making the second pillar voluntary, alongside introducing mandatory corporate pensions provision.The National Association of Non-State Pension Funds (NAPF), the first Russian pension fund body to obtain self-regulatory organisation status, submitted its proposals for overhauling the pensions system next year, including the introduction of mandatory corporate pensions programmes, as well as converting existing voluntary company schemes into compulsory structures.The NAPF has proposed that the new programmes be phased in over 5-10 years, starting with companies with more than 1,000 employees.While finance minister Anton Siluanov has said additional pensions provisions should be extended to banks and insurance companies, the NAPF believes management of the new programmes should be restricted to NPFs and guaranteed under the DIA scheme. Russia’s non-state pension funds (NPFs) generated an average weighted return of 10.8% in 2015, compared with 4.9% the previous year, according to sector regulator Bank of Russia (CBR).Of the 65 funds operating mandatory pensions insurance, 23 beat the year-end inflation rate of 12.9%, while only seven funds managed to exceed the annual inflation rate, which rose to 15.6% in 2015, from 7.8% a year earlier.The number of insured soared by 4.3m to 26.3m following a massive campaign by the funds to enrol members whose contributions were previously managed by private asset managers and state-owned Vnesheconombank (VEB), including the so-called ‘silent ones’ who were with VEB by default.The ‘silent ones’ had until the end of the year to switch to a privately managed entity or remain with VEB.last_img read more

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Joseph Mariathasan: Why a Danish inn suggests a post-Brexit trade problem

first_imgSource: EurostatTrade balance between India and EU member states, €m, 2016India was of course, the crown jewel of Britain’s colonial empire. Queen Victoria was proclaimed Empress of India in 1877 at the request of prime minister Benjamin Disraeli in a bid to bind India more closely to Britain.But the British never had India completely to themselves. The Portuguese only left their colonies in India (Goa, Daman and Diu) in 1961, and that was not by choice. Many Goans have since emigrated to the UK and elsewhere within the EU as Portuguese citizens.The French also owned various territories, most significantly Pondicherry in Tamil Nadu, which were fully transferred to India in 1962. French remains an official language and there is still a French community in Pondicherry.Exports to India from EU member states What the UK does have with India is the largest trade deficit of any EU country.Trade balance between India and EU member states (€m, 2016) Source: EurostatWhile the UK, Portugal and France have well established and long-standing relationships with India, they are not the only European nations with historical links from colonial times.Denmark may not be an obvious ex-colonial power, but Serampore in West Bengal’s Hooghly district was under the Danish rule from 1755 to 1845, when it was known as Fredriksnagore in honour of the Danish King Frederik V, who ruled from 1746 to 1766.The trading post was ceded to Britain in 1845 together with another Danish settlement in India, Tranquebar (Tharangambadi) in Tamil Nadu.For a more in-depth look at India’s Danish links, Soumitra Das writes for The Wire about the history of the Danes in Serampore here. There is also a fascinating 2010 report, Indo-Danish Heritage Buildings of Serampore, by Flemming Aalund and Simon Rastén, detailing several buildings originating from the Danish period that are still significant landmarks.The authors of the latter state that, during the heyday of Danish overseas trade, Serampore thrived and developed through considerable public and private investments.Moreover, while the salary offered to Danish government officers was notoriously low, “the officers conducted private business along with their official duties, and it seems that the condition in Serampore was especially liberal, providing attractive private business opportunities”.    The newly renovated Denmark Tavern, says Das, is a handsome yellow and white double-storeyed building with well-furnished rooms for accommodation with a comfortable cafe where people can enjoy a cup of coffee.It may not represent five-star luxury, but I suspect it will attract many tourists in the future, as word gets out of its historic origins. For the Danes at least, Serampore may still have the ability to provide “attractive private business opportunities”.Whatever one’s views on Brexit, the resurrection of the Denmark Tavern in Serampore suggests that the UK does not have a monopoly on sentimental relationships with India. It will take more than sentimentality to reverse the UK’s trade deficit with India. Source: EurostatImports from India to EU member states In February this year the Denmark Tavern – which dates back to 1786 – was reopened in Serampore in the Indian state of West Bengal. The restoration was led by the National Museum of Denmark along with the state heritage commission.As Commonwealth heads of government gather in London this week, the Denmark Tavern can be seen as an illustration that, as the UK tries to improve its trading links with its old colonies for a post-Brexit world, it faces tough competition even with its sentimental links.When it comes to trade, the position for the UK does not look as great as pro-Brexit politicians may proclaim.In fact, not only do Germany and France export much more to India than the UK, but so does Belgium, as data from Eurostat illustrate.last_img read more

