The €48bn industry-wide metal scheme PMT said it would reduce its yearly pensions accrual from more than 2.2% to 1.9% but keep its contribution at the current level of 18.1% of the pensionable salary.It is also to reduce its ‘franchise’ – the amount exempt from pensions accrual and for which no contribution is charged – from €15,904 to €15,554 in 2014.It said it opted, with its new accrual, for highest possible percentage under new government plans, combined with a reduced franchise.The scheme’s board said it decided to leave the premium unchanged at 18.1% to create leeway for improving PMT’s financial position. It added that the employers would increase their part of the pension contribution from 53.2% to 63.2% to allow their workers a net salary rise.This means the employers will also pay the full premium for transitional schemes for early retirement, according to PMT.The pension fund’s coverage ratio was 104.1% at October-end and must be at least 104.3% at the end of this year in order for PMT to avoid further austerity measures.Last April, the scheme had to apply a rights cut of 6.3%.Annemieke Biesheuvel, PMT’s spokeswoman, said: “It is likely to be a very tight outcome.”She said the scheme’s board could be facing a decision about a marginal cut of a few percentage points.“The question would be whether or not to apply a tiny discount, as a cut wouldn’t be good for public support for pension funds,” she said.The pension fund for metalworking and engineering has 1.2m participants in total, affiliated with 40,000 companies, and is the third-largest pension fund in the Netherlands.Elsewhere, insurance holding Achmea announced that it would shed 4,000 of the 19,000 jobs at its various subsidiaries, including pensions provider, asset and property manager Syntrus Achmea.Sources within the company said Syntrus Achmea’s 1,500 staff in De Meern, Amsterdam and Tilburg would not be affected by the cuts, apart from redundancies, as a consequence of already running and largely completed cost-cutting measures.
The Irish government is unlikely to gain support for its reforms to the second-pillar pension system unless it abolishes the 0.15% pensions levy, the Irish Association of Pension Funds (IAPF) has suggested.In a submission to the Department of Finance ahead of next month’s Budget, the association noted that more than €2bn had been taken from private sector pension funds since the introduction of the 0.6% levy in 2011, with a second, 0.15% levy introduced last year.To date the newer levy, ostensibly meant to pre-fund the state’s liability with company insolvencies requiring cash injections into underfunded schemes, had yet to be specifically earmarked for such payments, the IAPF said.“In any case, it is completely inequitable to ask those with defined contribution retirement savings to make a contribution to State liabilities in defined benefit schemes,” the submission added. Jerry Moriarty, chief executive of the IAPF, also noted the exemption for the unfunded public pension schemes, which enjoy a greater level of protection with state-backing.The consultation also questioned the government’s ability to roll out a new compulsory or semi-compulsory supplementary scheme, highlighted by minister for Social Protection Joan Burton as a way of increasing second-pillar coverage, as long as the current levy remains in place.It added: “It will be extremely difficult to persuade people of the benefits of pension savings if the government does not discontinue the levy. People need to know their savings are secure.“The experience of the levy and the fate of the National Pensions Reserve Fund do not indicate that pension savings in Ireland are secure.”The association also urged the government to set up a working group of government and industry representatives to discuss how the pension system’s tax and regulatory arrangements could be simplified.It said the “many anomalies” currently in place needed to be addressed.Asked whether the proposed Pensions Council, the body soon set to advise the Department of Social Protection on regulatory issues, could take on some of these tasks, Moriarty said he was uncertain.Because the membership of the council has yet to be announced, Moriarty said he was unsure whether it should be seen as part of its role.“If it had the appropriate people, yes, but sitting down really needs to happen,” he said. “The system already has lots of anomalies, different benefit limits that apply depending on if you’re in a PRSA, an occupational scheme or a personal pension plan.“If we are going to add another layer to it, we really need to sort out any anomalies there at the beginning, rather than complicate it further.”
