Belgian Association of Pension Institutions (BAPI) – Stephan Neetens has been appointed secretary general of the organisation, starting his new role at the beginning of July. He replaces Karel Van Gutte. Neetens trained as a lawyer and joins from an advisory role within the pensions and international affairs policy unit for Belgian deputy prime minister Alexander De Croo.BVV – Heinz Laber, chairman of the €25bn German banking industry pension fund, has been reappointed for a second four-year term. He also currently serves as a board member for UniCredit Bank. Additionally, the 15-strong supervisory board elected new sponsor representatives – Carola Gräfin von Schmettow of HSBC Trinkaus & Burkhardt and Frank Annuscheit of Commerzbank. Carsten Anlauf of Berliner Volksbank and Jürgen Tögel of Deutsche Bank were elected to represent the interests of beneficiaries.Universities Superannuation Scheme (USS) – Kevin Smith has been appointed to the new role of chief service delivery officer, responsible for delivering administration services to the scheme’s participating institutions and members. Smith has more than 30 years’ pension management experience, with previous roles at Aon Hewitt, Capita and Scottish Life.F&C Investments – Paul Myles has joined the institutional client management team to expand on the services F&C Investments provides to the local government and corporate pension schemes. He joins from Nordea, where he was director and head of UK and Ireland institutional business.Nordea Asset Management – Christophe Girondel has been appointed global head of institutional clients. He will take this position in addition to his role as global head of wholesale fund distribution. Girondel will now take on the two client-facing units previously run as separate business units.Vontobel Asset Management – Hervé Hanoune has been appointed head of fixed income and a member of the management committee. He joins from Amundi Asset Management, where he headed the company’s global aggregate bond team. Before then, he held various positions as a senior fixed income portfolio manager at Crédit Agricole in London and Singapore.AXA Investment Managers – Daoyu Chen has been appointed UK LDI portfolio manager. She joins from Goldman Sachs, where she traded sterling interest rate swaps and cross currency swaps for over five years.SCIO Capital – Kevin Flaherty has joined the European structured credit fund as head of syndicate. Previously, Flaherty was managing partner at Trimast Capital and head of structured product syndicate for Europe, Asia and Australia at Deutsche Bank in London.Société Générale Securities Services – Bertrand Blanchard has become country manager for the UK, joining from Société Générale’s Johannesburg branch in South Africa. Guillaume Lenoir has been appointed chief of strategic initiatives implementation, joining from EuroCCP. The Investor Forum, PostNL, Legal & General Investment Management, Belgian Association of Pension Institutions (BAPI), BVV, Universities Superannuation Scheme (USS), F&C Investments, Nordea Asset Management, Vontobel Asset Management, AXA Investment Managers, SCIO Capital, Société Générale Securities ServicesThe Investor Forum – The Forum has been formally launched with the appointment of Simon Fraser as chairman and Andy Griffiths as executive director. Fraser was formerly CIO at Fidelity Worldwide Investment. He is currently chairman of Foreign & Colonial Investment Trust and a non-executive director at Ashmore Group. He is also a former non-executive director at Barclays. Griffiths has 20 years’ experience as a research analyst and investment professional at Capital Group.PostNL – René van de Kieft has been appointed chairman of the board of trustees at Stichting Pensioenfonds PostNL, the Dutch mail pension scheme. He replaces Peter van Gameren, who will remain on the board. Van de Kieft worked at SFB, pensions manager of the construction workers scheme, from 1993 to 1999 and served as director finance and control, CFO and COO at PGGM from 1999 to 2009. He also worked as CFO at Q-park and has been interim CFO at the Dutch Chamber of Commerce since 2013. In addition to his role on the trustee board at PostNL, Van de Kieft is on the board at ABP, AGH and the industry-wide scheme for the hospitality industry, PHenC.Legal & General Investment Management (LGIM) – Sarah Aitken has been appointed head of institutional business for Europe and the Middle East, replacing Hugh Cutler. She will start in her new role in September. Until 2013, Aitken was head of distribution at Insight Investment Management. Prior to joining Insight in 2005, she was a managing director at Merrill Lynch Investment Management, where she was head of institutional relationship management. She began her career as a UK equity analyst at Cazenove and later joined JP Morgan.
