The Irish Pensions Board must develop a “clear, overarching vision” for the future of defined contribution (DC) regulation, rather than try to address individual concerns on a piecemeal basis, the Society of Actuaries in Ireland has said.The Society said it recommended a “fundamental” overhaul of DC in the country once the regulator had settled its plans, and that the redesign should be based around its proposals for the future of the pension system.In its response to the Pensions Board consultation on the future of DC regulation, the Society also urged the regulator to move away from proposals that would see the new standards only applied to younger funds.“If schemes are required to meet a particular standard to be approved by the Board, we recommend this be signposted in advance, with the new standards applying for all schemes from a date in the future,” it said. “This will give existing schemes time to transition to the new standards, and many new schemes are likely to aim to meet the standards from inception, but it would mean a single set of standards applying in the market place.”It also said the regulator should not seek to apply a blanket understanding of risk across all investment strategies, rather taking the personal circumstances of members into account – “in particular, the time remaining to the DC member’s planned retirement date”.The society further called for a debate around the model of trusteeship in Ireland, and said it would be “beneficial to determine if the benefits of the trustee model could be more effectively delivered in another way”.“We suggest it would be worthwhile to explore possible alternatives to the trustee model in detail, rather than solely focusing on adding further complexity to the role of the trustee,” it said, without elaborating on how a replacement model for trusteeship could look.The society’s views clash with those of Trustee Decisions head James Kavanagh, who, while speaking at a public consultation by the Pensions Board last month, called for his industry to be “more professional in [their] prudential role”.The actuarial group also said that, in attempting to lower the cost of DC provision, the Board should be mindful of the complexity of the current system acting as a “significant” driver of costs and suggested this was a further reason to ensure simplicity.It added: “Given the potential complexity for trustees to make fee/charge comparisons, trustees would benefit from Pensions Board guidelines/training setting out the factors that should be considered when assessing value for money.”It said such guidance should focus not only on fees but quality and service provided, “as well as the ultimate goal of promoting good outcomes for members”.,WebsitesWe are not responsible for the content of external sitesLink to Society of Actuaries In Ireland’s consultation response
“We are a small pension fund and expect to sell all our real estate in the next year,” Bache Vognbjerg said.The pension fund – which has total assets of around DKK9.5bn (€1.3bn) – sold all four of the residential properties it owns in the city of Aarhus.The fund said property generally produced low levels of return and that the money could attract a better return if invested differently.Bache Vognbjerg said it had gone ahead early with the sale of the four buildings because it had received a good offer it could not refuse.The parties have agreed not to disclose the value of the sales.The pension fund’s overall real estate holdings – which currently total around DKK600m in value before the latest sale of four buildings – will be sold, with the proceeds ploughed into a real estate fund in cooperation with two other pension funds, Bache Vognbjerg explained, declining to name them.Pensionskassen for Farmakonomer will then receive half of the sale value in cash and be 50% owner of the fund itself.The pension fund outsources all of its asset management but does risk management in-house. Denmark’s Pensionskassen for Farmakonomer – the pension fund for pharmaceuticals assistants – has sold four residential properties in Aarhus as a first step in selling off all its direct real estate holdings.Because of the high capital requirements for the asset class, the fund plans to sell all real estate within the next year, putting the proceeds into a fund.Peter Bache Vognbjerg, the labour-market pension fund’s chief executive, told IPE: “Within our risk budget, real estate had too high a weight, and it had to have too much in terms of capital.”The asset type was also considered too illiquid, he said.
