PWRI, Barings, BlackRock, Lombard Odier Investment Managers, BlueBay Asset Management, Towers Watson Retirement, Now: PensionsPWRI – Ria Oomen-Ruijten has been appointed as the pensioners’ representative on the board of the pension fund for sheltered workshops (PWRI). Over the last 15 years, she has been an MEP and vice-chair for the Christian Democrat party in the European Parliament, focusing on pensions, social affairs and employment. Oomen-Ruijten has also been a member of the Dutch Parliament for the Christian Democrat party CDA. She was nominated by the elected pensioners in the accountability organ of PWRI. The appointment of pensioners on the board of pension funds in the Netherlands was made possible by new governance legislation that went into effect on 1 July.Baring Asset Management – Ken Lambden has been appointed CIO, effective 16 September. He joins from Schroders, where he was most recently global head of equities. Before then, he served as chief executive and CIO of Schroders’ Australian business. Meanwhile, Marino Valensise, after seven years in the position of CIO at Barings, will become head of the Multi Asset Group. This appointment follows Percival Stanion’s decision to resign to take up an external opportunity. Andrew Cole and Shaniel Ramjee have also decided to resign from Barings, the company said. BlackRock – Jean Boivin has been appointed deputy chief investment strategist of the BlackRock Investment Institute. He joins from the Canadian Ministry of Finance, where for the last two years he served as associate deputy finance minister and G20, G7 and Financial Stability Board deputy for Canada. Before then, he was deputy governor at the Bank of Canada. Lombard Odier Investment Managers – The institutional asset management arm of Lombard Odier Group has appointed Nancy Everett to the newly created post of senior adviser for its US-based business. She joins from BlackRock, where she was managing director and head of US fiduciary management. Before then, she was chief executive and CIO at Promark Global Advisors, known as General Motors Asset Management, or GMAM, until March 2009.BlueBay Asset Management – Kaspar Hense has been appointed portfolio manager for global sovereign and aggregate bond strategies. He started his investment career in 2005 and worked for much of this time at Deutsche Asset Management in Frankfurt.Towers Watson Retirement – Peter Rowles has been promoted to head of the retirement practice for Ireland and the UK. He succeeds John Ball, appointed head of retirement solutions for the EMEA region in June. Rowles joined Towers Watson in 1987.Now: Pensions – Jamie Warren has been appointed head of legal. He joins from Capgemini, where he was senior legal counsel and had particular responsibility for the financial services division.
Speaking to the parliamentary committee on education and social protection earlier this week, she said there was a need to cultivate a “long-term savings habit” and that the Department for Social Protection (DSP) was currently working on a number of policy options on how to introduce a universal, supplementary scheme.“I am happy that now in particular, with the recovery taking hold and with the agreement in July, we will be in a position to progress this significantly,” she said.“In countries that have done this successfully, it took a number of years and was built up over a very gradual period of time.“This is very much what I envisage happening in the Irish system.”The gradual approach would be required, according to the minister, because incomes in Ireland post-IMF bailout have been too “tight” to warrant a faster rollout.Burton has previously said the system’s launch could be linked to a number of economic indicators, but the specific indicators have not been disclosed.Ireland’s unemployment rate is currently still above 11%.The introduction of mandatory pension saving was seen as preferable by the OECD, with its report labelling auto-enrolment “second-best”, while the Society of Actuaries in Ireland earlier this year also backed a mandatory pension system. Ireland will only see a “very gradual” rollout of a new supplementary pension system but still hopes to publish detailed proposals on the reform next year, according to minister for Social Protection Joan Burton.Burton said the current coverage ratio of second-pillar pensions – which has been static at around 50% of the working population since 1995 – needed to improve “significantly” and noted the OECD’s previous recommendation that Ireland introduce either compulsory pension saving or a system of auto-enrolment.The minister also repeated a pledge, made after she was elected leader of the Labour Party in July, to publish details of a new supplementary scheme in 2015.Burton has previously referred to the system as MySaver, although she admitted the names Shamrock Saver or Celtic Saver were being used.