The Dutch industry-wide pension fund for butchers is fighting an admonition by the De Nederlandsche Bank (DNB) regarding its arrangement for early retirement (VPL).DNB, the pension sector’s regulator, has refused to withdraw the admonition despite clarifications offered by the pension scheme, leaving it no other option than to take the regulator to court, according to John Klijn, employee representative and trustee board chairman.The €2bn butchers scheme reported on its conflict with DNB in its annual report. The decision to bring the case before a judge was made in May. The case will go to court on October 13 in Rotterdam.Klijn told IPE’s sister publication, Pensioen Pro: “In essence, DNB is of the opinion that we are using pension funding to fund VPL-related liabilities, whereas we, on the other hand, firmly believe we have worked out a very well balanced arrangement.” In 2006 and 2007 many Dutch pension funds made arrangements to gradually phase out early retirement schemes, for instance by raising pension rights to allow certain groups of participants to continue to take early retirement. In 2012 DNB reviewed these types of arrangements and concluded that in many cases the demarcation between VPL funding and pension funding was less than clear.“We could have fully financed the VPL scheme back in 2007, considering that our pension fund boasted a funding rate of 160%,” Klijn said. “We opted not to do that, as this was a conditional scheme: only plan participants who continue to work in this industry could apply for this early retirement pension.“But if we had opted to fully fund the scheme in 2007, everything would be just fine today.”The butchers scheme decided to secure the VPL rights in three tranches. “We opted for a careful and well-balanced method,” says Klijn. “The first tranche was fixed in 2011, the subsequent tranches were to follow in 2016 and 2021. On the advice of our accountant, we took this on the books as a liability.”In 2013, DNB objected. According to the supervisor, the butchers scheme is allocating pension funding to VPL objectives: DNB views funding added to the VPL buffers as illegitimate, fictitious contribution cuts.“Initially DNB disputed €40 mln,” Klijn said. “After we offered an explanation, the amount was lowered to €10m. We have held three separate discussions with DNB to clarify our views and we have submitted all manner of figures.“In addition, we have used minutes of meetings to demonstrate that we had done exactly what the social partners had instructed the pension fund to do.”The DNB is nevertheless standing by the admonition – which has now been suspended until the judge has ruled on the case. If the court rules against the pension fund, it will have to cut VPL benefits or raise additional premium contributions.
The €3bn pension fund of Dutch insurer Delta Lloyd has confirmed it is exploring its future options, including the possibility of liquidation. The scheme said it extended the contracts for pensions provision and re-insurance by no more than one year, rather than the usual five-year period.The extension coincides with the expiration of the current collective labour agreement (CAO), which includes the agreements on pensions.Unlike many Dutch financial institutions that have switched to collective defined contribution (CDC) arrangements, Delta Lloyd still has a defined benefit pension plan. In its new contract, it has had to increase its contribution due to low interest rates, it said.The pension claims of the scheme’s 4,000 participants have been re-insured with Delta Lloyd itself.Dutch unions voiced concerns as far back as 2014 that Delta Lloyd – much like asset manager Robeco, insurer Achmea and the banks ABN Amro, ING and NIBC – would switch to CDC.Many companies have sought to offload pension liabilities from their balance sheets following new accounting rules resulting from Solvency II.The pension fund said it was looking into three options, including continuing its current re-insured scheme, as well as ending re-insured arrangements and taking pensions “under its own wing”.The third alternative is liquidation and subsequently placing the pension plan with an insurer or the new general pension fund APF.Previously, Delta Lloyd said it would establish such a pensions vehicle.The pension fund declined to specify whether its options would be limited to keeping the pension plan with the employer or its APF.In 2014, IPE’s Dutch sister publication Pensioen Pro named the Delta Lloyd Pensioenfonds the best DB scheme in the Netherlands.Its coverage ratio was 129.4% at November-end.
Denmark’s prime minister has definitively retreated from his plan to increase the state pension age by six months, after admitting he was unlikely to win broad political support for the move.Lars Løkke Rasmussen wanted to increase the state pension age from 67 to 67.5 years from 2025.Resistance to the increase in the pension age came particularly from the two largest parties in the Danish Parliament, the Social Democrats and the Danish Peoples’ Party, according to national broadcaster DR.Løkke Rasmussen said in an interview with DR: “A broad majority, which also includes the Social Democrats and the Danish Peoples’ Party, has already decided that the state pension age should rise gradually, if Danes are living longer.” Danes were living longer than had been previously reckoned, and the labour market lacked extra capacity, he said.“Therefore it would be reasonable to adjust settlement to create greater equality between generations and ensure our progress and prosperity,” he said.But Conservative Party (Venstre) leader Løkke Rasmussen said it was extremely difficult to see broad support for the measure.“The government has therefore decided that the plans we will present in a week’s time will not contain that element,” he said.As the law stands, people born between 1956 and 1962 are entitled to receive a state pension at the age of 67. Under the plan that has now been dropped, this age would have increased by six months to 67.5 years.Løkke Rasmussen has proposed the increase in the state pension age several times over the last 12 months, according to DR, but he has now said that the idea had been finally laid to rest.However, he also said on television that the government would continue to work towards making it easier for people to stay in the labour market for longer i they wanted – an outcome the prime minister said was necessary if the country was to free up money for welfare.“We are still going to come out with an initiative that will be about motivating Danes to stay a bit longer in the workforce,” Løkke Rasmussen said.
