Webb blocks ‘piecemeal’ reform of fiduciary duty

first_imgWebb said he did not object to the “spirit” of the amendments, but noted that, on issues of climate change and fiduciary duty, he was required to defer to the Department of Energy & Climate Change and the Department for Business, Innovation and Skills.The latter department was behind the recent Kay Review on long-term investing and earlier this year asked the Law Commission to review whether and how the current interpretation of fiduciary duty might hinder long-term investing.The pensions minister said he encouraged Lucas “to keep up the pressure across government”.“To be frank, this issue is not always at the top of the pension agenda, so I welcome the amendments for that reason,” he said.Webb added that he would like the amendments to be withdrawn, as he would prefer “a more overarching framework affecting company law, business regulation and the duties of trustees not only in pensions but beyond”.However, Lucas was insistent that an independent review of how climate change and natural resource constraints impact private pension savings – which her amendment suggests should be completed by the beginning of 2015 – would give “some comfort and reassurance” that Webb was serious about tackling the issue.“The new clause is not just about fiduciary duty – it is about gathering data on the impact of climate change and natural resource constraints for the sustainability of private pensions and for a better understanding of the systemic risks posed by high levels of exposure to fossil fuels and other carbon-intensive assets,” she said.The third reading of the Pensions Bill, legislating for the new single-tier state pension and allowing the DWP to introduce a fee cap for auto-enrolment schemes, coincided with the launch of a report by lobby group ShareAction calling on trustees to consider the financial and wider macroeconomic risks of climate change. The UK government must take a holistic approach when reforming the fiduciary duty of pension trustees rather than amend legislation in a “piecemeal” fashion to address concerns on sustainable investing, the pensions minister has warned.Speaking in the House of Commons, Steve Webb said that, rather than his Department for Work & Pensions (DWP) rewriting pensions legislation to address isolated concerns about fiduciary duty, it was important to work on the issue across government departments.“We are trying to be as careful and as cross-departmental as we can, so we want to look at the whole investment chain and how corporate governance, the law of the land and pensions will be affected, to make change in an integrated and connected way,” the Liberal Democrat minister said.His comments come after Green Party MP Caroline Lucas tabled several amendments to the current Pensions Bill – one suggesting an independent review of the impact of climate change on investments and a second asking that the Pensions Regulator be required to improve and promote understanding of long-term and sustainable investing.last_img read more

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Irish National Pensions Reserve Fund sells part of Bank of Ireland stake

first_imgIreland’s National Pensions Reserve Fund (NPRF) has sold €11m worth of shares in Bank of Ireland (BOI) and announced a €4bn increase in the value of its directed portfolio, holding the government’s stake in two partially nationalised banks.The sale of the 43m BOI shares comes a month after the Irish government disposed of €1.8bn in preference shares held by the NPRF following a €4.7bn investment by the state in 2009.BOI’s share price rose following yesterday’s announcement, closing at €0.2850 compared with Monday’s closing price of €0.2580.A spokesman for the NPRF confirmed that the shares sold did not form part of the fund’s directed portfolio – rather, they stemmed from a 2009 transfer of university pension fund assets in lieu of the government’s statutory annual payment and were held within the discretionary portfolio. Separately, the NPRF also announced a preliminary return of 6.3% for its discretionary portfolio, increasing by €700m to €6.8bn at the end of the year.Since the fund’s inception, the discretionary portfolio has returned 3.9% per annum, the statement by the National Treasury Management Agency (NTMA) added.The NTMA also said the directed portfolio was valued at €13.1bn by year-end, a €4.1bn increase over the value disclosed in its most recent quarterly report for the three months to September.The statement noted that the value stemmed from the BOI shares the fund continued to hold – accounting for 13.95% of voting rights following this week’s sale – as well as its 99.8% stake in Allied Irish Banks (AIB) and cash derived from last year’s BOI preference share sale.However, some of the increase may stem from a revised valuation of the AIB stake, previously independently assessed as €0.0079 at the end of 2012 after the NPRF decided that the publicly traded price was an “inappropriate” measure of valuation.The NTMA added that, once the necessary legal changes were passed by Ireland’s Dáil, the entirety of the €6.8bn discretionary portfolio would be available to the proposed Ireland Strategic Investment Fund (ISIF).It said that, in anticipation of the conversion, the NPRF Commission had already committed or invested €1.3bn to areas of “strategic importance” to the local economy, including a suite of funds targeting small and medium-sized enterprises.At the end of 2013, the combined value of both portfolios stood at nearly €20bn, higher than at any point since 2010.It lost more than €9bn in value between 2010 and 2011, after the NPRF Commission wrote down the value of the directed portfolio.last_img read more

