Advisory board presents proposals on cutting pensions red tape

first_imgA Dutch advisory board has suggested that pensions red tape for flexible workers and the self-employed could be cut significantly through improved communication, the merger of sectors, and automatic value transfer for small pension claims.In a letter to Jetta Klijnsma, state secretary at the Ministry of Social Affairs, the board (Actal) recommended widening sectors with single pension arrangements in order to limit the number of value transfers and redemptions of pension rights.Actal said it reached its conclusions – based on a survey by KPMG – following signals from flexible workers and companies about the increasing complexity of pension rules and the lack of insight into accrued pension claims.It pointed out that flexible workers and the self-employed already made up 31% of the working population, and that this percentage was still increasing. According to Actal, red tape could also be reduced through a mandatory value transfer for pension claims of less than €451 a year, which currently cannot be redeemed.It recommended allowing pension providers to redeem, or write off, pension amounts of a few euros as soon as somebody leaves a job.This would decrease costs and positively affect pension contributions, as well as investment returns, it argued.Actal also recommended showing all first and second-pillar information in a single digital portal – the current Pensions Register – to cut back the overabundance of information provision.The advisory board also suggested an adjustment of legislation to allow for a better match between the contributions of the 48,000 self-employed, who still participate in mandatory industry-wide schemes, and their fluctuating income.Actal stressed that its recommendations would require not only legal changes but the commitment of pension funds and insurers.The Pensions Federation said it could not yet respond to Actal’s recommendations.last_img read more

Asset managers failing to use proxy votes ‘irresponsible’ – Generation IM

first_imgAsset managers are failing in their duty to asset owners if they do not engage with companies using their proxy votes, the co-founder of Generation Investment Management has said.David Blood argued that it was important to remember governance failures led to the collapse of investment bank Lehman Brothers, a fact he said underlined the importance of board composition.Speaking at a National Association of Pension Funds conference on stewardship, he noted that governance issues ranged from the composition of a board to the role of the chairperson versus the chief executive and the diversity of a board.All of these aspects matter, he said. Of the collapse of Lehman Brothers, he said: “The board failed. The CEO should have raised equity – it was well known the CEO should have raised equity – but he didn’t because the board didn’t say it.”Blood said he could give “hundreds” of examples where governance failures were ultimately responsible and questioned why some investors and asset owners failed to recognise its importance.He added that he found it “shocking” when asset managers argued that they did not possess the capability to engage or vote on behalf of asset owners, as the actions were part of the manager’s fiduciary duty.“If you are an asset manager – whether you’re an index manager, or you’re a concentrated manager – you’re taking on governance responsibilities, you must vote your proxies,” he told delegates.“To do otherwise, to say ‘Well, this just doesn’t fit my revenue model’, is irresponsible and inconsistent with what is in the best interests of clients.“Those who are confused about whether we should consider sustainability or not, or whether it’s a fiduciary issue or not, I’m not confused. It’s very clear to me that it allows you to make better investment decisions.”However, Melanie McLaren, executive director for codes and standards at the Financial Reporting Council – responsible for monitoring the UK Stewardship Code – warned against equating good engagement with constantly voting.“From an FRC point of view, we are a bit nervous about a world that suggests engagement equals a vote on anything,” she said.“We’d actually like to see engagement as genuinely that, as communication and dialogue – but it doesn’t always need to be on an ultimatum-type basis that you would get there for votes.”last_img read more

Swiss scheme tenders $200m high-yield debt mandate using IPE-Quest

first_imgThird, the applicant must be in compliance with a verified Performance Reporting Standard for all performance data submitted.And fourth, the place of jurisdiction for any inquiries should be Switzerland.The mandate calls for the use of the Barclays Capital US Corporate High Yield Bond index as benchmark, with a minimum 0.5% tracking error.Interested parties must have at least $1.5bn in assets under management (AUM) for the mandate and $5bn in AUM for the company itself.They should also have a track record of at least three years, preferably six.Managers should state performance, gross of fees, to the end of December 2013.The closing date for applications is 24 January.The IPE.com news team is unable to answer any further questions about IPE-Quest tender notices to protect the interests of clients conducting the search. To obtain information directly from IPE-Quest, please contact Jayna Vishram on +44 (0) 20 7261 4630 or email jayna.vishram@ipe-quest.com. A Swiss pension fund has tendered a $200m (€146m) high-yield corporate debt mandate using IPE-Quest.According to search QN1377, the applicant must meet the following minimum criteria to be considered.First, the asset manager must have a “demonstrable fiduciary investment management mindset”, and the “focus of the organisation should be on institutional money management, with experience in managing segregated accounts and the willingness to offer such accounts to new clients”.Second, the manager must be supervised and authorised by an official regulatory authority, and familiar with the BVG and BVV2 regulations for Swiss pension funds.last_img read more