Last year, the venture invested DKK1.4bn in the Brigg project in Lincolnshire.The latest project – the Snetterton power plant – will have total investment from the joint venture of DKK1.6bn, with DKK200m of that coming from BWSC.BWSC will build, operate and maintain the power plant for 15 years.The plant is scheduled to be up and running by spring 2017, and will have a capacity of 44.2 MW – equivalent to the average energy usage of 82,000 households.The plant will run on straw, and supply of the fuel has been contracted for the next 12 years, PensionDanmark said. Labour-market pension fund PensionDanmark is investing DKK1.4bn (€188m) in a biomass power plant to be built in the UK’s East Anglia, as part of a joint venture with Danish company Burmeister & Wain Scandinavian Contractor (BWSC).The DKK170bn Danish pension fund – which won this year’s Best European Pension Fund Award at the IPE Conference & Awards in Vienna – said the investment would be made via investment fund Copenhagen Infrastructure I, in which it is the sole investor. The joint venture is between the infrastructure fund and BWSC, and this will be the second biomass power plant deal in the UK it has signed.Torben Möger Pedersen, PensionDanmark’s chief executive, said: “We have to secure our members a good and steady return, and this cooperation delivers that.”
“However, the increase to the standard resulting from the falling rates reflects (and may underestimate) the difficulties faced by these schemes, and there should be no question of changing the standard in order to give schemes and their members the false impression the situation is easier than it actually is,” he said. Kennedy’s comments come only weeks after the Irish Association of Pension Funds (IAPF) called for a review of the regulatory framework to take account of “artificial and unprecedented conditions” in bond markets.Speaking at the organisation’s annual investment conference in late March, IAPF chief executive Jerry Moriarty said that while 60% of DB funds now complied with the funding standard, the impact of quantitative easing was “effectively reversing” the improvements.Moriarty also questioned why DB trustees were coming under pressure to increase bond holdings and de-risk ahead of 2016’s introduction of new risk reserve requirements when many bonds were posting negative yields.The Irish pension industry was previously granted a reprieve, with the funding standard suspended for several years in the wake of the financial crisis.It was reinstated in 2012.Kennedy addressed the question of de-risking in his foreword, making the case that those wishing to continue with higher-risk strategies were often doing so to minimise the cost of providing benefits.“For the trustees of defined benefit schemes, this approach is unlikely to be consistent with their obligations as trustees, especially as the risks bear disproportionately on the younger members,” he said.The Authority earlier this year revealed that 30 DB schemes had yet to submit funding proposals, nearly two years after they were due.,WebsitesWe are not responsible for the content of external sitesLink to Pensions Authority’s annual review Ireland’s pension sector should not expect any relaxation of the defined benefit (DB) funding standard despite prevailing low interest rates exacerbating deficits, the head of the Pensions Authority has warned.Brendan Kennedy said he accepted that low interest rates, triggered in part by the European Central Bank’s stimulus measures, made pension provision much more difficult.But he also stressed that scheme members needed predictable and reasonably secure income.In the foreword to the regulator’s annual review, he acknowledged requests to relax funding requirements “to reflect the problems this is causing to defined benefit schemes”.
Swedish occupational pension provider Alecta says it is looking for a new chief executive after the current head Staffan Grefbäck announced his departure.Grefbäck, who has been at the helm of the SEK721bn (€76.5bn) pensions firm since 2009, said: “After having held management positions in the finance sector for almost 30 years, I want to make more time for other things. “What those will be I do not yet know, only that I am not aiming for a new operational role.”Alecta said its board of directors would now start a search to find a successor for the post of chief executive. In the meantime, Grefbäck will remain as chief executive until a successor is appointed.Grefbäck said it had been a privilege to lead Alecta for seven “eventful and exciting years”.“Alecta is currently well positioned to face the future, with committed employees, strong finances and a level of competitiveness that creates real value and security for our customers,” he said.He added that, even though there is “always more to do”, he felt it was time to hand over the baton.Alecta’s chairman Erik Åsbrink said the board regretted Grefbäck was leaving.“But we respect his decision and understand the motives that have guided him,” he said.Before becoming chief executive of Alecta in February 2009, Grefbäck was head of Alecta’s asset management division, having taken on that role in 2001.
