Klijnsma calls for choice, solidarity and collectivity in pensions dialogue

first_imgPart of the dialogue will be nationwide meetings, where the Cabinet aims to check and supplement its own views, she said.She added that, depending on the interest and needs arising from these sessions, platforms for specific groups could be established.Klijnsma stressed that anyone with ideas about a sustainable pensions system could participate in the national dialogue, which will be held between September and December.The results of the broad discussion are to be laid down in a framework note, which will also include findings on the issue of the Social and Economic Council (SER).The state secretary said the outline note would include trends in society and experiences with foreign pension systems, and would be tabled in Parliament next spring.She added that the Cabinet would also address the consequences for the design of the system update, as well as possible transition routes and policy variants. Jetta Klijnsma, state secretary for the Dutch Ministry of Social Affairs, has said freedom of choice on pension arrangements, solidarity on risks and income and which collective approach and players should shoulder which responsibilities will be the main issues in the ongoing debate over the long-term future of the Dutch pensions system.Outlining her plans for future talks, Klijnsma said a new website, www.denationalepensioendialoog.nl, would become the focal point for the debate.She said the site – which is to go live in mid-August – would not only provide insight into the government’s orientation via surveys and polls but also contain links to the policy documents of important players in the debate. To support to dialogue process, Klijnsma presented a clarification of the definitions of the crucial concepts for the discussion.last_img read more

OECD calls for standardisation to create tradable longevity market

first_imgIt further urged pension investors to update their mortality assumptions regularly and ensure these recognised future mortality improvements, suggesting that failure to do so risked underestimating liabilities by 10%.“Likewise,” the report continued, “the use of assumptions that are not reflective of recent improvements in mortality can expose the pension plan or annuity provider to the need for a significant increase in reserves.”One of the suggestions to better address longevity risk was for the regulatory framework to be risk-based, so that a pension plan’s actions to mitigate any risk would be incentivised.However, the report raised concerns about the “potentially limited” capacity of insurers and reinsurers to take on risk, instead proposing that capital markets offer solutions that allow longevity risk to be traded.It said such tradable solutions could offer a “promising alternative” for pension schemes unwilling to increase risk buffers to retain their longevity risk.But it said it would be vital that the market offer standarised products and be transparent, with the development of longevity indices key to such a step. The OECD has called for greater standardisation and transparency in the pricing of longevity risk to allow for growth in the de-risking market.The think tank also reiterated earlier calls for the issuance of longevity bonds and governments to back the creation of functional longevity markets as it published its 2014 Pensions Outlook.Alongside the report, the body also published a detailed assessment of mortality assumptions and longevity risk, suggesting regulators should take a more proactive role in encouraging pension funds to manage their longevity.“More transparency and standardisation in the pricing of longevity instruments would aid potential investors in becoming comfortable with investing in longevity risk and allow for the further development of index-based instruments,” the report said.last_img read more

Aon Belgium wins mandate for pan-European scheme for researchers

first_imgIt also assisted the Task Force with its final report, in which the committee suggested the pension fund be set up under Belgian legislation as an OFP structure.The Task Force shortlisted Belgium’s OFP, a trust-based arrangement in Ireland or a SEPCAV and ASSEP in Luxembourg as “the most practical locations”.Ultimately, it named Belgium’s OFP as the “preferred” vehicle and said it was “fully in line” with the EU’s IORP Directive.It also cited the fact the regulator is “accessible, open-minded and supportive”, there are no “quantitative investment and financing regulations” and the zero tax base.In the report, Aon estimated the initial costs to be €3m for the first three years of the scheme. It said it would take 15 years for the fund to finance itself.The IORP will be rolled out to EU member states this year and then be extended to include the whole of the EEA by 2018.The Commission said the IORP would help employers in “attracting researchers in an increasingly competitive environment” and further assist the development of the European Research Area. Aon Belgium has been awarded a four-year contract worth €4m for providing “support services” to the recently launched pan-European pension project for researchers.The costs, along with other “initial set-up costs”, over the first four-year period will be covered by the European Commission.A cross-border IORP is to be set up later this year, after a consortium of first supporters was named last autumn.Aon had been helping to set up the project in recent years.last_img read more