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Bankrupt UK retailer’s pension fund secures €895m insurance buyout

first_img“It has always been our goal to deliver the best possible outcome for the members of this scheme,” Martin said. “A buyout guarantees member benefits under the BHS2 Scheme, and is the most secure solution for the members of this scheme.”Martin was also chair of the original BHS schemes.The BHS2 Scheme’s actuary, Ben Pullen, partner at Barnett Waddingham, added: “An attractive pricing opportunity existed in the bulk annuity market, and so we proactively assisted the trustee to take advantage of the opportunity to insure member benefits.“Reaching this outcome for the BHS2 Scheme so early is a testament to the combined efforts of all parties involved.”Uzma Nazir, head of origination structuring at PIC, said the scheme’s trustee board had “done an excellent job of managing the assets and liabilities”.Roughly 2,100 BHS scheme members remained with the old pension schemes, which are now in the Pension Protection Fund’s assessment period. The PPF forms a safety net for defined benefit (DB) schemes when their sponsors are declared bankrupt.A very British pension scandalBHS’s pension funds were thrown into the spotlight in 2016 when the high street retailer collapsed into administration a year after it was bought for the nominal fee of £1 by Retail Acquisitions Limited. Sir Philip Green appears in front of MPs in 2016 The pension fund for collapsed UK retailer BHS has secured an £800m (€895m) insurance buyout, securing member benefits and drawing a line under part of one of the country’s most high profile pension scandals of recent years.Pension Insurance Corporation (PIC), a specialist insurer, announced over the weekend that it had fully secured benefits for roughly 9,000 members of the British Home Stores (BHS) pension scheme, known as the BHS2 Scheme.BHS2 was set up last year following the collapse of the UK high street chain. Pension assets were transferred from two original schemes to the new vehicle along with a £363m cash injection from former owner Sir Philip Green. Sir Philip – who sold BHS in 2015 – made the contribution following public criticism from politicians and the national media.Chris Martin, executive chairman of independent trustee firm ITS and a trustee of the BHS2 Scheme, said the buyout was completed “far earlier than expected”.center_img Dominic Chappell gives evidence to MPs in June 2016Sir Philip Green – whose Arcadia Group was the previous owner of BHS – was summoned to appear in front of a committee of MPs to answer questions about his involvement in the sale and approach to funding the pension schemes. He later agreed with the Pensions Regulator (TPR) to pay the £363m into the new scheme.Dominic Chappell, director at Retail Acquisitions Limited, also appeared in front of MPs and has since been fined by TPR for failing to provide the watchdog with information relating to the firm’s purchase of BHS.The BHS case has fed directly into recent government policy regarding the regulation of DB schemes. In a white paper published in March, the UK’s Department for Work and Pensions said it would legislate to introduce a new criminal offence “to punish wilful or grossly reckless behaviour of directors” in relation to a DB scheme.The department also pledged to grant TPR more powers to fine directors and companies “to tackle irresponsible activities that may cause a material detriment to a pension scheme”.last_img read more

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Church of England calls for ExxonMobil greenhouse gas disclosure

first_imgNYSCRF and the Church Commissioners said that they – along with other investors – were continuing talks with ExxonMobil about the importance of releasing a more comprehensive disclosure report. They highlighted that other oil companies, such as Shell and Total, have already begun to set long-term emission reduction ambitions following investor engagement.Edward Mason, head of responsible investment for the Church Commissioners, said: “We want to see ExxonMobil develop a clear strategy for long-term sustainability, in line with international commitments for a safer climate. While we have been pleased to see ExxonMobil start to address the impact of climate change on its business over the past two years, the company has much more to do.”Thomas DiNapoli, New York State comptroller and trustee of NYSCRF, said: “ExxonMobil’s lack of GHG emissions reduction targets puts it at odds with its industry peers that have taken such steps. The world is transitioning to a lower carbon future and Exxon needs to demonstrate its ability to adapt, or risk its bottom line along with investors’ confidence.”This latest resolution was developed in line with the overarching expectations of the Climate Action 100+ initiative, which engages the world’s largest corporate greenhouse gas emitters to seek to ensure they take necessary and sufficient action on climate change.It is expected to be voted on by shareholders at ExxonMobil’s annual general meeting in spring 2019. The manager of the Church of England’s £8.3bn (€9.2bn) endowment fund has co-filed a shareholders’ resolution calling on oil and gas giant ExxonMobil to disclose greenhouse gas (GHG) reduction targets.The resolution was co-filed with New York State Common Retirement Fund (NYSCRF) and supported by institutional investors with $1.9trn ($1.7trn) under management, including CalPERS, the Church of England Pensions Board and HSBC Global Asset Management.The resolution asked the company to set short, medium and long-term GHG targets aligned with the goals established by the Paris Agreement in 2015 to keep the increase in global average temperature to well below 2º and pursue efforts to limit the increase to 1.5º.Last year, ExxonMobil shareholders passed a resolution filed by NYSCRF and the Church Commissioners asking it to disclose the impact of measures to combat climate change on its business. In response, the company released a first report in December 2017.last_img read more

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