Monthly Archives: September 2020

Denmark’s ATP, PFA snap up shares in DONG Energy

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first_imgDanish pension giants ATP and PFA are to buy stakes totalling DKK3bn (€402m) between them in DONG Energy, the Danish state enterprise.ATP will invest DKK2.2bn and PFA DKK0.8bn.The deal will see the energy group issue new shares worth DKK11bn, with the remaining DKK8bn invested by two funds run by Goldman Sachs – Goldman Sachs Infrastructure Partners and Broad Street Energy Partners.DONG Energy was valued at DKK31.5bn before the capital increase. DONG Energy is Denmark’s biggest energy producer.It also operates gas-fired power stations in Norway, the Netherlands and the UK and is the European leader in offshore wind power, running offshore wind farms across Northern Europe.The agreement reduces the Danish state’s ownership interest in DONG Energy from 81% to 60%, and the total ownership interest of the existing minority shareholders – a small number of locally based energy companies – from 19% to 14%.ATP will own around 5% and PFA 2% of the total capital, with Goldman Sachs’s interest at 19%.However, this could be altered if any minority shareholders take up the offer to participate in the capital increase on equal terms with the new investors.ATP and Goldman Sachs will be represented on the board of directors.The agreement includes a commitment to seek an initial public offering (IPO) of DONG Energy when conditions are right.If an IPO has not been completed following the release of financial statements for the 2017 financial year, the new investors will have the option to sell their shares back to the Danish state on pre-agreed terms.The transaction should be concluded by the end of this year, following political approval and the consent of the Danish competition authorities.The capital increase is part of DONG Energy’s financial action plan announced in February.One of the objectives is to improve its net debt/earnings before interest, tax, depreciation and amortisation (EBITDA) to around 2.5 by end-2014.The ratio is currently 3.5.Claus Wiinblad, head of equities at ATP, said: “The investment offers interesting and attractive prospects, with a good risk/reward profile.“We fully appreciate that, to fulfil certain projects, especially in wind power, DONG Energy needs more capital, and we have confidence in their business plan.”The shares will make up less than 1% of ATP’s investment portfolio.Wiinblad added: “We will be long-term shareholders, but, after the IPO, the investment will be managed as any other, so may be adjusted accordingly.”In June, PFA announced it had bought DONG Energy’s onshore wind-power business in partnership with energy company SE for DKK760m.last_img read more

Danish pension funds join forces for push into alternatives

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first_imgFour Danish pension funds are planning to invest tens of billions of Danish krone in alternative credit, capital funds, infrastructure and forestry over the next five years.Danske Capital will act as an adviser to the funds, which manage a combined DKK500bn (€67bn).The four funds – Danica Pension, a pension and insurance provider; DIP, the pension fund for engineers; JØP, the scheme for lawyers and economists; and Lægernes Pensionskasse, the doctors’ pension fund – said they expected alternatives would become a larger portion of their portfolios in future, yielding higher and more stable returns in combination with more liquid assets such as listed equities and bonds.The funds said they saw particularly exciting alternative investment opportunities in areas where banks no longer had the same capacity to lend due to tighter regulation in the wake of the financial crisis. The new collaboration has already resulted in the first investment in alternative credit, where the pension funds, together with Goldman Sachs, will provide loans directly to businesses.Torben Visholm, chief executive at JØP, said the cooperation would give the funds access to better investment terms due to economies of scale.He said the agreement would allow the funds to invest better, faster and in a wider range of assets.The joint venture’s large investment capacity will produce cost advantages and better investment terms, as well as positioning the participating pension funds to enter into public-private partnerships (PPP), they said.Søren Kolbye Sørensen, chief executive at DIP, said his pension fund had in recent years entered into a number of innovative collaborations with other institutions to reap cost advantages as a result of economies of scale.At the beginning of the year, DIP and JØP established a joint investment department, and the agreement on alternatives is another step in that direction, he said.last_img read more