Denmark’s PKA to expand pioneering ‘risk-premia’ strategies

first_imgPKA, the DKK195bn (€26.1bn) administrator for five Danish pension funds, is to expand a pioneering equity investment management strategy put in place in 2012 to a range of other asset classes during 2014.The funds began to adopt a strategy designed to get exposure to specific risk-premia and ‘market effects’ in equities two years ago, in collaboration with a number of investment bank and asset management advisers that included Deutsche Bank, JP Morgan and AQR.Instead of simply allocating long-only to traditional global, regional or sector equity portfolios, PKA’s strategy combines developed, emerging, frontier and small-cap mandates with around 15 alternative sources of risk and return.These include premia extractable from dividends risk, merger risk and implied volatility risk, factor exposures such as value and momentum, and other market ‘effects’ such as the low-volatility anomaly, and they are implemented using long/short strategies and derivatives. Implementation of the new strategy was completed towards the end of 2012.During 2013, the traditional equity risks returned 22%; the alternative risks, 13%.The funds’ investment portfolios (excluding liability-hedging) returned 9% overall in 2013.Now Jannik Teigen Hjelmsted, a senior portfolio manager at PKA, has revealed to IPE that the funds are set to expand some aspects of this approach into rates, currencies and commodity markets.“Last year, we did a big study internally to see if it is possible to get exposure to value, carry, momentum, volatility arbitrage and the low-volatility effect in other asset classes,” he said.“The high-level conclusion was that we do see those return sources outside equities, and we are now working on ways of getting exposure to them, building on the experience we have working with equities to create an even more robust portfolio.“With the same overall risk budget, we think we can earn a higher return for the total portfolio by having exposure to these new return sources.”He added: “We have some strategies in commodities and currencies already, but, on the back of this study, we will expand those and ramp them up for a more meaningful contribution to the returns of the fund.”In many ways, these new markets lend themselves naturally to the strategies PKA has been applying to equities.Most have deep and liquid derivative markets, and, as Teigen Hjelmsted pointed out, most are also risk-management markets.Unconstrained investors can be well-compensated by other market participants looking to lay-off their risks, and those risks often have low correlation to traditional return sources, he said.The same risk-transfer concept underlies several of the premia PKA seeks out in its equity portfolio, such as dividends and volatility risk premia.“PKA’s investment committee has approved a re-allocation of risk budget to these new strategies, and we expect that, by the end of 2014, we will have most of the strategies in place, as we complete the due diligence on each of them,” Teigen Hjelmsted said.“As with the equity risk premium project, we expect implementation to take about a year.”last_img read more

Blockchain comes to bond market as Lombard Odier backs $15m deal

first_imgBlockchain also “mitigated counterparty risk” in the transaction and sped up the completion of the deal, Vuille added, “reducing what normally takes a few days to a matter of seconds”.Stéphane Rey, chief technology officer at LOIM, said: “Through this blockchain transaction, we have learned more about using the technology and the more practical aspects that needed to be handled, not least legal and compliance to name a few.”Solidum developed its own blockchain-based system, dubbed ILSBlockchain, to support its transactions in insurance-linked securities.Cedric Edmonds, director of Solidum Re, said the project was in part a reaction to difficulties raising small amounts of capital efficiently through traditional platforms such as Euroclear.The transaction is the latest example of asset managers and other financial services providers exploring the uses of blockchain.Last year, Northern Trust teamed up with IBM to provide a blockchain administration system for a private equity fund run by Unigestion.At the time, Northern Trust’s president of corporate and institutional services Peter Cherecwich said the system was “designed to deliver a significantly enhanced and efficient approach to private equity administration”.Vanguard is currently exploring the use of blockchain in the construction of its index-tracking products, while Dutch pension managers APG and PGGM are jointly working on a blockchain-based administration service. Lombard Odier Investment Managers (LOIM) has completed a bond deal using blockchain technology, in a transaction it claims is among the first of its kind.The manager participated in a $15m (€12.6m) issue of catastrophe bonds by a Guernsey-based subsidiary of insurance specialist Solidum Partners in August.Details of the transaction were recorded and communicated to deal participants via blockchain, a digital ledger technology that has risen to prominence in finance as the backbone of Bitcoin. The system allows participants near-instant access to secure, encrypted records of transactions that would otherwise be handled manually and take several days to complete. These records can be shared with regulators if needed.Simon Vuille, a portfolio manager in LOIM’s insurance-linked strategies team, said the technology had “markedly lowered the transaction costs relative to other settlement methods where costs are prohibitive for transactions of this size”.last_img read more