Introduction of new Dutch pensions vehicle postponed despite ‘urgency’

first_imgShe did not, however, provide any additional details about the ultimate design of the APF, leaving the sector in the dark over whether mandatory industry-wide pensions funds would be allowed to join the new vehicle.More than a year ago, the Dutch Pensions Federation urged the government to expedite the introduction of the APF, as it sees the vehicle as an alternative for pension funds considering liquidation.An APF offers pension funds the option to operate under a single and independent board but with ring-fenced assets.It is meant to serve as a third type of pension fund, replacing the API – the defined benefit vehicle for cross-border schemes – which never took off. The Dutch government has postponed the introduction of long-awaited pensions vehicle APF by six months to 1 January 2016 despite acknowledging the “urgency” of its introduction. In a letter to Parliament, Jetta Klijnsma, state secretary for Social Affairs, said the government needed more time to answer questions about the APF Bill.Klijnsma said she agreed with the pensions sector on the urgency of the APF’s introduction but stressed that addressing a number of outstanding questions on voluntary pension plans, collective value transfer, governance and working capital required more time.In her letter, Klijnsma said the concept of the draft legislation would be open for consultation to enable the sector to share its views with the government.last_img read more

Alcatel-Lucent scheme hurries liquidation to benefit from market downturn

first_imgThe €700m pension fund for Alcatel-Lucent has said it is accelerating its liquidation process to benefit from the recent decline in equity markets.In its newsletter, the pension fund pointed out that the equity market downturn had had little effect on it due to its limited stock holdings.Bridging a funding gap with any potential merger partner, it said, would therefore now be easier.Last June, regulator De Nederlandsche Bank (DNB) ordered the scheme to be liquidated as of 1 January 2016. The regulator’s decision came after the pension fund’s sponsor terminated its contract for pension provision in 2012.The scheme also reported a funding shortfall.Subsequently, the pension fund lost two appeals to postpone the regulator’s initial liquidation deadline.Now, funding gaps with potential merger partners have narrowed so much that the Pensioenfonds Alcatel-Lucent believes it will be able to transfer pension rights at “no more than a small discount”.The pension fund, based on its funding last July, said it would have faced rights cut as high as 6%, depending on its merger partner.It added that transferring pension rights to an insurer would have entailed cuts of 8%.As of the end of August, the Alcatel-Lucent scheme’s coverage ratio stood at 96.8%.In its newsletter, the board said it was now negotiating with two industry-wide schemes about a rights transfer.The pension fund also indicated that its preferred option had been the new ‘general’ pension fund APF, scheduled to come into force on 1 January 2016.However, it claimed the regulator had denied the scheme the “necessary leeway” to use the new vehicle.The regulator also pointed out that the scheme’s risk profile would not have improved by using the APF.The pension fund said it was now waiting for a court verdict on an appeal regarding recovery payments demanded from its sponsor company.last_img read more