Niall O’Leary, head of portfolio solutions at SSgA, said investors continued to be overweight and were looking over their shoulders for the market correction.“[Investors are] uncomfortable with their position but cannot find an alternative,” he said.“The majority expect a drawdown, so they are overweight, they are adding and they are nervous.“The pressure to meeting funding standards and investment objectives, and the lack of opportunities elsewhere, has created an unholy challenge.”However, 55% suggested equity markets continued to offer good value.The research, which canvassed 420 global institutional investors across 13 countries, showed that, despite expectations of a downturn in equity markets, 91% said their portfolios were able to weather a major market correction.Two-thirds thought diversification alone was enough to protect portfolios.Despite investors’ confidence in their own portfolios’ ability to withstand a correction, 45% of investors said other institutional investors were unprepared for volatility.Only 8% said recent market volatility had had a significant impact on their strategies and were looking to implement additional protections, as two-fifths said short-term volatility was the new norm and should be expected.Around 85% also implemented downside-protection strategies, with 53% choosing dynamic asset allocation – a percentage that rose to 63% when looking specifically at Europe.Investors were also looking at low-volatility and volatility-targeting strategies as downside protection.However, 54% of investors said the timing of downside strategies remained the biggest challenge to implementation due to concerns over losing too much upside from bull equity markets.“There is an expectation of downside strategies that you have a smoother journey but a lower long-term return, so the insurance you pay is never fully recouped on the upside of the market,” O’Leary said.He said investors also had concerns about the risk of downside strategies failing to perform and the cost of implementation.One-third of investors said they lacked sufficient knowledge to be comfortable with the strategies.“The risk of these downside strategies not fully working does exist and is more pronounced in some strategies over others, which is why investors haven’t just chosen one approach,” O’Leary said. Institutional investors are continuing to push into developed and emerging market equities due to funding pressure despite strong expectations of a market correction, research has shown.The data from State Street Global Advisors (SSgA) showed 63% of global institutional investors increased allocations to developed market equities despite 60% expecting a negative market correction of 10-20%.Some 44% said the market was overvalued with a correction overdue, but two-thirds said funding pressures were forcing increased allocations.More than 50% said they would like to reduce equity exposure if an alternative capable of producing a similar return were available, but funding requirements (53%) and pressure to meet objectives (58%) meant equities continued to be increased and used.
Source: Pensions and Lifetime Savings AssociationNew logo of the Pensions and Lifetime Savings AssociationThe rebrand will see the association continue to use the Pension Quality Mark, its certification method for good quality defined contribution funds. #*#*Show Fullscreen*#*# Source: Pensions Quality MarkRefreshed logo for Pensions Quality MarkIt said the association’s board was satisfied the amount it had spent represented “great value for money”.“We’ve minimised costs by doing this project now when we are getting to the point of needing to refresh much of our collateral anyway, so the cost of the project has absorbed those costs from a later date,” it said.It said the change was discussed extensively with the board and the association’s policy-making councils, and that several consultation groups had taken place earlier this year with members.It said it did not need member approval at the AGM, as the association was changing only its trading name at this point.It will seek approval from members at next year’s AGM, however, to change the legal name of the organisation. The UK’s National Association of Pension Funds (NAPF) is changing its name to the Pensions and Lifetime Savings Association, with effect from today, in a move it says reflects the fact people are now working later in life and funding retirement in different ways.Joanne Segars, chief executive of the association, told the NAPF’s annual conference in Manchester: “Retirement simply doesn’t look like it used to. Today, people work later in life, and they fund their retirement in all sorts of ways.”She said the lines were blurring between work and retirement, between pensions and other types of saving and between scheme and saver responsibility.The newly renamed Pensions and Lifetime Savings Association said its purpose was to “help everyone achieve a better income in retirement.” In the future, the association’s lobbying work and research on policy and legislation will have to consider the role that property, work and other savings played in funding retirement, it said.Asked if the rebrand would see the association’s focus move away from institutions and institutional investors, Segars admitted there would be a shift into the retail space, as the ability for UK pension savers to draw down their pensions from age 55 meant people would need to make “tough and difficult decisions”.“So [the rebrand] is about making sure we are still about those members, those institutions who are our members – but we are working through them, as well as directly to help support saving,” she said. The association used consultancy Wolff Olins to develop the new brand – which will see its colours changed to what Segars said was “glorious fuchsia and teal” – but declined to specify how much the exercise cost, saying the information was commercially confidential.#*#*Show Fullscreen*#*#
