Laura Räty, chairwoman at Keva, noted that Keva was currently also drafting reforms that aimed to increase transparency in the scheme’s running.“It is very important to pay attention to leadership and organisational culture at Keva,” she said.“In all organisations, changing these requires long-term work, which at Keva has now started.“In the future, Keva has to be more transparent, as it is vested with notable responsibility as one of the central actors in the local work pensions market.”Keva recently also hired a new CIO for its real estate portfolio, Petri Suutarinen.He believes that, within property investments, residential property currently is the most attractive investment target for pension investors in Finland.Keva’s property portfolio accounted for approximately 7.3% of the scheme’s total assets at the end of 2013 and produced a return of 3.5%.“Last year,” Suutarinen said, “nearly 40% of new properties in Finland were built for renting purposes, whilst rents in the capital region increased by 4%.“The minor uncertainty in the domestic economy seems to be the increasing popularity of renting instead of buying.“Furthermore, migration pressure to the capital region in Finland will continue, so it will still be reasonable to invest in residential property in future. This attracts a long-term institutional investor such as Keva.”In 2013, Keva’s investments returned 7.5%.According to acting chief executive Alanen, Keva’s investments performed well in light of the prevailing market environment.“Fixed income markets in particular faced difficult times, and interest income remained low,” he said.“The relatively positive news from the US – and to some extent from the euro-zone – brightened the outlook for the equity markets in the global economy.” Equities performed best (16.6%), whilst private equity investments (14.4%) and hedge funds (11.8%) also produced strong returns, Keva said.Property investments returned 3.6%, and fixed income 0.4%.The return on commodities was negative (-3.6 per cent). Keva, the €37.8bn local government pension institution of Finland, is to begin searching for a new managing director this week.The scheme’s previous managing director, Merja Ailus, resigned in November last year in the wake of a scandal focusing on her fringe benefits and personal expenses.The scheme has since been run temporarily by its deputy managing director, acting chief executive Pekka Alanen.Keva insures Finns working in, or having retired from, jobs at the local government, the state and the Evangelical Lutheran Church of Finland.
The €668m Dutch pension fund of IT firm Alcatel-Lucent has been granted extra time by supervisor De Nederlandsche Bank (DNB) to transfer its pension liabilities to another provider, after the employer cancelled the contract for pensions provision with its own scheme.Following a request by the pension fund, DNB decided that accrued benefits must be moved within six months of a settlement with the employer concerning an additional financial contribution to which the scheme claims to be entitled.Alternatively, the fund must also complete the transfer within six months of a court verdict, in case a settlement cannot be agreed, the fund said in a statement.The dispute between the scheme and the company arose after because the parties were unable to conclude a new contract for pensions provision. The employer terminated the contract in 2011, as it wanted to implement an alternative model. As Alcatel-Lucent cancelled the contract before the fund’s recovery plan was completed, it must now choose whether to join another scheme or complete a buyout with an insurer.Meanwhile, the fund has also started looking into the possibility of employing an APF – the successor to the less successful API – which allows for the pooled management of pension assets, as an alternative pensions vehicle. Last month, a court in The Hague heard the appeal between the pension fund and the employer about the damage the scheme claimed to have suffered from the company’s decision. At the end of 2012, the pension fund of Alcatel-Lucent had 43 active participants, 1,330 pensioners and 2,915 deferred members. It reported an annual return of 10,4%.When asked by IPE, Jasper Koenhein, the scheme’s chairman, said he was unable to provide additional details immediately.