Santander scheme among investors boosting Hermes infrastructure fund

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first_imgHermes Fund Managers has attracted more than £200m (€252m) in new capital to its infrastructure fund, including a commitment from Santander’s UK pension scheme.The manager said that, counting the new £210m in capital, Hermes Infrastructure Fund (HIF) had now raised more than £700m, including commitments from a number of unnamed UK local authority pension schemes.Antony Barker, director of pensions at Santander UK, said his fund had invested with Hermes because the strategy had allowed it to tailor its exposure to direct and indirectly owned assets while allowing for a rapid deployment of cash into attractively priced secondary investments.“Investing in infrastructure assets is an important component of our asset allocation strategy, reflecting the natural hedge for liabilities and the chance to utilise our illiquidity for best reward,” Barker said. Peter Hofbauer, head of Hermes Infrastructure, told IPE HIF’s strategy was based around three approaches – a value-added strategy, one acting as a fixed income substitute and a third, opportunistic strategy “almost akin to private equity”.Hofbauer said the fund’s exposure to the UK would vary depending on the strategy, but added that, being a sterling-denominated fund, the further away it moved from sterling holdings, the higher the risk.“We have the ability under our different strategies to invest outside the UK – and, in fact, all the way to emerging markets – but that clearly is in the higher risk/higher return strategies compared with predominantly in the UK for the core liability-matching strategies,” he said.He added the fund was “predominantly, virtually solely equity”, and that while HIF had the capacity to invest in infrastructure debt, it had struggled to find opportunities.Hermes currently oversees £2.7bn in infrastructure assets, of which £2bn is in a managed account for the BT Pension Scheme.Santander’s Barker told IPE in April that the fund had committed to the Hermes venture while discussing the £7.8bn Santander UK Group Pension Scheme’s strategy to reach full funding over the next decade.At the time, he said he viewed infrastructure equity as “overbought” and that he saw the asset classes debt as offering a more attractive risk/return profile.“Hence, we are tempted to keep our powder dry,” he said.“We will buy into some situations. We are perhaps more interested in secondaries that are becoming available to us.”Barker noted that this was in line with the fund’s interest in distressed sellers, which was also a focus of its real estate strategy.last_img read more

AP1 to take on more investment risk to meet system’s needs

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first_imgHe said the fund was ambitious when it came to sustainable value creation.“We own relatively few companies, since our investments are based on active decisions about what the fund should own, and why,” Magnusson said. “A long investment horizon and a concentrated portfolio are key factors for the fund’s sustainability work, since they create the conditions for our managers to be better informed about the companies the fund invests in,” he said.In absolute terms, AP1’s net investment income after expenses was SEK16.6bn (€1.8bn) in the January-to-June period, up from SEK9.5bn in the same period last year.Net assets under management grew by SEK14.2bn since the end of December to SEK266.7bn at the end of June.AP1 is one of five AP funds that support the Swedish national income pension system — AP1 to AP4 and AP6.These five AP funds are set to be consolidated into just three funds, following extensive reviews of the buffer fund system, but details of the proposed restructuring have yet to be hammered out.Meanwhile, AP7 — the AP fund that operates the default option for the premium pension system (PPM) — generated a return for its equity fund of 14.7%, compared to the 34.0% produced for the full year 2013.AP7 said the equity fund return had beaten the benchmark by 0.15 percentage points.Total assets in the equity fund increased to SEK198.6bn from SEK173.5bn at the end of December 2013, according to the fund’s interim report.The bond portfolio produced a 1.55% return in the six-month period, compared to 1.8% for the whole of 2013. Assets in this portfolio grew to SEK12.9bn from SEK12.7bn at the end of last year.In its report, AP7 attributed the high level of return on its equity fund to the upswing on global equity markets, which was intensified with gearing.The outperformance was due to the fund’s active management which had made a SEK87.1m contribution, it said, and also to the fact that private equity had performed better than global equities.The equity fund consists of 97% global equities and 3% private equity.However, tactical allocation had detracted SEK147.2m from the fund’s potential returns in the period, AP7 said. Swedish pensions buffer fund AP1 said it has decided to raise the level of risk in its portfolio as it reported a 6.5% return on investments, after expenses, in the first six months of this year.In its interim report, the fund said the first half return beat its target of 5.5% and was just below the average return of 6.7% it had produced over the last 10 years.Johan Magnusson, AP1’s chief executive, said: “Following an in-depth strategy review, a decision has been made to raise the level of risk in the portfolio moving forward and thereby increase the probability of meeting the pension system’s long-term need for returns.”The fund’s strategic approach had been to build a portfolio that was robust to major changes in value, he said.last_img read more