Norway’s sovereign wealth fund has grown its industrial real estate portfolio, acquiring KTR Capital Partners for $5.9bn (€5.49bn).The deal is the latest move by Norges Bank Investment Management (NBIM) to expand its property holdings as it aims to invest 1% of the Government Pension Fund Global’s NOK6.94trn (€824bn) in assets into real estate each year and comes as part of an existing joint venture between Prologis and NBIM.Prologis US Logistics Venture, 45% owned by the sovereign wealth fund, is taking over 332 properties held in three KTR co-investment funds, Prologis said.The portfolio spans 60m sq ft of existing industrial space, 3.6m sq ft of space occupied by development projects and 6.8m sq ft of land. The $5.9bn transaction includes the assumption of approximately $700m of secured mortgage debt, according to Prologis, and the issuance of up to $230m of common limited partnership units in Prologis LP to KTR.Prologis and Norges Bank operate joint ventures in the US and Europe.Hamid Moghadam, chairman and chief executive Prologis, said the deal would take assets to more than “$11bn on two continents”.Norges Bank has a real estate allocation target of 5%.At the end of last year, its actual property exposure stood at 2.2%.For Prologis, a listed developer and manager, the KTR acquisition increases its presence in Southern California, New Jersey, Chicago, South Florida, Seattle and Dallas.Prologis said the investment “aligns with Prologis’ investment strategy, with approximately 95% overlap with its existing US portfolio”.The Norwegian government recently launched a consultation on whether the sovereign fund’s 5% real estate cap should be lifted.
Amendments to the IORP Directive proposed by the European Parliament could trigger “welcome reform”, bringing with them a relaxation of cross-border funding requirements and a greater focus on environmental concerns.Following Monday’s vote by the parliament’s Economic and Monetary Affairs Committee (ECON), PensionsEurope praised MEPs in pushing for a “practicable, proportionate and less prescriptive proposal” compared with that tabled by the Commission in 2014.However, despite parts of the industry welcoming revisions of the proposed universal benefit statement, concerns remain that the passed amendments contradict the European Commission’s stated aim of improving transparency. Sophie In’t Veld, a shadow rapporteur on the revised Directive, welcomed the removal of “unnecessary obstacles” for cross-border activity but said her parliamentary group of liberal MEPs wanted to go further, allowing for “innovative” arrangements. “It is to be expected that, in the era of FinTech, new products will enter the market that are outside the regulated area,” said In’t Veld, also a vice-president of the Alliance of Liberals and Democrats (ALDE).“We need to be much more forward-looking and do more to prepare for these kinds of innovations.”PensionsEurope chief executive Matti Leppälä said the industry group was pleased with the changes to cross-border funding requirements, which would see them subject to the same requirements as domestic funds.“This is a welcome reform,” Leppälä added, “which should make it easier to establish and operate cross-border pension schemes.”The association’s chairman Janwillem Bouma said PensionsEurope was also pleased with the more proportionate position adopted by ECON, which he said would allow member states to tailor requirements to their individual systems.Bouma added: “It is important to take into account different types of pension schemes, as well as the role social partners have, and the differences in social and labour law.”UK responsible investment charity ShareAction also welcomed the vote, after MEPs reinserted language on environmental risk assessment initially removed by member states.The charity’s senior policy offer Camilla de Ste Croix said the vote showed the responsible investment debate was “shifting in the right direction”.“By voting in favour of measures to mandate the consideration of environmental risks in pension schemes’ investment processes,” she said, “MEPs have shown they recognise the very real risks that environmental issues can pose to investment portfolios.”The Commission’s initial proposal suggested that environmental risks be assessed as part of the proposed wider evaluation of a pension fund’s risk profile each time a “significant” change occurred.PensionsEurope also welcomed a “simplification” of the universal Pension Benefit Statement (PBS), which consumer group Better Finance had previously warned against.Ahead of the vote, Better Finance’s Guillaume Prache impressed upon Hayes the need for the PBS to be as transparent as measures in place in the US.In a letter from Better Finance to Hayes and ECON chair Roberto Gualtieri, Prache strongly protested against any amendments that could be “a very significant step back in the protection of EU pension savers”.The letter also said the amendments risked “a severe watering down of the information that IORP participants would receive”.It said any action to undermine transparency could contradict the Commission’s recent work around the Capital Markets Union.“The recent Capital Markets Union Action Plan expressly asks the European Supervisory Authorities to promote the transparency of long-term retail and pension products and an analysis of the actual net performance and fees,” Prache said.The approved draft will function as the parliament’s negotiating position as the trialogue negotiations get underway between member states, MEPs and the Commission.