DNB – Dutch pensions regulator De Nederlandsche Bank has appointed Marry de Gaay Fortman to its supervisory board (RvC) as of 1 July. De Gaay Fortman is a partner at law firm Houthoff Buruma. She succeeds Bert van Delden, who resigned on 1 November. DNB reappointed Kees Goudswaard for a four-year period on the board. Goudswaard is a professor of economics and social security at Leiden University and chairs an advisory committee of the Social and Economic Council (SER) on the future of the Dutch pensions system. The supervisor also extended the four-year term of Feike Sijbesma on the supervisory board. Sijbesma is chairman of the executive board of chemicals conglomerate DSM.ERAFP – Olivier Bonnet will become head of asset manager selection at France’s €23.5bn additional pension scheme for civil servants, effective 1 May. Pauline Lejay will replace him as head of socially responsible investment (SRI), having previously been SRI officer. (See here for more)Deutsche Asset Management – The head of the asset management firm, Quentin Price, is taking medical leave from the company. Price joined Deutsche in January from BlackRock, where he was head of alpha strategies. (See here for more)Aberdeen – Campbell Fleming has been appointed global head of distribution at the asset manager, having resigned from Colombia Threadneedle Investments, where he was chief executive for the EMEA and global CIO. Before Columbia Fleming, he worked at JP Morgan until 2009. At Aberdeen, Fleming succeeds John Brett, who stepped down from the role late last year.Northern Trust – The asset manager has appointed Aaron Overy to a senior institutional sales role with primary responsibility for the UK market, while Nigel Tyler has been appointed senior index equity portfolio manager. Taylor joins from BlackRock, where he was responsible for managing pooled and segregated index portfolios. Overy was most recently head of asset pooling sales at Northern Trust.HQ Capital – The German investment manager for alternative assets has expanded the size of its supervisory board with two new members: Barbara Knoflach and Philipp Geller. Knoflach is deputy chief executive and global head of investment management at BNP Paribas Real Estate. Geller is a partner at HQ Trust and worked at UBS for seven years before that.Linklaters – Philip Goss has been appointed partner in the law firm’s pensions practice, effective 1 May. Based in London, Goss joined Linklaters in 2006 and advises corporates and trustees on a range of pensions law issues, including scheme mergers, investment issues, buy-ins and buyouts and liability management exercises.Allen & Overy – Jane Higgins has been promoted to partner in the law firm’s pensions practice, effective 1 May. She joined A&O as a trainee in 2005 and qualified as a solicitor in 2007, joining the pensions team as an associate. Based in London, Higgins advises corporates, banks and trustees on all aspects of their pensions arrangements. Länsförsäkringar, Alfred Berg, SPK, Mercer, DNB, Länsförsäkringar, ERAFP, Deutsche, Aberdeen, Colombia, BlackRockLänsförsäkringar – Peter Norhammar and Petter Löfqvist have been hired by Sweden’s Länsförsäkringar as part of its move to bring domestic equities management in house. The two are both currently working at Nordic asset manager Alfred Berg and will start their jobs as portfolio managers at the insurance group’s unit LF Mutual Fund Company (Länsförsäkringar fondförvaltning) in the autumn. Norhammar currently heads up Swedish equities at Alfred Berg and is senior portfolio manager for Sweden. He is lead portfolio manager for Nordic listed real estate equities including the fund Alfred Berg Fastighetsfond (real estate fund) Norden. Löfqvist is senior portfolio manager for Sweden, in charge of Nordic and Swedish small caps.SPK — Jonas Årsjö has been hired within the finance unit at Swedish banking sector occupational pension fund SPK. His main duty will be managing investment manager analysis in alternative investments and fixed income investments. Årsjö was previously senior investment consultant at Mercer Investment Consulting in Stockholm, as well as head of investment consulting at the firm for Sweden. He has also had an active career as a basketball player, and has recently been working as club director for the Swedish basketball team 08 Stockholm Human Rights.Länsförsäkringar — Sten Dunér, the chief executive of Länsförsäkringar AB — part of the Swedish group of 23 mutual insurance companies — is retiring in the course of this year as planned, having been in the role since 2010. He was previously CFO at Länsförsäkringar AB, and has worked at the company since 1982. The firm said it had now started the process of recruiting Dunér’s successor.
Van Vroonhoven announced that the AFM and Dutch pensions regulator DNB would investigate another 137 pension funds to check whether their communication on indexation and rights discount matched their financial set-up.As a next step, the schemes will be expected to transform participants’ overly optimistic expectations into “oversight and insight”, she said.Van Vroonhoven said a recent Leiden University survey had found that one-third of workers would receive a pension that fell short of their expected spending needs, and that only 35% were addressing the problem through additional saving.The AFM chair concluded that additional behavioural research, as well as financial education for children, would be necessary.Also at the congress, Kick van der Pol, chairman of the Dutch Pensions Federation, cited a survey by Motivaction to illustrate the dilemma pension funds are facing when designing a communication campaign.The survey suggests half of pension fund participants, including many young workers, would prefer a guaranteed pension of 50% of their last earned salary.The other half, however, including many older employees, prefer an uncertain pension of 70%.Van der Pol said the biggest challenge was explaining to participants that taking investment risk was crucial for a higher pension, but that full certainty of a higher pension did not existThe federation’s chairman announced a new information campaign targeting pensions awareness of workers between the ages of 30 and 40.“We will invite them through all social media to visit our dedicated website www.detijdvanjeleven.nl,” he said. The Dutch regulator for pensions communications (AFM) has called for a mandatory periodical check that must provide insight into workers’ expected financial position at retirement.Speaking at the Dutch Pensions Federation’s congress, AFM chair Merel van Vroonhoven said the “pensions MOT” would encourage people facing a shortfall to take additional measures.She said a recent pilot study of five industry-wide pension funds had shown how difficult it was to adjust schemes’ pensions targets to more “realistic” levels and convey this message to participants.“The participants are angry, as pension funds no longer live up to their initial promise of a guaranteed pension,” she added.