IORP II compromise highlights cross-border provision in talks with MEPs

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first_imgHowever, as the Council will base its negotiating position around the most recent compromise draft of the Directive, both elements will remain prominent.PensionsEurope said it welcomed the Council’s stance and looked forward to engaging with the Parliament.“PensionsEurope will continue working closely on this topic with the aim to support institutions for occupational pensions provisions in providing adequate, safe and sustainable pensions for the people of Europe.”James Walsh, the EU policy lead at the UK’s National Association of Pension Funds, said any re-assessment of cross-border regulatory requirements would be welcome by his organisation.“Unfortunately, the relaxation is not achieved in the current compromise text. It would have been achieved in one of the earlier compromise drafts, but unfortunately things were changed in the later versions.”He noted that ahead of the revised Directive’s publication last March, speculation was rife that the European Commission would relax cross-border funding requirements.Instead the initial draft retained wording requiring that cross-border schemes be funded at all times.Walsh cautioned against placing too much emphasis on negotiating mandates, but said it was nonetheless a “pleasant surprise” to see the wording on cross-border schemes amended.“I think it’s moderately encouraging that they’ve removed references to the Pension Benefit Statement and risk-evaluation from the negotiating mandate, but we’ve still got to have regard for the actual text of the Directive.”The negotiating mandate will see the Council engage with Parliament as it begins its revision of the Directive, based around the text initially proposed by Barnier.Final wording will then be agreed during negotiations between all three EU institutions.Despite the most recent developments, agreement over the negotiating mandate does not preclude the Commission withdrawing the IORP Directive, as it agrees its 2015 Work Programme.MEPs have raised concerns over the potential for the Directive to be scrapped. Member states are placing renewed emphasis on the relaxation of cross-border pension provision as part of their IORP II negotiations with the European Parliament.A finalised negotiating mandate released on Wednesday by the Council of the EU, which outlines the 28 states’ agreed position on the IORP Directive, said that removing the “remaining prudential barriers” to cross-border provision should be one of the four objectives.In contrast to a draft negotiating mandate drawn up by the Council in November, member states were less explicit in their support for the proposals on risk-evaluation for pensions (REP) and the Pension Benefit Statement (BPS).Instead, the mandate only specified that the Directive should focus on good governance and risk management, and should aim to provide “clear and relevant” information to members and beneficiaries.last_img read more