The Dutch Pensions Federation has said it expects a “long period of uncertainty” in the wake of the UK’s decision to leave the EU, pending negotiations on new treaties between the two.Bram van Els, its spokesman, also lamented that the Netherlands would “lose an ally on pension matters in the EU”.He cited shared interests as a consequence of the fact most British pensions are also capital-funded, and that both countries often worked closely together in European pensions talks.In the Federation’s opinion, however, it is too early to say whether the British will also leave lobbying organisation PensionsEurope, according to Van Els. “This would depend much on the treaties that are to be concluded,” he said. “Norway – as a non-EU member, for example – is compliant with EU pensions legislation.”Harmen Geers, spokesman for the €417bn asset manager APG, sought to put the effects of a Brexit into perspective by pointing at pension funds’ long-term horizons.“Quite recently, there was significant market volatility because of developments in China,” he said. “This seems, however, to have largely disappeared.”Geers noted that, last week, markets were up by more than the initial drop in the FTSE 100 this morning, and that the value of UK government bonds had risen following falling yields.APG has a €3.9bn stake in UK government paper, he said.Geers also observed that pension funds that had hedged the downward risk of the UK pound would achieve a positive result.He declined, however, to provide details of APG’s hedging policy.In an official statement, APG – also speaking on behalf of the €359bn civil service scheme ABP – added that the outcome of the referendum had “increased uncertainty and instability at a moment that the European economy was recovering”.It predicted this would have a “negative affect for pension funds over the long term”.Both Mercer and Aon Hewitt said Brexit would have a significant impact on Dutch pensions.Average funding of Dutch schemes is likely to fall by 3 percentage points to 94% as a direct result of the referendum, they predicted.In early afternoon Friday (24 June), Aon Hewitt noted a 0.15-percentage-point drop in the 30-year swap rate relative to its level of 1.07% on Thursday.Dennis van Ek, actuary at Mercer, predicted pension funds with insufficient funding or interest hedges would have to cut pension rights, or would be unable to grant indexation next year.He added that this would affect “millions of participants”.Frank Driessen, chief commercial officer at Retirement & Financial Management, said the combined liabilities of Dutch pension funds had risen by more than €30bn as a result of falling interest rates.He noted, however, that, despite equity losses in Europe and the US of 5% and 3%, respectively, the net loss for pension funds would be limited to no more than “a couple of billions”.“Losses in the US have largely been cancelled out by a stronger dollar, while falling interest rates had a positive effect on the value of government bonds,” he said.Meanwhile, Geert Wilders, of the anti-Europe Freedom Party (PVV), has called for a Dutch referendum on EU membership.Such a referendum is already expected to become a main issue in the Netherlands during political campaigning for the national elections in March.
University of St. Gallen researchers said they were surprised to find that the majority of pension fund managers still seemed “very satisfied with the cost/return ratios for bonds, stocks and real estate”.“The general fund-manager perception,” they write, “might still be based on the high stock returns of previous years.”No distinction was made in the survey between domestic and foreign investment in the various asset classes; the managers in the survey, however, remain “a bit more cautious regarding the assessment of private market (private equity, private debt, private infrastructure) and hedge fund-related investments”.The researchers argue that these findings point to a “discrepancy between perception and hard figures with regard to delivered returns”.According to the SFAMA study, net returns on asset classes with high TERs were higher than net returns on asset classes with lower costs.Calculations based on the financial year 2015 showed net returns to have been highest for private equity investments, at 6.4%.Only the net returns on real estate investments, at 4.5%, came close to matching this.The mean net returns for stocks came in at 0.3%, and for bonds at 0.1%.For nearly 80% of the survey’s respondents, net returns were among the most useful criteria for assessing performance.Even more important – 95% of respondents agreed to its usefulness – was the risk/return ratio.Only 14% of respondents considered this ratio as “good” for bonds, while another 31% thought it was “fairly good”.For private equity, the split was 17% (good) to 57% (fairly good).The highest risk/return ratio was assigned to real estate, with 55% saying it was “good” and another 38% agreeing to “fairly good”, which the researchers found “astonishing”.For more on asset management trends in the Swiss second pillar, see the November issue of IPE magazine A survey commissioned by Switzerland’s asset management association (SFAMA) and conducted by researchers from the University of St. Gallen has placed the average total expense ratio (TER) for a sample of Pensionskassen at around 0.6%.The survey – one of the first to cover costs since new rules on mandatory TER reporting for Pensionskassen came into effect – included 81 pension funds from the public (36), corporate (26) and multi-employer (19) sectors.Pensionskassen have been required to include TERs for each investment in their annual reports since 2013.According to the SFAMA’s survey, 75% of the reported costs in 2015 stemmed from portfolio management, while administrative and other costs only played “minor roles”.