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Collective labour agreements must lead pension change, says German minister

first_img“This opens up the possibility – as it is not agreed in detail, unlike the case with the minimum wage – for us to take on board ideas, and I invite you, the aba, to do just that,” she said.She said she viewed the first pillar as the most important part of retirement provision in Germany, and pointed to the losses incurred by savers during the financial crisis when wholly reliant on funded pension provision.“What we have in Germany is a healthy mixture – of the state-funded, occupational and private, the Riester pension,” she said.“We will not reform the system, in the sense that the basic set-up of the system will not change. If reforms are introduced, then it will be in the shape of changes to the system.”The minister said the government’s stance would allow for security of retirement planning.“The important and right pension reforms have already been introduced,” she said.“To be completely clear – [the system can] withstand demographic change and is future proof.”She added that she would be open to revisiting the four-decade-old occupational pensions law, but said she would not yet offer any concrete details.“For me, the legal framework is, at the end of the day, only an addition to what is already being negotiated within the collective labour agreements.”Her comments will have been welcomed by the aba itself, with the head of the organisation, Heribert Karch, stressing that a strong pension system needs a dual focus on state and occupational funding.“An agreed and thoroughly evaluated political mix of fiscal, social, collective labour measures can address the challenges before us and strengthen the dual core,” he said.Nahles also addressed the issue of the European Commission and its involvement in pensions policy.“Since I have been involved in politics, I have been aware of the European Commission’s Portability Directive – and have been getting annoyed by it,” she said.She added that she remained worried by the revised IORP Directive, published by the Commission earlier this year, and stressed that she would not allow a “weakening” of the bAV.“The White Paper on Pensions speaks of strengthening the occupational pensions sector – but then it also has to be implemented in such a way to allow for it,” she said.“At the moment, as I said, I still have my doubts that it’ll be strengthened.” Germany is unlikely to introduce radical changes to its pension system, according to its minister for Labour and Social Affairs, who argued that the government should only provide the legal underpinning for agreements struck independently by the country’s social partners.Addressing the aba annual conference in Berlin, Andrea Nahles said she viewed her next big “construction project” instead as increasing occupational pension (bAV) coverage among the country’s numerous small and medium-sized enterprises (SMEs).The minister, a member of the social democratic party (SPD), also said that while the brief mention within the coalition agreement to strengthen the bAV might sound “banal”, the wording was more a result of attempts to reach an agreement despite time pressure during negotiations.Nahles added that the industry should see the lack of detail on bAV reform as an opportunity.last_img read more

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Beni Stabili, Investire, Polaris create €7bn fund manager in Italy

first_imgThe shareholders of Beni Stabili Gestioni SGR, Investire Immobiliare SGR and Polaris Real Estate SGR have approved a merger between the three Italian fund managers.The move will create a new entity with €7bn of institutional assets under management and a portfolio of more than 30 funds.The new company will focus mainly on social housing, as announced by Fondazione Cariplo, majority shareholder of Polaris Real Estate SGR.It is expected the merged company will be the second-largest real estate fund manager in the country after IDeA Fimit. The merger between the three managers was announced earlier this year.Last week, the shareholders signed a final agreement outlining the governance and ownership structure of the new company, which is expected to start operating in January 2015 after regulators give a final go-ahead.Mediobanca and Lazard are acting as advisers within the transaction, according to reports in Italian media.The agreement was signed by Beni Stabili, the listed owner of Beni Stabili SGR, Banca Finnat Euramerica, which controls Investire Immobiliare SGR, and the shareholders of Polaris Real Estate SGR, which are Fondazione Cariplo, Italian surveyors’ pension scheme CIPAG and Fondazione Cassa di dei Risparmi di Forlì.An SGR (società di gestione del risparmio) is a platform dedicated to managing real estate funds under local regulations for institutional investors.Beni Stabili, an Italian REIT (or SIIQ) has been in the news recently as its board approved a €150m capital increase and new bank loans worth €500m, aimed at repaying debt used to finance a property portfolio leased to Telecom Italia.last_img read more