MSCI has opted not to add Chinese A-shares to its benchmark emerging market index, delaying their potential inclusion amid continued concerns from international investors about the accessibility of the market.The index provider said there had been significant improvements in the key areas of concern for investors, regarding the ease of participating in the Chinese A-shares market, but that more work needed to be done.Remy Briand, managing director and global head of research at MSCI said: “International institutional investors clearly indicated that they would like to see further improvements in the accessibility of the China A shares market before its inclusion in the MSCI Emerging Markets Index.”The index provider, however, held out the prospect of making another classification decision on Chinese A-shares before the next formal review in June next year, leaving room for an “off-cycle announcement”. A-shares are yuan-denominated shares of a mainland Chinese company typically listed on either the Shenzhen or Shanghai exchanges, as opposed to H-shares listed on the Hong Kong Stock Exchange.Investing in A-shares is controlled by rules set by Chinese authorities, restricting investors’ ability to gain exposure to the Chinese onshore equity market.For example, international institutional investors, according to MSCI, still have reservations about the effectiveness of recent policy changes on quota allocations and capital repatriation.This year’s decision by MSCI on Chinese A-Shares has so far met with a muted reaction compared with last year’s, when, as noted by Mark Tinker, head of AXA IM Framlington Equities Asia, it “was the only story in town”, driving a bubble and a subsequent crash.“This year the decision on inclusion is far less relevant,” said Tinker, speaking before the MSCI announced its decision. “MSCI may or may not include some weighting for A-shares, but the notion of a wall of ‘dumb money’ coming in to buy at any price was always extremely dubious.”Anthony Cragg, senior portfolio manager for a Chinese equity fund at Wells Fargo Asset Management, said MSCI’s decision was “naturally, mildly disappointing” and that there was a “reasonable expectation among most commentators that this time around at least some proportion, perhaps 5%, of A-shares would be included”.Commentators played down the significance of the A-shares’ continued exclusion for several reasons, including the view that their eventual inclusion was inevitable; that there are other channels by which investors can gain access to the Chinese market; and that the delay by MSCI should fuel further financial reform in China – benefitting foreign investors.“Although this delay may be unsurprising to many,” said John Sin, head of asset servicing, greater China, BNY Mellon, “an initial inclusion weighting of 5%, would have been unlikely to send shockwaves through the international investment community.“Be it through the various Stock Connect routes, RQFII initiatives or the indices, global investors are still closely following every progressive move with the intention of stepping up investments into China.”