Exiting the market at the wrong time ‘could cost more than 50%’

first_imgInvestors planning a tactical shift away from equities because of overstretched valuations risk substantial underperformance if they mistime their exit or re-entry, according to consultancy firm Cambridge Associates. In a new analysis of valuations and returns, Cambridge said that while valuations should not be ignored, investors who attempt to time the market risked missing out on the highest returns, which tend to be concentrated over very short periods.The consultancy said the high price-to-earnings ratios in some equity markets suggested low future returns, tempting investors to move substantial amounts out of the asset class.While UK equities were still within their ‘fair value’ range, Cambridge said, an analysis of 117 years of data showed that, from current valuation levels, subsequent 15-year real returns could be expected to be around 5%. However, the consultancy warned that, since 1900, being out of the market for just the two best quarters could cut the cumulative real returns on UK equities by more than 50%.Over the longer term, missing the 10 best quarters since 1900 resulted in more than 90% of the gain on UK equities being wiped out. Conversely, investors who miss the two worst quarters of returns would almost double their cumulative real gains on UK stocks, Cambridge reported.US equities showed an even more marked trend, the study found, with the best two quarters for returns comprising more than two thirds of the cumulative real returns since 1900.Alex Koriath, head of the European pensions practice at Cambridge Associates, said: “While no investor should be ignoring valuations, becoming too focused on timing an exit has substantial risks. The best periods for returns tend to be very concentrated, meaning that exiting at the wrong time could drag down cumulative returns significantly.“In the light of these reduced return expectations, some investors are seeking to lower fees by switching to an all-passive strategy through index tracking. But this actually maximises their exposure to any fall in the equity markets.“Now is the time for active management and low beta. Better returns might be delivered by a balanced long-term portfolio of equities and bonds, along with assets like absolute return hedge funds and less-correlated private market strategies, including both private equity and credit.”However, Koriath emphasised that his company was not advising a wholesale move into active management. “We are advising against carrying out a big tactical trade,” he said. “Instead, investors should include different styles and asset classes.”Making a big tactical shift out of equities would not be affordable for many pension funds with deficits, he added.He told IPE: “Moving out of risk assets means they can expect lower future returns, which means not achieving the target of 100% funding over the planned recovery period.”last_img read more

​Ilmarinen predicts big 2020 year-on-year fall in contributions

first_imgJouko Pölönen, Ilmarinen’s chief executive officer, said: “In the second quarter, Ilmarinen’s investment portfolio yielded 5.9% and solvency strengthened to 124% as the equity markets recovered rapidly from the dramatic stock price plummet caused by the corona pandemic earlier in the year.”Equity investments ended the six-month period with a -4.2% return and fixed income investments finished with a -2.9% return, he said, while alternative assets turned out to be the best performers generating a positive result of 10.6%, and real estate returned 1.8%.The total result for the pension fund – which is the largest of the four mutual pension insurance companies in Finland’s earnings-related pension scheme – was -€1.1bn, compared with the €931m profit registered at last year’s halfway point.Total assets fell to €48.8bn at the end of June from €50.5bn the end of last year.Pölönen said “strong development” in cost-effectiveness had continued in the first half and operating expenses financed using loading income declined by €7m from the corresponding period last year.Commenting on the pandemic, Pölönen said Finland had been successful in limiting human suffering during the first wave of the pandemic, but acknowledged that the virus continued to spread globally, with a “worrying growth trend” in infection figures in some European countries.“A key factor in terms of future development is how well a resurgence of the virus can be prevented without extensive lockdown measures, which would exacerbate the economic crisis and unemployment,” said Pölönen.Looking for IPE’s latest magazine? Read the digital edition here. Ilmarinen reported a 2% loss on its investment portfolio in the first half of this year, and the Finnish pensions insurance company warned full-year contribution inflows would be much lower than last year because of effects of the COVID-19 pandemic.Releasing its January-to-June financial report, Ilmarinen said premiums written fell to €2.7bn from €2.9bn in the same period last year, as a result of an increase in temporary layoffs and a temporary discount to the statutory TyEL contributions from employers.Commenting on the outlook for the full year, the pension provider said: “Owing to growing unemployment and the temporary discount on employers’ TyEL contributions, premiums written will fall considerably year-on-year.”Investment returns ended the first half in the red for the Helsinki-based institution, despite having rebounded between April and June.last_img read more