“For a £500m scheme even a small proportion of members leaving could add £7m to their accounting liabilities.” UK companies could face a £25bn (€28bn) accounting bill because of the impact of pension freedoms, consultancy firm Xafinity Punter Southall has claimed.Businesses are failing to account for the flood of people opting to transfer out of defined benefit (DB) schemes and the knock-on effect these moves could have on a typical pension scheme’s liabilities, the pensions consultancy said in its report, Accounting for Pensions.Wayne Segers, principal at Xafinity Punter Southall, said: “We are starting to see older pension scheme members that are close to retirement leaving their DB pension schemes to access the new pension freedoms. “Transfer values remain high and this is an attractive proposition for members, but these values are typically worth more than the accounting cost. ‘Freedom and choice’ was introduced by George Osborne in 2015UK pension scheme members have had access to more flexibilities regarding their pension income since reforms introduced by former chancellor George Osborne were implemented in 2015.Some campaigners in the Netherlands have called for similar measures in the debate about the country’s proposed new pension system.Last year, £34bn was transferred out of occupational schemes in the UK – a leap of £21bn on the previous year, according to the Office for National Statistics.Life expectancy rates are also changing, with the increase in the number of people living longer slowing in recent years, according to data from the Continuous Mortality Investigation (CMI) unit of the Institute and Faculty of Actuaries.This might act to soften the cost implications and reduce schemes’ liabilities, Seger added.“We may no longer be expected to live as long as we had hoped and the CMI has given companies a method to refine assumptions on life expectancy,” he said. “This may offset the cost of member options.”Warren Singer, UK head of pension accounting at Mercer, said accounting and transfer assumptions were specific to each pension plan. Therefore “accounting cost implications of pension freedoms can vary considerably between companies”, he added.“This means that transfer value experience may be neutral to the accounting cost [and] it may lead to cost savings or in some cases it could lead to additional costs,” he said.The problem stems from when the pension transfer value is greater than the accounting liability for the pension fund that was extinguished when the individual left, said David Robbins, director at Willis Towers Watson.“The increase in transfer activity is something companies will want to look at how in terms of how that affects the whole range of pension management. But the accounting number will not always be the dominant concern.”
EIOPA has doubled the number of representatives for pension plan beneficiaries on its Occupational Pensions Stakeholder Group (OPSG), it announced this week.The EU regulator for insurers and occupational pension funds increased the number of beneficiary representatives from four to eight, at the expense of academic, employee and industry association representation. Pension funds continue to have 10 representatives on the 30-strong OPSG.“New appointments also reflect developments in EIOPA’s strategic priorities, demonstrating expertise in sustainable finance and fintech,” the authority said.Flavia Micilotta, executive director of Eurosif, the European Sustainable Investment Forum, is one of 19 new members of the OPSG. Jerry Moriarty, vice chair of PensionsEurope and CEO of the Irish Association of Pension Funds, joins the OPSG for its new termJerry Moriarty, CEO of the Irish Association of Pension Funds, has also joined the group as a representative of PensionsEurope, of which he is vice-chair.He effectively replaces Matti Leppälä, general secretary of PensionsEurope, who had served the maximum of two two-and-a-half year terms. He was chair of the OPSG. Other departures from the group include Janwillem Bouma, managing director of Shell’s Dutch pension funds and chair of PensionsEurope; Paul Brice, strategic adviser and trustee for RPMI Limited, the administration and trustee services arm of the UK railways pension scheme; and Laure Delahousse, deputy director general at the French asset management association AFG.The new OPSG membership is effective 4 September, with the group due to have its first meeting in October.The OPSG and its insurance counterpart advise EIOPA on regulation and the development of technical standards, guidelines and recommendations. They can also submit opinions and advice on any issue related to EIOPA’s tasks.The European Commission has proposed strengthening the mandates of the stakeholder groups as part of its review of the three European supervisory authorities.PensionsEurope has called for the Commission to be in charge of the process for selecting stakeholder group members, instead of the supervisory authorities.Brexit rejig?The new term of the OPSG overlaps with the UK’s departure from the EU, a situation EIOPA drew attention to in its call for applications earlier this year.According to the EIOPA regulation, all members of its stakeholder groups must be nationals of a country in the EU or European Economic Area (EEA).An EIOPA spokesperson told IPE that in case the UK and EU failed to reach a deal on the former’s withdrawal from the bloc, a UK national’s membership of the stakeholder group would be cut short.In case a transition agreement is reached, “it depends on the final conditions of such an arrangement and its impact on the membership in the stakeholder groups of UK nationals if the membership can continue or not,” added the spokesperson.“This can only and will be analysed by EIOPA when the details are known.”Sue Lewis is a trustee director at UK master trust The People’s Pension and the only OPSG member exclusively identified as a UK national.InsuranceEurope’s Jones is identified as a joint UK and Norway national. Norway is in the EEA.The members of the incoming OPSG are listed in full here. Other newcomers include:Christian Lemaire, global head of retirement solutions at Amundi and named as a representative of the Amundi Pension Fund;Olav Jones, deputy director general and director of economics and finance at InsuranceEurope; andSibylle Reichert, head of the Brussels office for PensioenFederatie, the Dutch pension fund association