Source: MSCI, Schroders. Based on most recent data available in March 2018This aggregate figure masked a range of risk exposures, said Howard, with some companies having more than 10% of value at risk and others not exposed to physical climate risk at all. The oil and gas, utilities and basic resources sectors were the most exposed to the physical impact of climate change, while technology, personal and household goods, and healthcare were the least exposed sectors. The asset manager came up with the figures by calculating what companies would have to pay to insure their physical assets against hazards caused by rising global temperatures and weather disruption. This implied cost was then compared with companies’ market values.“By putting a price on the cost of ‘neutralising’ climate damage we create an objective assessment of the impact on corporate valuations,” said Howard and Hassler in their report.It was unaware of any companies that had taken out multi-decade climate insurance, but defended its approach as “a robust way to gauge physical risk exposures, and… commonly used to answer other investment questions”.Schroders is not the first asset manager to warn about overlooking physical climate risks.Nicolas Moreau, CEO of DWS – formerly known as Deutsche Asset Management – has argued that investors should pay more attention to physical climate risks “with some urgency”. The asset manager has teamed up with a California-based climate intelligence advisory firm to assess companies’ exposure to catastrophic climate events. Investors have not been paying enough attention to physical climate risks, as opposed to the risks posed by steps to combat climate change, according to Schroders.With temperature rises lagging increases in greenhouse gas concentrations in the atmosphere by around 40 years, further disruption from the effects of changing weather patterns looked unavoidable, the asset manager said in a new report. This meant bigger risks to physical assets and infrastructure.With the exception of the energy sector, companies generally showed an appreciation of the risks posed by the disruptive impacts of physical climate change, wrote authors Andy Howard and Marc Hassler. Investors, however, had paid limited attention to physical climate risks, which seemed “remiss”, it said.More attention had been paid to the impacts of steps to limit temperature rises – typically referred to as “transition risks” – but these risks “rely on action to combat climate change that is far from assured”, argued the asset manager.Its latest climate change tracking analysis found that the pace of global warming was still double the target under the Paris Agreement because global action to limit its impact was still too slow.Howard, Schroders’ head of sustainable research, said that the order of magnitude was smaller with physical climate risks than in the case of transition risks, “but on the other hand we do know this is happening, we know it’s already playing out in front of us”.“When we talk about the risk of carbon pricing hitting $100 a tonne, that’s a risk we can’t yet say is going to happen,” he said. “We can say that it will need to happen or that it should happen, but the reality is that you can’t assume it’s baked in and a definite outcome.”Based on an analysis of around 11,000 listed companies across the world, Schroders found that 1-1.5% of value was exposed to physical climate risks across equity markets. Overall risk exposures can be gauged from the impact on equity indices
The two clients of Dutch insurer Delta Lloyd’s general pension fund (APF) have joined Centraal Beheer APF, part of the Achmea Group.The move followed Delta Lloyd’s decision in October to exit the APF market after the insurer was taken over by NN Group.According to Ruud Hagendijk, chairman of the Delta Lloyd APF, both employers – funeral business Yarden and waste processor ATM – fully supported the switch.“The good thing is that both accrued pension rights and future accrual have been transferred to Centraal Beheer APF,” he said. “The 1,400 participants [will] notice little of the change and their pension plan remains unchanged by and large.” In October, the board of Delta Lloyd APF – a consolidator of Dutch pension funds – decided to liquidate after struggling to attract new customers. NN indicated that it wanted to continue with its own offering in this market – De Nationale APF – and the Delta Lloyd APF had failed to find other financiers in time.“This was in part caused by the uncertainty about the future of the Dutch pensions system,” explained Hagendijk. “Potential clients tended to postpone decisions.”The chairman said the set up of Centraal Beheer APF was aligned with the philosophy of the Delta Lloyd scheme, while offering more flexibility.He added that Centraal Beheer APF had already been high on the shortlists of Yarden and ATM when they were initially considering transferring to an APF.The board of Delta Lloyd APF will spend the coming months completing the liquidation.According to Hagendijk, the scheme’s own assets were still sufficient to finance this process.Volo, the APF founded by pensions provider and asset manager PGGM, is also to be liquidated after its parent company decided to exit the market.It hasn’t yet announced the new pensions provider for the staff of its two affiliated employers, Ortec and chocolate manufacturer Jan Huysman.