USS wades into debate on €27bn AkzoNobel takeover bid

first_imgThe UK’s largest pension scheme has issued a rare public statement calling for the board of chemicals firm AkzoNobel to engage meaningfully with a €26.9bn takeover approach.US paints manufacturer PPG earlier this week submitted a third bid for the Dutch company. AkzoNobel acknowledged the “unsolicited” approach in an announcement to the stock market on 24 April and promised to “carefully review and consider” the offer.The Universities Superannuation Scheme (USS), a shareholder in AkzoNobel since 2010, today called for the company’s board to “engage in a meaningful and constructive dialogue with PPG”. It currently holds 1.28% of AkzoNobel’s issued shares.Daniel Summerfield, co-head of responsible investment at USS, said in a statement: “We believe that this revised offer, with the assurances given, provides a launch pad for negotiations to commence in earnest.” PPG also promised a “significant” reverse break fee, meaning it would contribute towards AkzoNobel’s costs if the deal falls through. Summerfield said this part of the offer was “particularly noteworthy” and called for the company’s board to “seize this opportunity and constructively engage with PPG as a matter of urgency”.Activist investor Elliott Advisors also called for AkzoNobel to enter into “sincere and constructive discussions” regarding the offer.In a statement, Elliott Advisors said: “There can be no reasonable doubt that PPG’s revised proposal represents a bona fide proposal from a credible counterparty; this proposal clearly warrants sincere engagement from AkzoNobel.”Elliott also voiced concerns that a hostile bid – which it said could materialise if AkzoNobel failed to engage – would not necessarily include the same terms for shareholders. “Elliott therefore believes that friendly discussions now are in the best interest of all stakeholders,” the activist firm said.Elliott took a major stake – roughly 3%, according to statements from the investment company – in AkzoNobel late last year as it believed the chemicals firm was undervalued and underperforming relative to its peers.AkzoNobel has offered shareholders an alternative strategy, involving a restructure of the business.In addition, earlier this month a group of shareholders called for an extraordinary general meeting (EGM), which newspaper reports suggested was aimed at ousting Antony Burgmans, chair of the company’s supervisory board.AkzoNobel rejected the bid, but USS criticised this decision, claiming it showed the board was not taking its fiduciary responsibilities seriously.“The decision to ride roughshod over shareholders’ rights not only undermines the credibility of the board but portrays Dutch governance in a very negative light,” USS’s Summerfield said.“We took the unusual step at the annual general meeting of making public our concerns. The board and management now need to demonstrate that they are willing and able to fulfil their fiduciary duties to shareholders by evaluating objectively the revised offer by PPG.”Elliott Advisors also strongly criticised the decision, describing it as “groundless” and “an egregious dismissal of shareholder rights, further evidence of self-entrenchment and… a continued affront to proper corporate governance”.“Elliott believes that the reality is that AkzoNobel is afraid of calling the EGM because shareholder feedback apparently indicates that shareholders would vote to remove Mr Burgmans from his position as chairman of the supervisory board,” the activist investor said in a statement. “AkzoNobel’s supervisory board… has failed to fulfil its corporate governance duties by refusing to obtain, through engagement with a credible bidder, the necessary information required to evaluate a serious proposal.”It added: “As far as Elliott is aware, it is unprecedented in European corporate history to have several large shareholders request the convocation of an EGM of a major corporate, and the fact that six AkzoNobel shareholders have done so in this instance is indicative of the breadth and depth of shareholder discontent with the conduct of AkzoNobel’s boards.”AkzoNobel’s share price closed at €79.20 on 27 April, up by almost a third (32.6%) since the start of the year – driven primarily by trading in the wake of PPG’s bids.last_img read more