Schroders has hired Charles Prideaux as head of its solutions business, a newly created role.Prideaux left BlackRock at the end of 2016 after 28 years at the firm, having first joined its predecessor company Mercury Asset Management in 1988.In his new role at Schroders, which he starts on October 2, Prideaux will oversee the company’s institutional and intermediary services including advice, bespoke portfolios and risk management.His appointment comes as Schroders’ John McLaughlin, head of portfolio solutions, has announced his retirement after 24 years with the company. Richard Mountford, global head of product, said: “We have big ambitions for our solutions business and I look forward to working with Charles and building on this well-established and highly regarded business.”Prideaux’s most recent role at BlackRock was head of active management for Europe, the Middle East and Africa (EMEA). He took the role last year having been head of EMEA institutional business since the firm’s merger with Barclays Global Investors in 2009.Prior to that, he had been global COO for the fundamental equities business. He also sat on BlackRock’s EMEA executive committee.
The survey was the eighth annual impact investor survey that the GIIN has carried out. It asked 229 investors for their views on approaches to mitigating the risk of impact washing after respondents to last year’s survey identified the risk of “mission drift” or “impact dilution”.The GIIN highlighted the recent rapid growth of the impact investing market “with many well-known, large scale firms entering over the past few years”.Investors were also asked about their views on challenges to the growth of the impact investing industry. The most commonly cited challenges were the “lack of appropriate capital across the risk/return spectrum” and the “lack of common understanding of the definitions and segments of the market”.Survey respondents by organisation type#*#*Show Fullscreen*#*# Third-party certification, shared principles or a code of conduct could help guard against product providers exaggerating their impact investing claims, according to a survey by the Global Impact Investing Network (GIIN).More survey respondents were in favour of greater transparency on impact strategy and results, with 80% agreeing that this would help mitigate the risk of “mission drift”.Two in five respondents (41%) agreed that third-party certification would help mitigate the risk of “impact washing”, while others agreed that shared principles (31%) or a code of conduct (26%) were potential approaches.One in five (21%) considered no action was necessarily required, instead arguing that “the market mechanism will address the risk of impact washing”. This year, the GIIN also asked respondents whether they were exclusively dedicated to impact investing, or also made “conventional” investments. Two-thirds were in the former camp, and one-third in the latter.The survey captured 229 organisations – although three did not provide information about assets under management. As at the end of 2017, the remaining 226 respondents collectively managed $228bn (€193bn) in impact investing assets. Respondents included some of Europe’s largest asset managers, such as AXA Investment Managers, BlackRock, and Deutsche Bank.Fund managers comprised the bulk of the sample – 59% – and managed 32% of the assets under management. Development finance institutions comprised only 3% of the sample but accounted for 45% of assets.‘Conventional’ investors get stuck inRespondents operating in both conventional and impact investing arenas reported that they were making more impact investments compared to three years ago, as well as demonstrating greater commitment to measuring and managing their impact, and gaining more buy-in from key internal stakeholders.A large share – 70% – of investors also indicated that conversations with internal stakeholders had moved from the ‘why’ to the ‘how’ of impact investing.Respondents highlighted the need to convince key decision-makers of the potential financial performance of impact investments as a significant challenge (31%). A fifth of respondents found it a significant challenge to demonstrate sufficient client demand for impact investing products, but more than two-fifths did not feel this was a challenge.Over half of respondents (55%) faced no difficulty demonstrating concrete examples of peers engaged in impact investing, and just 10% of respondents found it significantly challenging to prove that impact investments were consistent with their fiduciary duty.Significance of challenges to gaining buy-in for impact investing for organisations that also make conventional investments#*#*Show Fullscreen*#*#
Insurance giant Legal & General (L&G) has insured the UK liabilities of an unnamed Fortune 500-listed company in a transaction worth £285m (€321m).The deal covers roughly 1,100 members and follows an “enhanced transfer value” exercise, which involved the scheme boosting the value of members’ total benefits to provide an added incentive to take their pensions out of the defined benefit structure.Laura Mason, CEO of L&G Retirement Institutional, said early engagement with the scheme’s trustee board meant the insurer was able to grant “price certainty… while enabling them to offer flexibility” to members.