Mercer starts master trust for UK DB schemes

first_imgInvestment consultant Mercer has launched its UK Mercer DB Master Trust, which offers defined benefit (DB) pension plan sponsors the potential for “enhanced governance and economies of scale to deliver better outcomes for members”, it said.Under the trust, Mercer will be responsible for providing all services including investment with fiduciary management, journey planning, actuarial services, covenant assessment, scheme management and administration, with trusteeship provided by independent professional trustees.The employer would maintain ultimate responsibility for the funding of the scheme, an announcement stated.This new solution adds to Mercer’s existing advisory and fiduciary offerings and ensures clients can access a full spectrum of approaches to select the best fit for their individual governance needs, it said. Benoit Hudon, leader of Mercer’s wealth business in the UK, said: “Managing employee pension schemes has become increasingly complex and many organisations suffer from time or cost constraints.”He said these challenges are “particularly acute” for smaller or mid-sized legacy DB schemes where often dedicated in-house expertise lacks, while access to best-in-class capabilities can be expensive.He added that the trust will “potentially reduce fees and improve outcomes”, while also giving members access to the largest administration of private sector pensions in the UK.The Mercer DB Master Trust has evolved from the Federated Pension Plan (FPP), an existing and long-established master trust initially set up by Jardine Lloyd Thompson that currently has around £260m (€280m) of assets and 73 participating employers.Additionally, Independent Trustee Services (ITS) and PTL have been appointed as additional professional trustees to work alongside PAN Trustees, which has been FPP’s trustee for more than 15 years.To read the digital edition of IPE’s latest magazine click here.last_img read more

Kingscliff house pushes the boundaries in property design

first_imgThe loft-style main bedroom with spa ensuite and balcony as well as the 12-car basement garage are serviced by an Italian-designed lift, which Mrs Witheriff described as “glitzy”.“(The basement) has even got a mechanical pit for servicing of vehicles,” she said.“There’s also a total roof deck which has got amazing views over the suburb and Hinterland.”The onsite auction will be held on Wednesday, November 7.Video Player is loading.Play VideoPlayNext playlist itemMuteCurrent Time 0:00/Duration 1:58Loaded: 0%Stream Type LIVESeek to live, currently playing liveLIVERemaining Time -1:58 Playback Rate1xChaptersChaptersDescriptionsdescriptions off, selectedCaptionscaptions settings, opens captions settings dialogcaptions off, selectedQuality Levels720p720pHD576p576p360p360p216p216pAutoA, selectedAudio Tracken (Main), selectedFullscreenThis is a modal window.Beginning of dialog window. Escape will cancel and close the window.TextColorWhiteBlackRedGreenBlueYellowMagentaCyanTransparencyOpaqueSemi-TransparentBackgroundColorBlackWhiteRedGreenBlueYellowMagentaCyanTransparencyOpaqueSemi-TransparentTransparentWindowColorBlackWhiteRedGreenBlueYellowMagentaCyanTransparencyTransparentSemi-TransparentOpaqueFont Size50%75%100%125%150%175%200%300%400%Text Edge StyleNoneRaisedDepressedUniformDropshadowFont FamilyProportional Sans-SerifMonospace Sans-SerifProportional SerifMonospace SerifCasualScriptSmall CapsReset restore all settings to the default valuesDoneClose Modal DialogEnd of dialog window.This is a modal window. This modal can be closed by pressing the Escape key or activating the close button.Close Modal DialogThis is a modal window. This modal can be closed by pressing the Escape key or activating the close button.PlayMuteCurrent Time 0:00/Duration 0:00Loaded: 0%Stream Type LIVESeek to live, currently playing liveLIVERemaining Time -0:00 Playback Rate1xFullscreenWhy location is everything in real estate01:59 Make a splash in the pool. The extravagant design makes it one of the most prominent homes in the Salt Village precinct.LJ Hooker Kingscliff agents Brett Swales and Carol Witheriff are marketing the property, which will be auctioned next month.Mrs Witheriff said an interstate businessman bought the property in 2010 as a holiday home for his extended family. However, they no longer use it as often.Given the house’s opulent design and lavish features, Mrs Witheriff said it would be snapped up quickly.More from news02:37International architect Desmond Brooks selling luxury beach villa14 hours ago02:37Gold Coast property: Sovereign Islands mega mansion hits market with $16m price tag2 days ago No expense has been spared in the design. More news: North v South — where’s the best place to live on the Gold Coast? 1 Cactus Court, Kingscliff is a sight to behold.IT’S the type of home that makes jaws drop.With towering windows, a spiral staircase leading up to a rooftop deck and a street-facing infinity edged pool, this Kingscliff property commands attention. “It’s been completely updated and renovated over the last three to four months,” she said.“We opened it for the first time last Saturday and had 12 lots of people through.”The four-storey house is on a 976sq m corner block and has four bedrooms, four bathrooms, a tiered theatre room, outdoor entertainment area and five water features. More news: Mansion stunning at every turn Relax poolside. Entertain in style. From the front. Inside the property.last_img read more