Institutional investors making renewables key future trend – report

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first_imgInstitutional investors are increasingly aligning their investments with energy technologies of the future, a new report claims.According to the 2015 ESG Trends to Watch, from MSCI’s global head of ESG research Linda-Eling Lee, investors have begun to scrutinise the carbon-related risks embedded in their portfolios, using a sophisticated range of tools.In addition to the measurement of companies’ current carbon emissions, investors can now adopt a total portfolio accounting of current and future emissions, measured against market benchmarks.They can also access portfolio construction techniques ranging from selective exclusions to tilts of portfolio weights based on current and future carbon characteristics of individual securities. But the report warns: “Investors can be highly exposed – both positively and negatively – to fundamental shifts in energy technology in the broad, diversified equity and fixed income holdings that can make up the vast majority of a portfolio.”For example, the diversity among utility companies in the MSCI ACWI Index, a global equity index consisting of developed and emerging market countries, means that while more than one-third of the companies by market capitalisation currently derive less than 10% of their generation capacity from renewables, 11% of companies get more than 50% generation capacity from renewables.The report says: “Without deliberately tilting more aggressively towards the companies with large and growing renewable capacity, investors potentially risk being under-exposed to significant growth in future fuel technology.”Another theme highlighted is corporate governance.While a plethora of company scandals have highlighted the more sensational details of directors’ behaviour, the report says institutional investors are making more systematic efforts to assess the effect of two types of factors on company performance – the industry expertise of individual board members, and the diversity of perspectives across the full board.A governance analysis by MSCI ESG Research showed that, within the MSCI ACWI, those financial institutions with boards composed mainly of industry experts generated a larger return on equity (ROE).The analysis also found that ROE for the one-third of MSCI ACWI constituents with no women on the board averaged 13.15, compared with 20.21 for the benchmark.Lee said: “As the availability of analytical tools improves, we anticipate institutional investors will shift beyond targeted scrutiny of corporate ‘blow ups’ and towards systematic integration of these types of factors that are less about meeting best practices and more about capturing material impact.”The report also highlights the increasing interest of large institutional investors in linking investing to positive social impact.So far, they have been hampered by the lack of comparable outcome measures across projects, the small scale of projects and illiquidity.To discover the feasibility of using public equities as an investment route, a sample portfolio of companies was created from the MSCI ACWI.Companies were screened for characteristics including products having an impact (such as a high percentage of loans to small and medium-sized enterprises) and strong innovation capacity for addressing social needs (such as telecommunications companies targeting lower-income groups).The resulting sample of 100 companies demonstrated some promising upside, including increased exposure to markets with social needs, and risk-adjusted returns during the sample period that are comparable with the benchmark.Lee said: “Social impact investing does not necessarily improve returns by itself, but, by opening access to markets that have been underserved, as these markets get bigger, these companies will be in a better position for growth.”She added that the ability to overlay exposure to social impact opportunities across broad, diversified public equity portfolios was expected to attract new investor segments with the potential to shift significant capital towards social needs.Institutional investors are also looking to invest in infrastructure where it is most needed and least politically risky.The key financial characteristics of infrastructure investments – higher income yield, stable quality cash flows and lower market volatility that is less correlated with equities exposure – are gaining appeal in the shift towards alternative investments in the asset allocation process.And the report says the sector represents an even more attractive investment proposition than might first be thought.It said: “While public attention to potential losses has often focused on the threat to poor island nations, of the 20 countries projected to have the largest number of people living in areas at risk of flooding, six are developed markets including Germany, Japan and the US. Others include some of the fastest-growing economies of the past decade, such as Brazil and China.”The report analyses countries in the MSCI ACWI Index, finding that the top five European Union economies (excluding Spain) all face potential vulnerabilities to flood risk that require attention to climate adaptation investments.It concludes: “We anticipate that, as institutional investors increase allocations to this asset class, they will rely on an ESG lens to help target growth opportunities in building climate resilience and to minimise governance-related risks that currently present barriers, especially for non-domestic infrastructure investments.” Meanwhile, a study from the UCL Institute for Sustainable Resources has found that one-third of oil reserves, half of gas reserves and more than 80% of current coal reserves globally should remain in the ground and not be used before 2050, if global warming is to stay below the 2°C target agreed by policymakers.The study, funded by the UK Energy Research Centre, also identifies the geographic location of existing reserves that should remain unused, setting out the regions that stand to lose most from achieving the 2°C goal.last_img read more