“In this busy market, we remain focused on providing innovative and tailored solutions that enable trustees and sponsoring companies to secure their members’ benefits efficiently, while fully settling their pension obligations,” Mason added. The deal follows L&G’s £4.4bn buy-in with the Airways Pension Scheme, announced last week – the UK’s biggest ever single bulk annuity transaction.Brewery dilutes pension risk with £50m buy-inIn a separate de-risking deal, brewery firm Greene King has secured a £50m buy-in for its Spirit (Legacy) Pension Scheme.The contract was agreed with Scottish Widows and marked the scheme’s first bulk annuity deal. Aon, which acted as adviser to the pension fund, said the Spirit scheme planned to secure further buy-ins in the future “when supported by the scheme’s asset strategy and available market pricing”.Iain Urquhart, chairman of the trustee board of the Spirit (Legacy) Pension Scheme, said: “The scheme has progressed well on its journey to providing full and permanent benefit security, and reaching this important landmark as part of the wider plan represents good progress.”The transaction made use of Aon’s Compass platform, which is designed to streamline the bulk annuity purchase process. Dominic Grimley, risk settlement adviser at Aon, said it had allowed the trustees and the company to react “quickly to capture a market opportunity”. Willis Towers Watson selects Hermes for stewardship mandateConsultancy giant Willis Towers Watson has appointed Hermes Equity Ownership Services to provide voting and engagement services to its £3bn Global Equity Focus fund.Hans-Christoph Hirt, head of Hermes EOS, said his company would engage with the fund’s holdings “on a wide range of issues, including business strategy and risk management” as well as environmental, social and corporate governance issues.Craig Baker, global CIO at Willis Towers Watson, added: “We believe that the principles underlying sustainable investment, including effective stewardship and responsible ownership practices, form the cornerstone of a successful long-term investment strategy. We are committed to being at the forefront of sustainable investing.”The Global Equity Focus fund is a ‘best ideas’ product launched by the consultancy in 2016 and containing the top 10-15 stock selections from eight of its top rated equity managers.
“Currently, Stock Connect daily quota and [renminbi] liquidity are sufficient to address an inclusion factor that is a multiple of the current size,” MSCI said.There had also been a noticeable decline in the number of trading suspensions on the A-shares market, it added.The index provider proposed to increase the “inclusion factor” for large cap securities fourfold, from 5% to 20%, in phases throughout 2019 and 2020.Additions would include companies listed on the ChiNext index, often likened to the US’s NASDAQ market, which MSCI said had 194 stocks accessible to the international market. It has also proposed to add mid-cap companies in 2020.Fellow index provider FTSE Russell is close to deciding whether to add A-shares to its indices, according to its chief executive Mark Makepeace. He told Bloomberg Television earlier this month that it would likely add an initial weighting greater than MSCI’s current position.Investors have until 5 February 2019 to submit feedback to MSCI. The consultation document is available here. MSCI is consulting on whether to increase its benchmarks’ weightings towards China A-shares from next year.The index provider launched a consultation today with a proposal to grow the proportion of A-shares in its flagship MSCI Emerging Markets index to 3.4% by 2020. The weighting is currently 0.71%.A-shares, which are listed on the Chinese mainland, were first added to MSCI’s indices earlier this year, with 12 new benchmarks launched in March. The company said today that the implementation had been “successful”.In its consultation document, MSCI also highlighted that Stock Connect – an equity trading project connecting Hong Kong’s equity exchange with the Shanghai and Shenzhen exchanges – had “proven to be a robust channel to access China A-shares”.
Swedish state pension buffer fund AP4 made a 0.2% loss on its investments last year after costs, but its active management strategy meant it was able to prevent weak markets leaving more of a dent in its SEK349bn (€32.9bn) portfolio.Releasing full-year financial figures, the fund said the return before costs was 0.1% for 2018.Active management had contributed 2.3 percentage points to the return, it said.Niklas Ekvall, chief executive of the fund, said: “2018 was a year with periodically high volatility and weak – and in many cases negative – returns on financial assets. “It is therefore gratifying that AP4’s active management was very successful in 2018 and significantly limited the impact of the weak market on AP4’s total return.”Ekvall said this illustrated the value of broad-based and high quality active management in the current low-return environment.The pension fund made net disbursements to the pension system of SEK6.8bn during the year.This led to total fund capital falling to SEK349.3bn by the end of December, from SEK356.6bn at the beginning of 2018.Changes to the AP funds’ investment mandate, which took effect at the beginning of this year, have given the four buffer funds more freedom regarding their asset mixes.However, Ekvall said in the annual report that it was “of the utmost importance” that the second step of this reform process was carried out as planned in 2019.This next set of changes will broaden the range of investment forms and types of instruments the funds can use. It is currently going through the Swedish legislative process.“A modernisation also in this area is therefore a prerequisite for the AP funds’ ability to purposefully and cost effectively use the greater freedom to act that the change in the first step conveys,” Ekvall said.Earlier this week, fellow buffer fund AP3 posted a 0.6% profit on its investments, after AP2 turned in a 1.3% annual loss when it released its annual report last week.AP1, the fourth of the main buffer funds, is set to publish its 2018 report tomorrow.