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Danish pension funds finance DKK175m court building via PPP

first_imgThree Danish labour-market pension funds have teamed up with contractor CASA and property manager DEAS to build a town court building in Svendborg on the Danish island of Funen.PensionDanmark, Sampension, PKA have formed a public-private partnership (PPP) with the other two parties to carry out the project, which involves the building’s construction and its management for the first 20 years of its existence.The three pension funds will finance the DKK175m (€23.5m) project sum equally – which includes construction and maintenance of the building.The new 4,000sqm building will bring court activity in the town under one roof, housing more than 40 of the town’s court staff, PensionDanmark said. Building will start at the beginning of next year and be completed in June 2016.Torben Möger Pedersen, chief executive at PensionDanmark, said the decision to go ahead with the PPP project showed that the financing model was very much taking root in the domestic economy.PensionDanmark, Sampension and PKA have spearheaded work to promote PPPs in Denmark in recent years.At the end of 2012, the three pension funds announced they would provide a ‘one-stop shop’ for public authorities with construction needs, giving them a single point to access architectural, financing and other services.PensionDanmark said this was the second Danish PPP project it had invested in this year, after the psychiatric hospital project in Vejle, while PKA said it was its third – including the Vejle hospital, as well as one in Skeiby.Advisers for the Svendborg contract include KPF Architekter and COWI as consulting engineers.The agreement requires final approval from the parliamentary finance committee.last_img read more

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PPF funding ratio improves despite slump in investment returns

first_imgKenneth also confirmed the fund hoped to move to in-house the management of parts of its LDI portfolio by the end of the year.But, despite the change in approach, he signalled the fund would not rapidly switch to in-house management for other parts of its portfolio.“This is a long-term plan, focused on managing funds in a considered and sustainable way,” he said.“We will take the time we need to make this work for the long-term interests of our members.”Andy McKinnon, the fund’s CFO, echoed Kenneth’s upbeat tone and said 2015-16 had been successful despite the “challenging economic backdrop”.“Our robust strategy has put us in a strong position to manage the uncertainties ahead, and our long-term risk model predicts we will achieve financial self-sufficiency by 2030 in 93% of scenarios,” he said.The PPF’s likelihood of achieving its self-sufficiency target by 2030 – at which point it would no longer be reliant on levy income – has significantly increased since 2014-15, but the fund’s CRO Hans den Boer admitted the 5-percentage-point improvement over the previous year was down to changes to the way the self-sufficiency target was calculated rather than changes in the market environment.In addition to already paying compensation to members of BHS schemes, the fund also acknowledged the potential impact of a second potential insolvency event – the entry of the British Steel Pension Scheme (BSPS) into the PPF.The PPF said an allowance had been made for the potential future claim by the BSPS, and that, based on information it had to hand, it would possess “sufficient reserves should this scheme come to [the PPF] during the coming year”.The future of BSPS is being debated by government.The PPF has argued that, if the fund is allowed to sever the link to its sponsor, it should be barred from entering the lifeboat fund in future. Taking into account expected insolvency events, also known as type II liabilities, the PPF’s board calculated that its funding level would have declined from 115% to 108% over the course of the financial year.McKinnon confirmed the 108% funding ratio reflected BSPS’ potential entry into the fund. The Pension Protection Fund (PPF) has seen its funding ratio improve over the last financial year, despite a marked slump in investment performance following 2015’s record return of nearly 26%.The UK’s lifeboat scheme said its funding ratio had risen by more than 1 percentage point, to 116.3%, despite the impact of the schemes for insolvent retailer BHS entering the PPF, and investments only returning 1.7%.CIO Barry Kenneth said the £23.4bn (€29.7bn) fund had intentionally taken on less risk over the course of the year but nevertheless managed to outperform liabilities.It generated £200m in income from both its liability driven investment (LDI) portfolio and its growth portfolio, with the fund’s surplus increasing by around £500m to £4.1bn at the end of March.last_img read more