UK roundup: Docklands Light Railway Pension Scheme, TPR, Serco, ABI, SGSS

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first_imgThe Docklands Light Railway Pension Scheme has reached an agreement with its sponsor employer over its 2009 actuarial valuation after involvement from the regulator.The Pensions Regulator (TPR) said the trustees and sponsor, Serco, were unable to reach an agreement by 1 April 2009.Serco ran the Docklands Light Railway, an East London train line, until 2014.TPR oversaw a funding settlement for the now £36.1m (€49m) deficit, which will be cleared by January 2018, with £20m coming from Serco by January next year. Serco will put £33m into the scheme and £4m from its subsidiary Dockland Light Railway Ltd.In light of the missed 2009 deadline, TPR said it would consider it necessary to exercise its funding powers against Serco but then suspend this once negotiations between scheme and sponsor recommenced.Lesley Titcomb, TPR chief executive, said the deal, overseen by TPR, showed that it would support schemes with non-compliance and did not take kindly to missed actuarial deadline submissions.In other news, figures from the Association of British Insurers (ABI) show that defined contribution (DC) savers have withdrawn £27m a day in the first three months since they were granted new freedoms.From April, DC savers over the age of 55 have been freed of the obligation to purchase annuities. As of the end of June, they have taken out £2.5bn from DC schemes.More than half, £1.3bn, was paid out in cash.However, £1.1bn was shifted into income drawdown products, a market expected to grow after the freedoms were introduced, and one many DC schemes are considering offering in-house.Approximately £990m was invested in annuities, with the average purchase around £55,600.The ABI’s director for long-term savings policy, Yvonne Braun, said the figures showed how well providers were adapting to the reforms.Lastly, Société Générale Securities Services (SGSS) has received UK regulatory approval to offer trustee and depositary services for UCITS and alternative investment funds.The company will now offer full custody, depositary and fund administration services for UK pension funds.last_img read more

Belgian pension funds return 1.45% over first half as Brexit hits hard

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first_imgBelgian pension funds achieved a return of 1.45% on their investments in the first half of 2016, with the UK vote to leave the European Union having had a “very negative” impact on the financial markets, although they stabilised after, according to PensioPlus, Belgium’s occupational pension fund association.The survey was of a representative sample of Belgian pension funds with €23.4bn in total assets under management, representing around 60% of second-pillar funds in Belgium; the results were presented late last week.The 1.45% figure is the average weighted return.Inflation was reportedly 1.69% for the first half of the year, which lead to a loss of 0.23% in real terms. Philippe Neyt, president at PensioPlus, told IPE the rate of inflation was exceptionally high and “one of the highest in Europe”.He explained that the high rate was propelled by a jump in value-added tax on electricity from 6% to 21%.Inflation is expected to fall, to between 1.87% and 2.2%, depending on the source.PensioPlus noted that the results of its survey reflected the situation seven days after the UK referendum on the country’s membership of the European Union, a vote the association said had a “very negative” impact on the financial markets and, as a result, on investment returns.However, markets have stabilised since then, it said, adding that the weighted average return on investments since the beginning of 2016 would have been 4.56% as at the end of August.PensioPlus said its survey showed the returns to be principally due to a fall in interest rates that increased the value of fixed income investments.In equities, ex euro-zone stocks made a strong positive contribution.In 2015, Belgian pension funds posted a full-year return of 4.48%, with the real return at 2.86%.This is also based on a survey conducted by PensioPlus.This year, as at the end of June, Belgian pension funds’ asset allocation was split 35% equities, 45% bonds, 5% real estate, 2% liquid assets and 13% ‘other’ investments.With regard to “persistent low interest rates”, Neyt told IPE the “vicious circle had to be broken”.He noted that pension funds from Canada and Australia had countered the problem by making significant investments in infrastructure, including in Belgium, such as in Brussels airport and Elia, Belgium’s electricity transmission system.Belgian pension funds, according to Neyt, are invested in infrastructure funds such as TINC/DG.Neyt also addressed the subject of pan-European pensions funds, saying that Belgium had attracted two-thirds of funds that had moved, which made the country Europe’s predominant location for setting up cross-border pension vehicles.Pension funds and employers that have chosen Belgium as their base include RESAVER, the European Commission-backed second-pillar scheme for researchers, and Alcon, BP, Chevron, CITCO, Euroclear, GE, Johnson & Johnson, Nestlé, Pfizer and Sanofi.Neyt attributed this to Belgium’s legislation being fully in line with the EU IORP II Directive, with its flexible governance framework, and noted that the Belgian government had overcome a major hurdle relating to the deduction of withholding tax.The Belgian council of ministers recently passed a bill that clarifies the tax and administrative treatment of cross-border pensions.  Changing pension attitudesThe PensioPlus returns survey coincided with multi-employer first-pillar pension fund Ogeo announcing the results of its latest annual opinion survey.Ogeo said the survey showed a “significant change in Belgians’ attitudes to their pensions”.For example, whereas in 2014 7% of respondents intended to retire after 65, in the latest survey, this increased to 28%.The survey showed that 63% of Belgians are in favour of the establishing a compulsory supplementary pension. Just under two-thirds of private sector workers support such a system, with public sector workers slightly less positively inclined (54% are in favour).Only 44% of working people in Belgium have a supplementary pension scheme with their employer, 36% of which are women and 55% men, according to the survey.last_img read more