Funding of most Dutch pension funds has improved by up to 1.5% following a new longevity prognosis by the Netherlands’ Actuarial Society (AG).As a consequence, more schemes are less likely to cut pension rights in 2019 and 2020.The AG predicted that the rate of increase of life expectancy in the Netherlands would level off relative to its earlier prognosis in 2016, in part as a result of more of the elderly population dying from flu in the past two years.Drawn from the latest forecast, the life expectancy of a girl born in 2019 would be 92.5 years, rather than 93.3 years as per the previous prognosis. A boy born next year is now expected to reach age 90, instead of 90.4 years.The AG said that the impact of the new insights would differ for each pension fund, with schemes with a relatively large male population experiencing an improvement in their funding ratios of approximately 1.2%.Funding of a pension fund with relatively more women would improve by roughly 1.6%.However, the AG warned that funding also depended on interest rates.Nevertheless, the newest longevity forecast was the first to ease the pressure on pension funds since the second world war.‘Bring in new data as soon as possible’According to Rajish Sagoenie, partner at actuarial consultancy Milliman, the new figures could push the coverage ratios of slightly underfunded schemes up to a level that would not require a benefit cut in the coming years.Pension funds without a funding shortfall at the end of 2018 don’t have to apply any cuts before 2025, under the five-year recovery plans contained in the Netherlands’ financial assessment framework (FTK).Sagoenie added that the AG figures also increased the indexation potential for pension funds with a funding of more than 110%.“Although it isn’t about large amounts, after many years of bad news about pensions, the psychological effect on participants would be big,” he said.Daan Kleinloog, partner at consultancy Sprenkels & Verschuren, emphasised the importance of introducing the new AG data as soon as possible.“As the policy funding [ratio] – the most important criterion for cuts and indexation – is the average coverage of the past 12 months, adjusting the actual coverage ratio at September-end would boost the policy funding during the next four months,” he explained.However, the newest actuarial forecast will not directly affect the future retirement age for the state pension, known as the AOW, as this is based on data from Statistics Netherlands (CBS). Based on the AG’s data, it is likely that the AOW age is to remain at 67 years and three months in 2024, but will rise to 68 in 2029.Although most Dutch pension funds use the AG’s figures, the €414bn civil service scheme ABP, for example, applies data from CBS, which will publish its new forecast at the end of this year.
Other influences on the growth of ETFs included investors’ ongoing search for “low-cost beta”, Greenwich said, as well as a wave of ETF launches focused on environmental, social and corporate governance (ESG) themes.Greenwich’s research revealed that Spanish asset owners had the highest allocation on average to ETFs at 26% of overall assets, based on a sample size of six. Italian investors allocated an average 20% to ETFs, while Swiss investors dedicated 18%.Average allocation to ETFs by country (%)Chart MakerOf the investors polled by Greenwich, 36 said they had used ETFs as a direct replacement for other investment vehicles. Nearly three quarters (72%) of these said they had replaced active mutual funds, while ETFs were also a popular replacement for index mutual funds (39%) and directly held bonds (33%) and equities (31%).“Due in large part to [the] trends of portfolio repositioning and growing demand for index strategies, ETF allocations surged in both equity and fixed income last year,” Greenwich said.A third of investors – 26 firms – currently using ETFs planned to increase their allocations, with 11 planning to up their holdings by more than 10%. One in five fixed income ETF users said they would increase their allocations in 2019.BlackRock’s iShares ETF unit was the most popular among European investors, with 94% of the 89 respondents using the firm’s products. DWS’ X-trackers arm was second favourite with 56%, while Lyxor came in third.Most used ETF providersChart Maker Further reading IPE’s 2018 ETFs GuideCan investors rely on established and emerging big players to keep costs down and to continue innovation? IPE looks in depth at the issues and opportunities shaping the fast-growing ETF sector, from regulation and implementation to smart beta products, ESG indices, and even cryptocurrencies. European institutional investors increased their allocations to exchange-traded funds (ETFs) dramatically in 2018, according to research by Greenwich Associates.The US-based data provider said in a report published this week that institutional allocations to ETFs grew by 50% in 2018 compared with a year earlier.Inflows into the vehicles totalled $315.8bn (€277.6bn), the second-highest figure recorded by Greenwich’s annual survey after the $467.1bn recorded in 2017.“As institutions repositioned their portfolios to address heightened volatility and risk, they made wide use of ETFs to implement specific modifications,” the company said. “Institutions are utilising ETFs as both tactical tools and as a strategic, longer-term staple in the portfolio.”