Emerging markets fuel 6.7% return at Switzerland’s Publica

first_imgThe average funding ratio for Swiss corporate pension schemes is at its highest since 2008.Source: Willis Towers Watson Overall, Publica’s developed market investments gained 2.9% in 2017.Equities were the best performing of the main asset classes Publica held in 2017, gaining 5.5%. Its European equity holdings returned 14% on a currency-hedged basis, while its emerging markets exposure made almost 30%.Publica’s bond holdings ended up making a positive contribution to the overall result for 2017, gaining 0.8%. Positive returns from emerging market government bonds, corporate bonds and private debt instruments offset losses on other government bonds.Publica is the multi-employer pension fund for the Swiss confederation and network of governmental universities and research institutions. It comprises open and closed pension plans, and runs different investment strategies for each.The investments for its open schemes, which account for the bulk of the institution’s total assets (CHF36bn), gained 7.1% in 2017. The investment strategy for its closed plans led to a return of 3.3% for 2017.The average funding level of all 20 pension plans within Publica was estimated at 107% at the end of 2017.Publica’s board of directors was due to make further decisions about its technical parameters this month after the Swiss federal parliament late last year rejected a request for funds from the government to cushion the impact on federal personnel from cuts to the parameters.Publica, which is also the pension fund for federal employees in Switzerland, announced the cuts last year, effectively reducing the pension promises to future retirees.Commenting on the federal parliament’s decision to reject the support measures for Publica, the trade union for federal employees (VGB) said the government and Publica’s decision-making bodies needed to come up with a solution.“Reducing the technical interest rate and consequently the conversion rate without accompanying measures is unthinkable,” said the VGB. “The benefit loss for federal employees would be enormous.” Publica came out as Switzerland’s largest pension fund in IPE’s 2017 Top 1000 Pension Funds ranking.  Swiss corporate plans on the upSwiss corporate pension schemes’ funding increased by around 1.5 percentage points in the fourth quarter of 2017, according to the latest Willis Towers Watson figures.The coverage ratio climbed from 102.5% to 104% over the period, it said.Positive investment returns had the most significant impact on the consultancy’s Swiss pension index, offsetting the impact of increasing pension obligations from a lower discount rate.The return on investments held by Swiss pension funds was 2.3% higher in the fourth quarter than the preceding quarter, based on the Pictet BVG-40 plus index.This took the return for the calendar year to “a very solid” 7.6% overall, the consultancy said.Adam Casey, senior consultant at Willis Towers Watson, said: “Companies should consider measures to reduce risk in their pension positions as IAS 19 balance sheet levels are close to 10-year highs. This can be done more easily if the pension funds are in a better funding position.” Publica, Switzerland’s largest pension fund, achieved a net return of 6.7% on its investments in 2017, buoyed in particular by the performance of its emerging markets holdings.Excluding currency hedging the 2017 result would have been 8.2%.In 2016 the CHF39bn (€36bn) public pension fund’s investments gained 5.1%.Publica’s emerging markets investments made the biggest contribution to the fund’s overall performance, gaining just less than 3%. Equities gained just under 30%, and US dollar and local currency denominated government bonds returned around 9%.last_img read more

Report lays out plan for German pension dashboard

first_imgA report commissioned by the German government has proposed a centralised ‘pension dashboard’ to give savers a calculation of their total accrued pensions in the first and second pillars.The proposal was contained in a 180-page report by consultancy group Aon and the Institute for Insurance Science at the University of Ulm, and presented at this year’s Handelsblatt occupational pensions conference in Berlin.It outlined the concept of a secure website where German savers could get a calculation of their accrued pension rights and possible future accruals from existing supplementary pension plans as well as the first pillar.The website would then collate all the available data and calculate a possible future monthly retirement income estimate, stating it as a purchase power equivalent value for the time of the request. The government had commissioned the report to look into the challenges and advantages of introducing a “cross-pillar pension information system”. Germany’s government has confirmed plans to explore a pension dashboard conceptKonrad Haker, from the German social ministry BMAS, confirmed the pension dashboard was on the government’s agenda.“Over the next week we will hold talks with the stakeholders and consensus will be necessary on fundamental decisions such as the scope of the platform, its structure and how it should be run,” he said.Last year, the government set up the Deutsche Renten-Information to create a pension dashboard. In a preliminary project it invited a sample of German citizens to upload their pension information and obtain an estimate of their retirement income.However, as stated in the new report, it became clear that, while people would have liked to have this cross-pillar accumulated calculation, only a few provided the data and some provided information irrelevant to their retirement income.The dashboard plan The authors of the study proposed a centralised digital platform – probably overseen by a government department – for information coordination but not for data storage.Data on accrued pension rights would only be collated when a registered user requests the information.“Afterwards all the information would be deleted from the platform again and it would only be stored with the pension providers that already have the data,” said Hans-Joachim Zwiesler, a professor at the University of Ulm and one of the authors of the report.He said the model calculations of a possible future monthly retirement income “should be made available to the user” for download as it “could be used when seeking professional advice” on supplementary pension arrangements.However, Zwiesler emphasised that the platform would “not consult” on any products or action to be taken.The study proposed a pension glossary and “general information” on retirement provision to be included in the dashboard. It could also be used to inform members about possible tax advantages of certain pension provisions, or the possibility of making top-up payments.Information standardsRegarding the information provided by companies and pension providers, co-author Gundula Dietrich, a partner at Aon, said it was “not expedient to completely leave it up to them to provide information”.As a first step, the researchers said they would like to see providers “co-operate in a trial run” of a possible future pension dashboard.However, the German government would first have to agree on starting such a trial, as well as the legal framework to accompany it.Dietrich and Zwiesler called on all stakeholders to start at least a “lite” version of an information tool “as soon as possible”.They also hoped for a knock-on effect on pension data standards, as information requirements could help providers standardise their data and – in some cases – “get the boxes with files out of the cellar”, as one audience member put it.Lukewarm receptionSeveral pension providers indicated to IPE that the industry was not entirely keen on the project.Representatives of larger companies with in-house pension plans and good information on occupational pensions claimed their members were well-informed enough and could already get more details – including calculations on future accruals – at any time.On the other hand, people working at smaller, multi-employer Pensionskassen argued that an information service such as a dashboard would be important to have.“We think the project is feasible and it might be good just to start off by providing users with an information on where they accrued pension rights,” Dietrich said.After a pilot phase – provided there was political consensus for the project – she estimated that the “actual start” would be scheduled for “two to three years’ time”.In an online survey at the Handelsblatt conference, delegates were asked which income should or should not be included in a future pension dashboard. Of the respondents, 81% said they would exclude income from real estate rental, while 16% would not want fund investments included.The study (in German) can be downloaded here.last_img read more