People moves: PenSam leadership becomes one-man show

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first_imgVarma, Swedbank Robur, KPA Pension, ABN Amro Pensioenfonds, NN Group, SRB, Hymans Robertson, MSCI, BNP Paribas, Aviva, Willis Towers Watson, Muzinich & CoPenSam – Benny Buchardt Andersen, director of DKK105bn (€14.1bn) PenSam, has decided to resign from the company at the end of September. Andersen, who is part of PenSam’s two-man leadership team alongside director Torsten Fels, said that after some very exciting and busy years at the Danish labour market pension fund, it was time for him to try something different. He has worked at PenSam for 10 years and became director a year ago. The company said that from now on, it would be led by Fels alone. Fels is now listed as chief executive of PenSam on its website. PenSam recently poached Claus Jørgensen from competitor PKA to become its new CIO.  Varma – Hanna Kaskela has been appointed to the newly-created role of director of responsible investment at Varma, with effect from 1 September. She will report to Varma’s CIO, Reima Rytsölä, and will be a member of the Finnish pension insurance company’s investment operations’ executive group. A spokeswoman for the company said the creation of the new role underlined the significance of responsible investments for the firm. Varma’s responsible investing specialist had resigned from her position earlier, she said, and the company then decided to re-evaluate the responsible investment operations as a whole. Varma plans to recruit an analyst to further boost its responsible investment resources, the spokeswoman said.Swedbank Robur – Eva Axelsson has been hired by Swedbank Robur, Swedbank’s asset management subsidiary, as its new head of sustainability research. She comes to the company from Swedish local authority pension fund KPA Pension, where she was head of sustainability. She will start her new job in mid-October this year. Axelsson is replacing Anna Nilsson, who left Swedbank Robur in June. ABN Amro Pensioenfonds – Fred Steenwinkel has been named a non-executive member of the one-tier-board of the €26bn ABN Amro Pensioenfonds, representing the scheme’s pensioners. Steenwinkel had previously been a member of the pension fund’s accountability body. He is also a board member at the €652m pension fund Equens and the Dutch association of pensioners organisations (NVOG).SRB – Joanne Kellermann is to leave the Single Resolution Board, the European body tasked with managing bank bankruptcies, where she was a director. Her announcement came as a surprise, as she was two-and-a-half years into a term that would have ended in 2020. According to an SRB spokeswoman, Kellermann wanted to “broaden her horizon”. Kellermann left Dutch supervisor De Nederlandsche Bank in 2014, having been director of pension fund supervision for seven years. She was the first female member of DNB’s executive board. Prior to her job at DNB, Kellermann worked as a lawyer at NautaDutilh. She said she would stay on at the SRB until a successor has been found.Nationale Nederlanden (NN Group) – NN Group has appointed Arthur van der Wal, its director of pensions since 2014, to the new position of chief executive of Movir, its subsidiary for labour disability insurance. He started at NN’s collective pensions business and continued at ING Investment Management, where he worked from 1999 to 2011, when he became chief executive of pensions provider and NN subsidiary AZL. Van der Wal has been a member of the executive council of the Pensions Federation and is a member of the foundation council of Netspar, the network for pensions researchers and professionals, and of the advisory board of PensioenLab, the pensions think tank for young workers.MSCI – Guido Giese has joined the company as executive director for equity research, based in London. He was previously head of environmental, social, and governance (ESG) index solutions at RobecoSAM, and before that head of product development at STOXX. Earlier this month, MSCI ESG Research announced the appointment of Mervyn Tang as head of ESG research for Asia Pacific ex-Japan, based in Hong Kong. Tang previously worked at Fitch Ratings, where he was director, Asia Pacific sovereigns, responsible for sovereign analysis and macro forecasting.BNP Paribas – Joost Höppener has started as head of institutional sales at BNP Paribas Asset Management. He has succeeded Rogier van Harten, who was head of institutional clients for continental Europe and the Netherlands. This role has been abolished following the establishment of sales positions for individual countries. Höppener was previously senior relationship manager at BNP Paribas AM. He had a similar job at Fortis Investments before joining BNP Paribas AM. He has also worked as a sales manager at ABN Amro Asset Management.Aviva Investors – The asset manager has hired Sunil Krishnan as head of multi-asset funds. He will join the company in October, from Santander Asset Management. At Santander he was a senior portfolio manager responsible for outcome-oriented funds and asset allocation strategy. Krishnan’s previous roles include head of global asset allocation at Hermes Investment Management and head of market strategy at the BT Pension Scheme, Hermes’ owner. Aviva Investors has also appointed Gavin Counsell as a manager on the Aviva Investors Multi Strategy funds. Counsell has worked at the asset manager for more than five years and replaces Nick Samouilhan, who has joined T Rowe Price.Willis Towers Watson – Paul Devitt has joined the consultancy as a director in its global services and solutions practice. He joined from Aon Risk Solutions, where he specialised in global benefits consulting for over 15 years. He has specialist expertise in employee benefit captive consulting, which aims to help companies protect themselves against the rising cost of providing employee benefits.Hymans Robertson – Tom Dunster has joined the independent pensions and benefits consultancy as a senior investment research consultant. He will lead the firm’s equity research. Before joining Hymans, Dunster was head of fund research at C Hoare & Co, where he worked for six years. He has also worked at Principal Investment Management, now Sanlam Private Wealth, and HSBC Asset Management.Muzinich & Co – The corporate credit specialist has promoted Josh Hughes, formerly managing director of marketing and client relations, to head of global distribution with a focus on key international accounts. The position is new.last_img read more