Germany should focus the additional pension entitlements it is planning on the task of reducing old-age poverty risks, the OECD has recommended in its latest survey of the country’s economy. Funding for such spending should come from general tax revenue, it advised.In its 2014 economic survey of Germany, the OECD said the programme presented by the new government, which took office in December 2013, included measures to raise pension spending.It said: “These measures make earlier retirement more attractive and are not targeted at alleviating future poverty risks among the elderly.” The organisation noted that fiscal policy in Germany was expected to remain broadly neutral in 2014 and 2015.The coalition agreement foresaw new spending commitments of around 0.4% of GDP this year and an extra 0.2% next year, it said. Most of the higher spending planned would go on more generous pension entitlements to be enacted in 2014, it said.Higher pensions would be paid to women who gave birth before 1992, and works with long contribution records would be able to retire on a full pension two years before the legal retirement age, it said.But it warned these reforms did not address future old-age poverty risks.“Further pension spending pressures may arise if these poverty risks materialise and existing means-tested benefits for the elderly are considered insufficient,” it said.It said funding increased redistributive spending for the elderly from general tax revenue rather than from social security contributions that could be more employment and growth friendly.This method of funding would also meant the burden was shared more broadly and equitably among all tax payers, it added.
Notification of any extension to the occupational pension exemption was due for decision by the European Commission in mid-August.“So please may we know the outcome?” was the question back then. And repeated at the end of the month. One’ll have to wait “a few more weeks”. Ah, well…! October to November? Still nothing! Early December? At last! Something! Expect to hear before Christmas! Thank you European Commission, thank you, indeed! But is this promise credible?Behind the various Brussels scenes, including in the Council, where the EU national governments meet, there emerges a plethora of indications of lips being stitched shut. This could signal confusion, disagreement, tension, Faustian bargaining?Request for wisdom from the PR man for one EU national representation, itself likely to be heavily involved, was answered by: “Derivatives? Sorry, I’m really not much into that myself.”Better try the Americans, who, under Dodd-Frank, already have rules that pension fund derivative trades do have to be cleared, and should be motivated to see trans-Atlantic fair play.The recorded message, from the so-described “key man” cheerily stated that a general strike in Belgium was keeping him away from the office today. (In fact, the strike was the previous day).Tracked down eventually, he passed the inquiry on to a colleague, who passed it again, and so on, to, finally, the official press office of the “US Mission to the EU”.Some light on the subject? Actually, not much! “We can’t really comment on this. Best regards …”Similarly, from a particular pension fund interest (described by a bystander as dealing with the matter for itself and others), came the words “at the moment, we choose to wait and see what happens”.Only InsuranceEurope, for insurance-based pensions, would fully articulate its stance. Its members do have to trade using central counterparty clearing houses (CCPs), it stated. The institution argues against the need. But no, it added, it was not itself involved in lobbying.However, one press spokesman, discussing commission president Jean-Claude Junker’s general position, conceded “I do understand the matter of principle involved”.The moral issue is that, if the EU does not buck up its economy fast, the political consequences don’t bear thinking about. In other words, Junker is targeting a kind of hell, today. On the other hand, the PR granted that even the common citizen was aware that financial markets lacking oversight can nose dive dramatically.Moreover, the fluttering paper on which the derivative contracts are written represent some years of global GDP. Potentially terrifying prospects? Hell tomorrow?So, emphatically, the PR promised to find out the official position of his own government’s financial department.Splendid!Splendid, that is, if that position ever arrives! In Brussels, there are two types of hell, Jeremy Woolfe explainsThere are two sorts of hell. Hell today, and hell tomorrow. That is, if the EU financial big-wigs in Brussels manage to put off today’s economic agony, they can be sure of risking more of the same tomorrow. Or worse.The anguish centres on whether workplace-based pension fund managers will be able to escape having to clear their trades in derivatives via clearing houses and for how long in the future.The issue comes in the European Market Infrastructure Regulation (EMIR), which aims to reduce hazards associated with the derivatives market.