The scheme assessed 7,700 of 10,000 companies for their sustainable credentials, resulting in a better insight into the opportunities and risks of ABP’s long-term investments.In addition, it has developed additional criteria for excluding companies from its portfolio and added 150 firms to its exclusion list. Last year, it divested from companies involved in tobacco and nuclear arms – banking a €700m profit in the process – and added South Sudan’s government bonds to its exclusion list.PetroChina, Tokyo Electric Power Company and US supermarket Walmart were all excluded because of violations of the UN’s Global Compact on human rights, the environment, and corruption.Renewables, green bonds and engagementABP’s allocation to renewable energy assets increased to €4.9bn during 2018, the report stated, which was €100m short of its 2020 target. Its holdings in sustainable energy at 2018-end equated to 11% of its energy portfolio.Last year, the civil service scheme expanded its stake in green bonds by €2bn to €5.5bn. It has now invested in 141 bonds issued by government-related organisations for financing social and sustainable projects.The report also detailed how the scheme had engaged with Facebook and Apple to prevent the violation of the digital rights of customers, as part of its commitment to improve human rights. ABP also said it had backed the Brooklyn Pledge, which calls on the clothing industry to fight abuses.However, environmental pressure organisations argued that the pension fund was still on a collision course with the goals of the Paris climate agreement.Fossielvrij NL, Both ENDS, Urgewald and Greenpeace said that ABP still had €10bn worth of investments in the fossil fuel industry.Between 2016 and 2018, ABP’s stake in the 44 largest carbon emitters had even increased, they claimed, adding that investments in Russian energy firms Gazprom and Rosneft had doubled and tripled, respectively, last year. The Netherlands’ largest pension scheme has declared itself on track to invest €58bn in assets linked to the UN’s Sustainable Development Goals (SDGs) by the end of next year.The €431bn civil service scheme ABP said in its ESG report for 2018 that SDG-related investments grew by €5.7bn to €55.7bn last year, equating to 14% of its entire assets. Its goal for next year is €58bn.ABP has already exceeded its CO2 emissions reduction goal of 25% relative to 2014. Last year, it had reduced the carbon footprint of its equity portfolio by 28%.It achieved this by setting stricter requirements for large carbon emitters in its investment universe, as well as easing the restrictions for sectors with limited emissions.
But the regulator has warned that with COVID-19 causing market volatility and an uncertainty for businesses and personal finances, pension members could be at risk of making knee-jerk decisions that could affect their pensions. Chris Cummings, Investment AssociationThe Investment Association (IA) is also warning savers of the potential risks posed to their savings and investments from scams and financial crime during the COVID-19 pandemic.The association said that “evidence suggests that some scammers are attempting to use the pandemic to convince savers and investors to withdraw money from their investments”.Chris Cummings, IA’s CEO, said: “Sadly, criminals never miss a trick, and so during this time of heightened criminal activity, we are urging savers and investors to think very carefully about the risks criminals pose to their financial wellbeing and life-long savings.“If it looks too good to be true, it probably is.” UK pension fund trustees will warn savers looking to transfer to a defined contribution (DC) from a defined benefit (DB) pension during the COVID-19 crisis that it will unlikely be in their best long-term interests.The call follows guidance published today by The Pensions Regulator (TPR), in which trustees are asked to send DB members looking to move retirement funds a letter warning them of the risks during the pandemic and urging them to consider their decisions carefully.Since 2015 pensions freedoms have given scheme members more flexibility in how they can access their pension pots.Many have taken advantage of this flexibility and last year £34bn (€38.5bn) was transferred from DB schemes, according to TPR. Julian Mund, PLSAIt also confirms that savings in DC schemes are also ring fenced from employers’ assets, and in addition are generally protected against insolvency of the pension provider.The guide also warns savers to “think very carefully before deciding to stop contributing to your workplace pension”.“You could miss out on employer and government contributions to your pension, growth to your pot from a future stock market recovery and even death benefits associated with your scheme,” it said.Julian Mund, PLSA’s CEO, said: “In the majority of cases the best action is to stay the course with your workplace pension. Past experience suggests that share and other asset prices will recover over time.