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Norway’s KLP generates 4.4% on back of short-term bonds, real estate

first_imgNorway’s largest municipal pensions provider Kommunal Landspensjonskasse (KLP) has reported a 4.4% return on investments in the first nine months of this year and said this figure was higher when the rising value of its hold-to-maturity bonds and lending was taken into account.On a value-adjusted basis, returns rose to 4.4% for January to September, up from 2% in the same period last year, but, including hold-to-maturity bonds and lending, it returned 4.9%, up from 1.2%, according to the pension fund’s interim report.The returns are on its common portfolio, whose assets grew to NOK447.9bn (€48.7bn) at the end of September from NOK405.6bn at the same point last year.This portfolio makes up most of KLP’s group assets of NOK589bn. Sverre Thornes, the pension fund’s chief executive, described results achieved in the third quarter as “solid”, adding: “The good result enables us to maintain a lower level of premium than today’s very low interest rate level would suggest.”KLP’s property investments in the common portfolio made a 7.8% return in the first nine months of this year, up from the 6.6% return reported for the same period last year.Property made up 12.2% of the portfolio at the end of September.Shares, which had a 20.3% weight, generated just 0.6% in the nine-month period, excluding currency effects, but were higher than the 1% loss in the comparable year-earlier period.Taking account of currency effects, KLP said the return on shares was 4.8% over the period.Short-term bonds produced a 5.5% return, up from 1.7%, while long-term bonds generated 3.2%, slightly below the 3.4% posted for the same period in 2015.Lending, meanwhile, returned 1.8%, just down from 2%.Short-term, long-term and hold-to-maturity bonds and lending made up 20.7%, 27.1% and 11.2% of the common portfolio, respectively, at the end of September.KLP’s contributions rose strongly in a year-on-year comparison, with premium income – not including premium reserves it received on transfers in – climbed to NOK26.2bn between January and September from NOK22.7bn in the same period in 2015.In the last few years, KLP has seen membership surge after commercial pension providers Storebrand and DnB Livsforsikring left the municipal pensions market, gaining public sector occupational pension contracts from 87 new municipalities and county administrations, and 346 businesses in a two-year period.last_img read more

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Irish sovereign wealth fund backs forestry portfolio launch

first_img“[W]e are pleased to invest alongside Dasos and EIB in this initiative which is very consistent with our mandate and with government policy,” he said in a statement.“It will create a better structure to support availability of timber from Ireland’s private forestry estate and will seek to support greater afforestation levels.”The new investment was announced in County Wicklow in Ireland today.Speaking at the event, Ireland minister Andrew Doyle said: “The mobilisation of timber from privately owned forests is a key objective of my department and this investment fund will make a significant contribution towards achieving this goal.”The EIB’s involvement is backed by the European Fund for Strategic Investment, the lynchpin of the European Commission’s plan to boost economic growth and job creation in the EU. The EIB says it is one of the world’s largest financiers for forests, and has invested €4.5bn in forest-related projects across Europe and worldwide over the past five years.According to a statement announcing the new initiative, the Dasos fund is targeting the development of a portfolio of around 10,000 hectares of forests by supporting direct land acquisition, lease contracts, afforestation, and other forms of land management.It “will seek to address issues faced by small scale forests across the country by working to improve forest management and strengthen the supply of wood for commercial use”, the statement said.There are an estimated 19,500 private owners of small forests in Ireland, according to the statement.Separately, a new life science fund backed by ISIF announced a first close of €100m today.The Seroba Life Sciences Fund III invests in life science companies in Ireland, the UK, and other European markets, although a “limited” number of investments may also be made in the US. ISIF’s O’Callaghan said: “The Irish life sciences sector is of critical importance to Ireland’s economic prosperity and ISIF is delighted to continue to support Seroba as a key component of the domestic healthcare venture capital landscape, through our investment in Fund III.”The new fund’s first investment is in Endotronix Ireland Limited, a subsidiary of a medtech and digital health company, Endotronix Inc. Read more about the Ireland Strategic Investment Fund’s portfolio in the February issue of IPE Magazine. Ireland’s sovereign wealth fund is investing €55m in Irish forestry via a new fund that is also being backed by the European Investment Bank (EIB).The EIB is investing €28.5m in the fund, which is aiming to make €112m of investment in privately owned forests in Ireland.The new fund is called The Foraois Limited Partnership and is run by Dasos, a Finland-based “pan-European forest investment fund”.Eugene O’Callaghan, director of the Ireland Strategic Investment Fund (ISIF), said forestry “is a natural asset class for long-term, patient capital investors”.last_img read more