A spokesman for PGGM said: “Although the current exemption is officially to expire on 16 August, we fully assume there will be an extension of two years.“However, it has not yet been decided by the European Commission.”An APG spokesman said it also expected the extension to become a reality soon.“We think the chance is more than 50%, but we can only be sure after the decision has been taken,” he said.Under EMIR, European pension funds would have to set aside dozens of billions of euros worth of high-quality collateral – cash or very safe bonds – for derivatives transactions.Because these assets cannot be invested, the regulation is likely to hinder the growth of the European economy, APG warned.The asset manager also previously argued that a spike in demand for collateral on interest swaps, in the event of sudden swings in interest rates, also carried system risks.PGGM has also claimed that the requirement to deposit collateral with central clearing houses will create concentration risks. The European Commission is likely to extend pension funds’ exemption from the European Market Infrastructure Regulation (EMIR) – which aims to increase stability in the OTC derivatives market – to 2017, according to asset managers APG and PGGM. Together with the Dutch Pensions Federation, APG and PGGM – asset managers for the €334bn civil service scheme ABP and €156bn healthcare scheme PFZW, respectively – have been the chief advocates for the Dutch pensions industry in Brussels calling for the postponement or adjustment of EMIR. They have argued repeatedly that the regulation will come at the expense of pension funds’ returns while increasing financial risks.They have also claimed that, within the European Union, Dutch pension funds would have the most to lose.
RankInstitutional investorCountry Dutch healthcare scheme PFZW and Sweden’s AP4 were also among the European pension investors to claim one of the nine highest ratings, with the buffer fund rising 54 places to rank ninth.The ranking also saw Norway’s Government Pension Fund Global top the list as the most climate-conscious of the 39 sovereign wealth funds assessed, falling just below the Top 20 and receiving an A rating.Leading 20 institutions in Global Climate 500Leading 20 institutions in Global Climate 500 Only 7% of the world’s largest asset owners are able to calculate their carbon footprint, according to a global ranking of pension and sovereign wealth funds.However, the latest Global Climate 500 ranking conducted by the Asset Owners Disclosure Project (AODP) awarded a number of Europe’s largest pension funds the highest rating of AAA, with AP4 and PFZW among the schemes that saw their ratings improve.Australia’s Local Government Super rose to the top of the ranking of 500 asset owners, while the UK’s Environment Agency Pension Fund fell four places to fifth after a number of new entrants rose 54 spots to enter the Top 10.Norway’s KLP was the highest-ranked European pension provider, coming second, with CalPERS third and Dutch civil service pension scheme ABP fourth, up 28 spots in the ranking. 19New York City Employees Retirement SystemUS 4ABPThe Netherlands Julian Poulter, chief executive at the AODP, said it was encouraging Scandinavian investors had embraced the concept of assessing carbon risk.“However, the Norwegian sovereign wealth fund is still the elephant in the room with its huge size, and Norwegians need their fund to get to AAA rating in advance of Statoil’s eventual and inevitable demise,” he said.Poulter also praised efforts by Dutch pension managers and funds but noted that the country was almost uniquely exposed to climate change risks.He also pointed out that 35 UK schemes were awarded the worst or second-worst possible rating, stressing that members of the “laggard” funds were likely to take action.The AODP last week announced it would work with NGO ClientEarth to help pension beneficiaries sue schemes failing to acknowledge the risk of climate change.“BP and Shell are a significant source of dividends for UK pension funds,” Poulter said.“It simply isn’t good enough to sit back and expect markets to manage their demise smoothly when history shows the market correction is likely to be sudden and brutal.”Pension investors recently saw a resolution backed by a number of Europe’s largest funds accepted by BP’s shareholders, requiring the company to publish how it would deal with climate change. A similar resolution has been tabled for the Shell AGM next month.,WebsitesWe are not responsible for the content of external sitesLink to AODP Global Climate 500 index 18PKADenmark 15VicSuperAustralia 16Universities Superannuation SchemeUK 1Local Government SuperAustralia 7AustralianSuperAustralia 17CareSuperAustralia 9AP4Sweden 8PFZWThe Netherlands 10General Board of Pension and Health Benefits of the United Methodist ChurchUS 13First State SuperAustralia 12AvivaUK 2KLPNorway 6New York State Common Retirement FundUS 11AP2Sweden 20Teachers’ Retirement System of the City of New YorkUS 5Environment Agency Pension FundUK 3CalPERSUS 14CalSTRSUS