LJ Hooker Cairns Edge Hill lists Brinsmead home with granny flat

first_imgThe kitchen“We entertain and sit out there most nights before we head to bed. It is a very relaxing and quiet suburb.“The neighbours are enduring friends, and not too many people in the street move. We’re downsizing and having a treechange and moving to the Tablelands to enjoy our retirement.”With three children to raise, the owners constructed the home to provide some privacy for young adults.More from newsCairns home ticks popular internet search terms2 days agoTen auction results from ‘active’ weekend in Cairns2 days agoA bedroom downstairs comes with its own toilet and kitchenette and gave the kids “a point to leap from into their own lives”. Relax while looking out to the pool“The house lends itself to people who might have an elderly parent or older teenagers who are staying at home because of the cost of living. It give them the ability to live their own lives, or others who want to host Airbnb guests,” the owner said.The home has been recently repainted inside and out, and over the years, renovations of the bathrooms, ensuite and kitchen have helped the property remain fresh and attractive.A stone benchtop and soft-close drawers have also been installed in the kitchen.Access to back of the property is provided along what used to be a fire break for the cane fields and sitting up high on the hillside, the home always receives cool breezes during the height of summer. The yardOpen plan, the practical layout and multiple internal living zones ensures easy living, according to agent Kim Ryan from LJ Hooker Cairns Edge Hill.“The vast timber deck is the ideal spot to entertain with easy access to the downstairs section where you can relax poolside all year round and soak in the leafy surrounds,” she said.“Banks of louvres give ample natural light and cross-ventilation and there is internal access to the main garage. There is side vehicle access to a separate workshop area and plenty of off-street parking.”Ms Ryan said the home was close to Redlynch Central Shopping Centre, local shops, St Andrews Catholic College and Freshwater Christian College and within the catchment areas for Freshwater State School and Redlynch State College.Offers will be considered prior to auction.The home goes to auction on Saturday at 12pm. The deck at 21 Feeley Cl, BrinsmeadThe upfront cost of investing in solar power cannot compete with the immediate savings already built-in.The owners bought the land in 1989, drawn to Brinsmead for its safety, peace and protection from cyclones.Building began in 1990 and it the balcony which is by far the star of the immaculate home.“The balcony is probably where we spend the most of our time,” the owners said. Video Player is loading.Play VideoPlayNext playlist itemMuteCurrent Time 0:00/Duration 1:06Loaded: 0%Stream Type LIVESeek to live, currently playing liveLIVERemaining Time -1:06 Playback Rate1xChaptersChaptersDescriptionsdescriptions off, selectedCaptionscaptions settings, opens captions settings dialogcaptions off, selectedQuality Levels720p720pHD540p540p270p270p180p180pAutoA, selectedAudio Tracken (Main), selectedFullscreenThis is a modal window.Beginning of dialog window. Escape will cancel and close the window.TextColorWhiteBlackRedGreenBlueYellowMagentaCyanTransparencyOpaqueSemi-TransparentBackgroundColorBlackWhiteRedGreenBlueYellowMagentaCyanTransparencyOpaqueSemi-TransparentTransparentWindowColorBlackWhiteRedGreenBlueYellowMagentaCyanTransparencyTransparentSemi-TransparentOpaqueFont Size50%75%100%125%150%175%200%300%400%Text Edge StyleNoneRaisedDepressedUniformDropshadowFont FamilyProportional Sans-SerifMonospace Sans-SerifProportional SerifMonospace SerifCasualScriptSmall CapsReset restore all settings to the default valuesDoneClose Modal DialogEnd of dialog window.This is a modal window. This modal can be closed by pressing the Escape key or activating the close button.Close Modal DialogThis is a modal window. This modal can be closed by pressing the Escape key or activating the close button.PlayMuteCurrent Time 0:00/Duration 0:00Loaded: 0%Stream Type LIVESeek to live, currently playing liveLIVERemaining Time -0:00 Playback Rate1xFullscreenHouse prices: Australia’s property market facing longest downturn in decades01:07BUILT in the early 1990s, 21 Feeley Cl, Brinsmead was ahead of its time.The five-bedroom, four-bathroom home on 1037sq m tucked in behind Mt Whitfield is wired to take advantage of off-peak power providing an economical investment for a savvy buyer.The house was fitted with a 400L hot water system using tariff 31 electricity and wired so the pool, dishwasher and laundry use tariff 33 power.last_img read more