£22bn UK pension fund ‘should divest from fossil fuels now’, say protesters

first_imgCampaigners gathered outside the office of the UK’s largest local government pension fund today to call for it to divest from fossil fuel companies.Campaign groups including Fossil Free Greater Manchester and Extinction Rebellion demanded that the £22.5bn (€25.1bn) Greater Manchester Pension Fund (GMPF) exit completely from its stakes in fossil fuel firms. Citing data compiled by Fossil Free UK, the campaigners claimed that as much as 10% of the fund’s portfolio was invested in such companies.In a press release ahead of the protest, Fossil Free Greater Manchester member Stuart Bowman argued that GMPF was “totally out of touch with the public mood” and had “no clear plan” for divestment.However, GMPF – part of the UK’s Local Government Pension Scheme (LGPS) system – said in a statement yesterday that it was “working hard to become carbon neutral” by 2050 or sooner, in line with a plan set out in 2017. It was in the process of moving £2.5bn of assets into low-carbon strategies “targeting a significant reduction in carbon footprint and intensity”. Representatives of GMPF met with Fossil Free Greater Manchester last week. While both parties agreed on a goal of a zero-carbon economy “as quickly as possible”, GMPF said it was also “committed to a just transition ensuring the interests of workers and communities are properly taken into account”.#*#*Show Fullscreen*#*# Source: Fossil Free Greater ManchesterFossil Free UK campaigners outside the office of Greater Manchester Pension Fund on 19 July 2019A spokesperson for the fund said: “We are the biggest local government investor in renewables and energy efficiency with £0.5bn invested and leading investment opportunities for other funds.”The spokesperson added that GMPF’s work on renewable energy and related investments “needs to be balanced” with the fund’s strong performance track record. The pension fund said it had added £3.7bn of value “above that of the average LGPS pension fund”.GMPF also highlighted its fiduciary duty to ensure that investment decisions “do not threaten financial performance”. Over the past three years, it said, the investment portfolio achieved more than £400m in additional returns than if it had removed stakes in companies such as oil giant BP or gas distributor Centrica.Rushing to divest would cause “material financial detriment” to GMPF, the spokesperson said, with potential consequences for public sector employers, workers and council tax payers, all of whom could be forced to pay more towards the pension scheme.Other LGPS funds have also rejected blanket divestment strategies. A number of large schemes responded to criticism from Friends of the Earth last year by stating that divestment did not affect the companies involved.Earlier this month, pensions minister Guy Opperman called on pension schemes to play a major role in the UK government’s plan to end its contribution to global warming by 2050.Further readingClimate change protesters disrupt pensions conference Campaigners from Extinction Rebellion interrupted an LGPS conference in May to call for schemes to divest from fossil fuelsLow-carbon indices: Work in progress Providers acknowledge that low-carbon indices are imperfect, but argue they are an invaluable tool to help reduce climate change risk in a portfoliolast_img read more