Balls added: “Our bias is simply to be pretty neutral in terms of euro-zone exposure and to be very careful about less liquid parts of the European markets in our traditional portfolios. ”He explained that PIMCO’s traditional portfolios would avoid “high-risk, less liquid” European assets and cited concerns about the confiscation of assets in Portugal – following the Bank of Portugal’s decision in late December to impose losses on €2bn of bonds issued by Novo Banco.He also cited discussions in Austria to impose haircuts on bonds issued by Heta Asset Resolution, a bad bank, whose issuance were meant to be guaranteed by the federal state of Carinthia. PIMCO owns Heta bonds and in March was reported to have filed a lawsuit against Carinthia.It is also affected by the Bank of Portugal’s decision regarding Novo Banco debt.“It seems perfectly plausible, over the next 3-5, you’re going to have more and more cases where European governments or regional governments look to do bail-ins to address problems of excessive leverage, in the case of the euro-zone,” Balls said.“So, we’ll start off being very cautious about our euro-zone exposure.”Brexit not systemic riskDiscussing the likelihood of the UK’s leaving the EU following the 23 June referendum, PIMCO managing director Mike Amey said the company believed there was only a 40% chance of a so-called Brexit.Amey said the 60% likelihood the UK would remain was consistent with its initial assessment, and based on the risk of discussions around immigration, or another unforeseen event, swaying the vote.But the manager was largely unconcerned about the risk of Brexit for the wider global economy.“We would agree that, if we do vote to leave, growth would probably slow down to a ballpark of zero, or slightly above,” he said.“We don’t think it’s a systemic event in terms of its influence on the world. Clearly, it would be a big issue for the UK, but we don’t think this is an event that potentially derails the global economy.”For more on how to Brexit-proof your portfolio, see the current issue of IPE PIMCO is shifting to a more cautious stance on Europe in light of the rise of populist parties across the Continent, according to one of its most senior staff.Andrew Balls, CIO of global fixed income, said PIMCO had changed its previous approach to Europe, which had seen it overweight European sovereign assets and taking on other Continental risk assets, in light of the changing political landscape.“Given the very difficult outlook, given the rising risk of populism, we should have a more cautious stance,” he said while discussing the $1.5trn (€1.3trn) manager’s house view following its most recent secular forum.His comments come after the Austrian presidential runoff elections, which saw an independent candidate affiliated with the local Green Party narrowly defeat the candidate of the right-wing FPÖ, as well as growing support for both right and left-wing populist parties in France and Spain.
The Pensions Regulator (TPR) has started enforcement action against Philip Green and others aimed at making them give financial support to the pension schemes of collapsed UK retail chain BHS.BHS fell into administration in April, leaving the future uncertain for its two defined benefit (DB) pension schemes, the larger of which had a pension deficit of £571m (€641m).The company had been sold to a firm called Retail Acquisition by Green in 2015.TPR said yesterday it sent warning notices (statements of its case) to Green, Taveta Investments, Taveta Investments (No. 2), Dominic Chappell (majority owner of Retail Acquisitions) and Retail Acquisitions. Each notice is more than 300 pages long and sets out the arguments and evidence as to why the regulator believes the respondent should be liable to support the BHS pension schemes, following the sale of the business in March 2015 and its subsequent insolvency.Lesley Titcomb, chief executive of TPR, said: “Our decision to launch enforcement action is an important milestone in our work to attain redress for the thousands of members of BHS schemes who have been placed in this position through no fault of their own.”Graham Vidler, director of external affairs at the Pensions and Lifetime Savings Association, said: “The Pensions Regulator is doing the right thing today by exercising its powers to begin enforcement action, but, despite the regulator’s best efforts, this is unlikely to result in a quick resolution.”In other news, the pension fund of UK children’s charity Barnardo’s has again lost a battle over the indexing of its pensions benefits so that it follows the Consumer Prices Index (CPI) rather than the Retail Prices Index (RPI), after the Court of Appeal of England and Wales upheld an earlier court decision.The RPI has been rising at a faster pace than the other, more recently introduced UK inflation measure of the CPI, and the deficit-hit DB pension scheme may have been able to improve its funding position by switching its indexing basis in this way.The appeals court upheld a ruling that, as sponsoring employer of the pension scheme, Barnardo’s had no power under the 1988 rules of the scheme to substitute the CPI or some other index for the RPI. Fuat Sami, partner at Sackers, said: “Today’s court decision will continue to leave employers and trustees, who have been grappling with this issue, in an unsatisfactory place. “Unless the government moves to consult more widely on amending primary legislation – to relax the existing section 67 requirements that govern members’ rights – the ability of schemes to switch from RPI to CPI will continue to depend on how the scheme rules were originally drafted many years ago. It is essentially a lottery.”Jason Shaw, senior associate at Allen & Overy, said the court’s decision hinged very much on the particular wording of a scheme’s deed and rules, which he said was “an uncertainty that is not particularly helpful for either trustees or employers.”“The Court of Appeal, by majority decision, upheld Warren J’s judgment in the High Court that the wording did not give the trustees a discretion – but the fact there was a disagreement on the wording of the rules shows how complex this issue is,” he said.