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Dutch tax experts warn of lump sum disadvantage

first_img“The option of personal choice is part of a modern pension,” Koolmees said at the time during his presentation of the pensions accord.Tax experts noted that the lump sum would be charged against regular and progressive tax tariffs, and concluded that the impact would be significant for participants earning 150% to 200% of the average income.According to the NOB, members of this tax group taking out a lump sum would be hit by the highest tax tariff of 49.5%, rather than 19.45% for their life-long benefits.In their case, using the existing option of high/low pay outs in drawdown arrangements could possibly be more beneficial, as pensioners could lose means-tested housing and care benefits as a consequence of taking out a lump sum, the order said.The NOB urged the minister to exempt the lump sum for these subsidies.In its response to the consultation, the industry organisation further noted that pensioners would not be allowed to combine the lump sum with the high/low pay out option.The latter enabled pensioners to start with high benefits straight after retirement and a lower payout later, enabling them to receive approximately 8% of their pension during the first years of retirement.In a statement, the minister argued that offering the combined option would increase the risk that a large part of someone’s pension would be taken out too early, which could lead to an insufficient pension later on in retirement.The NOB contended that, because of the progressive tax tariffs, it will hardly make a difference whether a participant opted for a lump sum or the existing option of high/low benefits. A stacking ban would “substantially limit” the effectivity of the new lump sum option, it stated.Dutch financial daily Het Financieele Dagblad (FD) quoted pensions specialist and lawyer Theo Gommer, of Gommer & Partners Pensioen Advocaten, as describing the minister’s approach as “incomprehensible paternalism”.“In particular lower paid workers, who tend to die earlier, would benefit from stacking lump sum and high/low pay outs,” he said. “People in their 60s should be allowed to take the descision themselves.”According to the FD, the sector organisation for lawyers had suggested to allow stacking, but combining this with a lower limit for the remaining pension. The Dutch order of tax advisers (NOB) suggested that the country’s new option of taking out a lump sum at retirement is unlikely to be beneficial to pensioners, as people could end up in a higher tax band, or lose housing benefits and care subsidies.The statement follows an online consultation on lump sum legislation.As part of the pensions agreement of June, social partners and the government had agreed that pensioners would be allowed to take out up to 10% of their accrued pension entitlements, which could be spent as they wished.Increased freedom of choice is one of the key elements of the pensions paragraph in the election manifesto of the liberal democrats (D66), the polical party of social affairs’ minister Wouter Koolmees.last_img read more

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Federated Investors, Hermes combine to become Federated Hermes

first_imgSaker Nusseibeh, chief executive officer of Hermes Fund Managers Limited, also said that by investing responsibly, the firm aimed “to help people retire better, strive for better risk-adjusted returns and, where possible, contribute to positive outcomes in the wider world”. Federated Investors has incorporated the Hermes Investment Management brand into a new corporate name, Federated Hermes, it was announced today.Federated Investors also changed its New York Stock Exchange ticker symbol from FII to FHI to reflect the combining of the two active management companies.In 2018 US asset management giant Federated Investors acquired a 60% stake in Hermes Fund Managers from its previous majority owner, BT Pension Scheme (BTPS).Today the combined entity said its corporate identity would be focussed on “a commitment to responsible investing to achieve financial outperformance”. Federated Hermes is headquartered in Pittsburgh, PennsylvaniaHermes has for some time taken a strong responsible investment stance, and Gordon Ceresino, vice-chairman of Federated Investors, previously told IPE that Federated viewed Hermes as “the world leader in ESG”.Since the 2018 acquisition Federated has moved to strengthen its credentials in this area, launching a responsible investing office and integrating Hermes environmental, social and governance factors into the liquidity fund investment decision process. It is in the process of doing the same for Federated equity and fixed income strategies.Federated has also become a client of EOS, the engagement and stewardship arm that came with the acquisition.Last month Hermes Investment Management acquired MEPC, a UK commercial real estate developer, from BTPS.According to Pittsburgh-headquartered Federated Hermes, it had $575.9bn (€521bn) in assets under management as of 31 December.last_img read more

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