Danish labour-market pensions provider Sampension has won a large corporate pensions contract from retail chain Sportsmaster to provide pensions for its staff of more than 1,000, ousting the current provider Nordea Life & Pensions.The DKK264bn (€35.4bn) pension fund said the Sportmaster contract was the first large company scheme it had taken on after deciding at the end of 2015 to focus more broadly on small and medium-sized businesses as a supplement to the collectively agreed labour-market schemes.Hasse Jørgensen, chief executive at Sampension, said: “Every time a big company puts their pension out to tender, there is a particularly thorough selection process, and we are proud the overall package of products, prices and services has matched the customer’s expectations in a market characterised by tough competition.”Chris Bigler, CFO at Sportmaster, said: “In Sampension, we saw the strongest combination of an effective administration set-up, the ability to generate attractive returns and good insurance.” Sampension won a contract from IT and software company KMD to provide a unified pension scheme for its workforce, which now totals more than 3,200 in late 2014, taking on around DKK3bn of existing pension savings.In December last year, the Architects’ Pension Fund (AP) and the Pension Fund for Agricultural Academics and Veterinary Surgeons (PJD) decided to move their administration and asset management to Sampension from Unipension, in a move that will involve about 19,000 pension scheme members, and the transfer of around DKK25bn in assets. The Sportmaster contract has been seen in Denmark as potentially marking a change in the pensions industry, as it is the first time a labour-market pension provider has won a major private-sector contract.In other news, Danish pension providers PFA and PKA announced they have linked up with private equity firm Axcel to buy a majority stake in Danish shipping finance company Danmarks Skibskredit from Danske Bank, Nordea and others for DKK4.25bn.PKA, which runs three health and social care sector pension funds, said it saw good chances for the company to increase its earnings once the market in which it operates improved. In the deal, Danske Bank, Danmarks Nationalbank (the Danish central bank), shipping giant AP Møller-Mærsk and Nordea Bank sold their ownership stake consisting of 72% of the equity capital of the shipping finance firm to a consortium made up of Axcel, PFA and PKA.Anders Damgaard, group finance director at PFA, said: “Danmarks Skibskredit is a solid business with a unique business model.”He said the company was a specialist within its field and its loss history and client list testified to a professionally run firm with a good market position.PKA CIO Michael Nellemann Pedersen said the pensions company believed it could continue with the good work that had already gone into the Danmarks Skibskredit, and that having new ownership would strengthen the firm. “At the same time, we see good opportunities for the company to increase its earnings, when the market comes to a time when it is in calmer waters,” he said.Peter Lybecker, chairman of Danmarks Skibskredit, said the company’s major shareholders had been in talks with several interested potential buyers.“In my opinion, Danmarks Skibskredit will get a particularly strong circle of owners in Axcel, PFA and PKA, who can support the company and speed up the continuing development of its shipping finance business for the benefit of staff, customers and cooperation partners,” he said.
Mo Ji, chief economist for Asia ex-Japan at Amundi, said investors that ignored Bond Connect would be “at a significant disadvantage”.“This is another step in the normalisation of Chinese capital markets which is a trend that no one should underestimate,” Ji said. “Chinese stock markets account for 10% of global market cap, and Chinese bond markets rank third in the world. We will see their integration into global markets go progressively deeper. Governance and transparency will continue to improve in the process.”Carl Shepherd, fixed income portfolio manager at Newton Investment Management, added: “Whichever form market access takes, China as an international bond player represents a much smaller market than its position as the world’s second-largest economy would suggest. Greater access should be seen as an inevitability, and provide greater trading volumes, which in turn should boost liquidity in both the bonds and the currency.”Shepherd added that the improved market access would also encourage greater accountability. “If not, this should quickly become apparent in the form of yield spikes or significant outflows,” he said. “This [is] useful for providing a graphic example of market risk perceptions which may not be reflected or announced in the state managed press releases. We would ultimately view this as part of a natural progression towards a more consumer-led model of policy making, and away from the old command and investment-led economy.”The PBoC and HKMA said in their statement that they would “establish effective mechanism for information exchange and execution assistance, strengthen supervisory cooperation, and jointly combat cross-boundary illegal activities so as to ensure effective operation” of Bond Connect. Fund managers and other institutional investors can trade in Chinese bonds without having to set up an onshore account, after China’s central bank officially opened its “Bond Connect” programme with Hong Kong.The Bond Connect link was officially opened yesterday by the People’s Bank of China (PBoC) and Hong Kong Monetary Authority (HKMA) “in order to promote the development of the bond markets in mainland China”, the two parties said in a joint statement.The first day of operation saw $721m (€636m) of purchases, according to Bloomberg. China’s total government and corporate debt market is estimated to be worth $9trn.The opening of the Bond Connect follows last month’s decision by index provider MSCI to include Chinese A-Shares in its emerging markets indices from next year. While the additions will make up a small portion of MSCI’s Emerging Markets index, it is set to add momentum to the Chinese government’s efforts to open up its domestic market to foreign investors. Stock Connect, a programme to improve foreign access to domestic shares, was introduced in 2014 and expanded last year to cover both of China’s main equity exchanges.