DuPont, the multinational chemicals company, is to relocate its workers’ pensions in the Netherlands to its European pension fund (DEPF) in Belgium next year.The relocation involves €235m in pension assets for 400 workers employed by three of DuPont’s subsidiaries – DuPont de Nemours, DuPont Filaments and Genencor International.Union FNV announced the cross-border move, saying it was satisfied with the decision, “as the new arrangements would be future-proof and cheaper for the sponsor”.It confirmed that company’s existing financial agreements in the Netherlands – including contribution level and its duty to plug funding gaps – would remain unchanged. The FNV also highlighted that the works council (OR) and new pensions committee had been given “a strong say” in the decision.Last year, during a hearing in the Dutch parliament, Gijs van Dijk, the FNV’s spokesman on pensions, said his union would consider all of its options in “blocking the Belgium route” for Dutch pension funds.The pension plans of DuPont’s Dutch subsidiaries have been implemented by the €1.3bn Pensioenfonds Chemours Nederland, but their contracts are set to expire at year-end.The Pensioenfonds Chemours Nederland was, until last year, named Pensioenfonds DuPont Nederland.Chemours, in turn, was a DuPont subsidiary until last year, when it became an independent company.Frans van Dorsten, chairman at Pensioenfonds Chemours Nederland, said the departure of DuPont’s participants would leave his scheme with approximately 525 active participants, as well as almost all deferred members and pensioners, which total 1,135 and 1,860, respectively.He said his pension fund would weigh its options for remaining independent in the coming years, but he emphasised that the need for change was not urgent.In its 2015 annual report, the scheme’s internal visitation committee said that, “following the split-off of Chemours from DuPont, the increasing regulatory pressure and high costs of pensions provision, the viability of the pension fund requires monitoring”.The pension fund reported administration costs of €742 per active participant and spent 0.3% on asset management last year.As of the end of October, its funding stood at 115.3%.The relocation to Belgium is still subject to approval by Dutch regulator DNB.
SPF Beheer, PWRI, Eumedion, Shell, PFZW, European Commission, FCA, SPOA, PAOFarmacie, Zoetwaren, Deutsche AM, Invesco, Schroders, Finance Watch, Aegon, RobecoSAM, Vescore, Tikehau, BoAML, UK honours listSPF Beheer – Pauline Frens will start as SPF Beheer’s operational director on 1 February. She is the fourth member of the Dutch railways pension fund provider’s executive team, sitting alongside chief executive Edwin Kreikamp, Martin Mos (director of finance and risk management) and Justus van Halewijn (director of asset management).PWRI – Frans Prins has left his role as director of the €8bn Dutch pension fund. According to the scheme, Prins wished to change the balance between his job and private life and is now seeking positions as a trustee and internal supervisor. Annemarie Beun, a board adviser of PWRI, will act as director on a temporary basis.Eumedion – Garmt Louw, chairman of the €26bn Dutch pension fund for Shell, has been appointed chair of Eumedion, the platform on corporate governance and sustainability for institutional investors. Louw succeeds Peter Borgdorff, director of the €185bn healthcare scheme PFZW, who has completed his statutory six-year term. European Commission – Mette Toftdal Grolleman and Lee Foulger have left their positions within the office of the European Union’s commissioner for finance, Valdis Dombrovskis. The pair served under previous finance commissioner Lord Jonathan Hill. Grolleman is a former member of the Danish government’s permanent representation to the EU and is leaving to join communications firm Fleishman Hillard. Foulger was on the staff at the UK Treasury department until 2009 before joining the commission, and he is moving the UK’s Financial Conduct Authority.SPOA – The €1.5bn occupational pension fund for public pharmacists in the Netherlands has named