“For people in a defined contribution scheme who are close to retirement, it may be necessary to take stock of when you plan to retire and how much income you can expect to have. Seek guidance or financial advice if you are unsure what to do.”Click here to read the full PLSA guide.ScamsIn TPR’s guidance, the regulator said “pension scams are devastating”, quoting recent figures that show victims of pension frauds have lost on average £82,000, for some their entire life savings.“Trustees are the first line of defence in protecting retirement funds and have a key role in ensuring members make informed choices,” it said.TPR is, therefore, also urging trustees to follow the Pension Scams Industry Group code of good practice, which has practical steps for carrying out due diligence and assessing transfer requests and example letters for communicating with members throughout the transfer process.Additionally, the regulator said trustees should direct their savers to the ScamSmart website, which is monitored by the FCA, to learn how to protect themselves from pensions scams. Charles Counsell, TPRCharles Counsell, TPR’s chief executive officer, said: “We are determined to do all we can to protect savers’ retirements from the unprecedented impact of COVID-19.“A decision to transfer a pension pot that’s taken a lifetime to build is a very serious one and we’d urge members to be very, very careful making any transfer decisions at this time.”He added that the trustees’ warning letters to their pension fund members should also include information on how to get free, impartial guidance available from The Pensions Advisory Service (TPAS).Pandemic guidance In today’s guidance, the regulator is calling on trustees to:highlight the free, impartial pensions guidance from Pension Wise, including phone appointments and online information;encourage members to take regulated advice to understand their retirement options;identify increased risks in how a member has decided to access their pension funds and give appropriate warnings of the risks and implications of their chosen option;send all DB members requesting a cash equivalent transfer value (CETV) a template letter signed by TPR, the Financial Conduct Authority (FCA) and the Money and Pensions Service, which runs TPAS;monitor CETV requests and inform FCA of unusual or concerning patterns, such as spikes or the same adviser across multitude of requests.Charlotte Jackson, head of pensions operations and consumer protection at the Money and Pensions Service (MaPS), said: “Many people
The manager of the NOK10.2tn (€936bn) Government Pension Fund Global (GPFG) has announced that in the interest of openness, from today onwards it will publish its rationale a day after voting against an investee company’s board.However, Norges Bank Investment Management (NBIM) also lamented the lack of any uniform shareholder voting framework across markets, having gathered data from 66 markets in order to analyse processes.Carine Smith Ihenacho, chief corporate governance officer at the sovereign wealth fund’s (SWF) Oslo-based manager, said: “We wish to be transparent with companies and the market so they can better understand our voting.”The fund’s starting point was to support boards, she said. “Therefore, it is particularly relevant for companies and the general public to understand why we in some cases vote against the board,” Smith Ihenacho said.These explanations would be published one day after any shareholder meeting where NBIM had opposed a company board, said the central bank subsidiary, which already provides the rationales for some of its voting decisions on its website.NBIM said its public voting guidelines formed the basis for its decisions on how to vote, and that it was publishing four position papers today that clarified its views on the issues of board independence; multiple share classes; shareholder rights in equity issuances, and related-party transactions.The manager has also put out an “asset manager perspective” paper today on the voting process, including elements of what it considers to be an efficient voting process and how it believes key stakeholders could contribute to necessary improvements.Smith Ihenacho said that as a global investor, the SWF depended on an efficient voting process.“We see that in several markets, there are still manual voting processes, several layers of intermediaries, and a lack of electronic solutions,” she said“We depend on issuers, investors, business participants and regulators cooperating to make relevant information available, propose improvements, develop good electronic voting solutions, and modernise frameworks,” she said.The analysis in its paper on voting processes had taken in data from 66 markets, NBIM said, adding that findings confirmed the lack of a uniform framework across markets.Few markets had end-to-end electronic voting systems or vote confirmations, it said.To read the digital edition of IPE’s latest magazine click here.