Pensions minister asks schemes for copies of ESG statements

first_imgThe UK pensions minister has written to pension schemes to request they submit the sections of their statement of investment principles (SIPs) that set out how they take account of financially material considerations arising from environmental, social and corporate governance (ESG) factors, including climate change.He also wants to see the sections that set out the pension schemes’ policy on stewardship and taking member views into account.The aim, according to a press release from the Department for Work and Pensions (DWP), is to compile a record so Guy Opperman, the minister, could monitor compliance with new regulations that “compel funds to pay greater attention to environmental, social and governance considerations”, as well as highlight best practice.The minister also wants to know if the schemes report in line with the Task Force on Climate-related Financial Disclosures. Source: PLSAGuy Opperman addresses the PLSA conference in October 2018In the press release, Opperman is quoted as saying: “Pension funds are a powerful weapon in the fight against climate change. Despite some good work by a number of schemes, some are not acting. We need urgency on this vital issue from trustees and investment managers.“New regulations came into force last week,” he added. “I’m demanding that the remaining pension schemes and the fund managers they appoint stop shuffling their feet.“They must meet their responsibilities to savers now and in the future, and to protect the future of the planet.”Under 2018 regulatory changes, trustees of UK defined benefit and defined contribution schemes had until 1 October to update or prepare their SIP to make sure it included their policy on:How financially material factors (including but not limited to ESG considerations such as climate change) are taken into account in the context of investment activity;The extent, if at all, that non-financial matters such as members’ views are taken into account; andEngagement and voting activities in respect of investments, which includes engagement with asset managers employed by the trusteesAccording to the DWP press release, Opperman has told schemes that circumstances in which climate and ESG risks are not financially material are likely to be “extremely limited”.Therefore, according to the minister: “It is part and parcel of trustees’ fiduciary duty to take account of these risks when setting out investment strategy and to explain that clearly to investors.”A spokesman said the idea behind the minister’s asking for the relevant sections of their SIP is to give the pension funds the chance to “show themselves in the best possible light”.News of Opperman’s letter comes after the UK’s main pension fund trade body last week referred to the new regulations as being merely the first step on a “journey” for trustees. Caroline Escott, policy lead for investment and stewardship at the Pensions and Lifetime Savings Association (PLSA), today said the announcement from the pensions minister “emphasises that this shouldn’t just be a tick box exercise for trustees, it’s not just a compliance exercise”.“Schemes of all shapes and sizes need to think about how they meaningfully implement ESG across their portfolio and also how they tell the story, communicate what they’re doing to scheme members,” she told IPE.Lorna Blyth, head of investment solutions at mutual insurer Royal London, said ESG issue were increasingly in the spotlight, and that Opperman’s move “sets a clear direction of travel from government and policy makers”.  Most UK pension trustees were prepared for the new rules regarding responsible investment, according to a survey by Hymans Robertson that was publicised a few weeks before the 1 October deadline. A survey from law firm Sackers indicated there was still lots of confusion about the extent to which trustees should take account of member views. This article was updated to add a comment from Caroline Escott at the PLSA. The request was set out in a letter to 50 of the UK’s largest pension schemes in which, according to the press release, Opperman spelled out what pension schemes must do under the new regulations. A copy of the letter was not made available.According to the press release, the minister also “probed” the schemes about “what substantive measures they have made – and when – to their investment strategies to take account of environmental, social and governance [sic] and climate change, and what substantive changes they have made to their stewardship policies to ensure that trustees act as engaged investors”.last_img read more