Mariëtte van de Lustgraaf as its chair. She succeeds Mark Hagenzieker, who has stepped down after 15 years as chair and 21 years on the board. Van de Lustgraaf is chief executive of the Dutch Expertise Centre for Pharmacotherapy with Children and a board member of PAOFarmacie. Later this year, Marjolein Menheere, SPOA’s secretary, is to leave the pension fund after serving 11 years on its board.Zoetwaren – Jan Groen has been named as the employers’ chairman of Zoetwaren, the €2.2bn Dutch pension fund for the confectionery sector. He succeeds Fabio Bambang Oetomo, who had been chair since last April, after taking over from Leo Dekker. Groen is financial manager at Hellema en Fortuin, a cake and candy producer.Deutsche Asset Management – Petra Pflaum has been appointed to the newly created role of CIO for responsible investments. She will lead Deutsche AM’s dedicated environmental, social and governance team. She will also continue in her role as EMEA head of equities but share the position with Britta Weidenbach as co-head. Weidenbach is head of European equities. Pflaum is also to take a position on Deutsche AM’s board.Invesco – The UK asset management giant has hired Gareth Isaac as EMEA CIO for Invesco Fixed Income, a newly created position. He joins from Schroders, where he was a portfolio manager in its bond team. Invesco said Isaac would lead “portfolio management and strategic investment thinking” for the group’s global macro team.Finance Watch – Rainer Lenz has been named chairman of Finance Watch, a public interest body based in Brussels. He replaces Kurt Eliasson. Lenz is a professor of economics at Bielefeld Fachhochschule. Finance Watch was set up in 2011 to act as a counterweight to the industry group.Aegon – Wim Hekstra has started as director of corporate markets at insurance company Aegon, a role that includes responsibility for the company’s pensions business. He succeeds Maarten Edixhoven, who is to become chief executive of Aegon. Edixhoven in turn succeeds Marco Keim, who will become responsible for all of Aegon’s operations in Continental Europe. Aegon has also appointed Anke Schlichting as chief technology officer of Aegon Netherlands as of 1 March. She is currently IT director at APG.RobecoSAM – The specialist sustainable investment manager has hired Marius Dorfmeister as global head of clients and a member of the firm’s executive committee. He previously held similar roles at Vescore, another sustainable investment management specialist. He has also been in charge of institutional client relations at Notenstein Private Bank, Bank Sarasin & Cie and Falcon Private Bank, as well as holding senior positions at AIG in Austria and Merrill Lynch.Tikehau Investment Management – Gen Oba has been hired as director of marketing and international development. He joins the French asset manager from Bank of America Merrill Lynch, where he spent 18 years, most recently as managing director of investment banking. At Tikehau, Oba will be responsible for “marketing strategy and the development of the firm’s relationship with large international clients”, the company said.UK – Former UK pensions minister Steve Webb has been knighted in the country’s New Year’s Honours list. Webb was pensions minister from 2010 as part of the coalition government formed by his Liberal Democrat party and the Conservative party. He served for five years, making him the longest-serving pensions minister in recent history, before losing his seat in the 2015 election. He is now director of public policy for Royal London.Two staff from the Pensions Regulator were awarded OBEs: Charles Counsell, executive director of automatic enrolment, was recognised for his services to workplace pension reform, while Andrew Young, an actuary at the regulator who has also worked for the Pension Protection Fund, was rewarded for “services to pension policy and pensioners”. Sheila Nicoll, former director of conduct policy at the Financial Services Authority, was awarded an OBE for her work in financial services, as well as the voluntary sector. Nicoll is now head of public policy at Schroders.