Wouter KoolmeesWouter Koolmees, the new minister for social affairs, estimated the number of these very small pensions at more than 200,000.However, parliament decided that the option to refund small pensions would remain in case a pension fund had tried five times in vain to transfer rights to a new provider.At the request of parliament, Koolmees indicated he would try to find out whether it would also be possible to transfer small pension entitlements to a participant’s previous provider. The Dutch parliament has passed legislation enabling pension funds to transfer small savings pots to a new provider after a member changes jobs, allowing them to accrue benefits at a new scheme.Previously, pension funds had to repay the member’s contributions if their pension rights amounted to less than €468 a year, in order to avoid proportionally high administration costs.However, workers who have been refunded in this manner are facing lower benefits at retirement.As of 1 January 2018, pension funds can automatically transfer small pension entitlements to the assets that are being accrued at a new pension fund. The new option doesn’t apply to pension rights of less than €2, which will be added to a scheme’s collective assets.
“We want to be careful to cover all the challenges associated with the dashboard, such as funding, governance as well as what role the government might have and whether legislation is necessary,” Baroness Buscombe said.She added that her department was also looking at experiences overseas to understand more of the concept of a pensions dashboard. Example of state pension information displayed on the pension dashboardThe concept of a dashboard to collate all an individual’s pension savings and entitlements was first suggested by former chancellor George Osborne in 2016. At the time, he said the tool would be up and running in 2019.Current pensions and financial inclusion minister Guy Opperman last year promised government support for the project, which has been developed so far by the Association of British Insurers (ABI) and technology firm Origo. He also reiterated the 2019 target.However, last week the Times newspaper reported that Esther McVey, the UK’s state secretary for work and pensions, was considering abandoning her department’s work on the tool in favour of other welfare reforms.The ABI said that the government risked exposing millions to fraud and lost pension pots if it abandoned its support of the pensions dashboard.More than 87,000 people have signed an online petition urging the government to support the project.The ABI and Origo have been working on prototypes for a dashboard for two years. Last month, Origo announced it had successfully tested a version for use by up to 15m pension savers. Baroness Buscombe addresses the House of Lords todayBaroness Buscombe also stated that any decision to force pension providers to partipate in the tool – as suggested by Labour peer Lord Bill McKenzie during questions – would depend on several issues, including the functionality of the dashboard, the delivery model, and its governance.She said that the government’s views on this would be set out “in due course”.Lord McKenzie had urged the government not to change tack on the dashboard plan, adding that the DWP should have ownership of the online tool.Baroness Susan Kramer of the Liberal Democrats suggested that the government was dragging its feet on the dashboard.“The industry is – to put it mildly – cross, having done all of the work that it needed to contribute towards creating a pensions dashboard,” the peer said. Baroness Buscombe referred to the country’s online pensions tracing service to help people locate details of legacy pension pots, as well as the website Check Your State Pension. She added that the DWP planned to launch a Single Financial Guidance Body next year, to replace the numerous bodies offering guidance on different areas of personal finance.The dashboard’s development The UK government has not committed itself to a timetable for when a pensions dashboard will be operational, it said today.Baroness Buscombe, parliamentary under-secretary for work and pensions, said “feasibility work” was nearing completion, but highlighted the complexity of the issue in developing the online tool.“The more we look at it, the more questions we are asking ourselves and the industry,” she said, responding to questions in the House of Lords, the UK parliament’s upper chamber.The government has received criticism in the past week since a UK newspaper report claimed the Department for Work and Pensions (DWP) was considering abandoning support for a dashboard, which would collate all an individual’s pension savings and entitlements.