Dutch MP: Aon’s cross-border pension transfer is ‘supervisory arbitrage’

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first_imgThe transfer of the pension fund of Aon Hewitt Netherlands to Belgium is “supervisory arbitrage” as the discount rate for pensioners is considerably higher than in the Netherlands, a Dutch MP has argued.In questions to Wouter Koolmees, the Netherlands’ minister for social affairs, Pieter Omtzigt, MP for the Christian Democrats party, suggested that the Netherlands could no longer stop pension funds from moving abroad under the European IORP II directive.Focusing on the 3.5% discount rate applied for pensioners in Belgium, Omtzigt questioned whether the minister deemed this percentage prudent, and asked why the Netherlands required pension funds to use the ultimate forward rate (UFR), currently 2.4%.If the 3.5% discount rate was not prudent, Omtzigt challenged why Dutch supervisor De Nederlandsche Bank (DNB) had approved the transfer. What IORP II saysArticle 12.8 of IORP II limits a regulator’s power over a pension scheme’s transfer from one EU member state to another:The competent authority of the home member state of the transferring IORP shall only assess whether: (a) in the case of a partial transfer of the pension scheme’s liabilities, technical provisions, and other obligations and rights, as well as corresponding assets or cash equivalent thereof, the long term interests of the members and beneficiaries of the remaining part of the scheme are adequately protected; (b) the individual entitlements of the members and beneficiaries are at least the same after the transfer; (c) the assets corresponding to the pension scheme to be transferred are sufficient and appropriate to cover the liabilities, technical provisions and other obligations and rights to be transferred, in accordance with the applicable rules in the home member state of the transferring IORP. Pieter Omtzigt, CDASource: CDA Omtzigt argued that the fact that in Belgium full indexation would be allowed at a coverage ratio of 110% also counted as supervisory arbitrage. Under Dutch rules, full inflation-linked pension uplifts are only allowed when a scheme’s funding is at least 125%.In a tweet, he claimed the transfer was “supervisory arbitrage in its purest form”.DNB has told IPE’s Dutch sister publication Pensioen Pro that it assessed a “multitude of factors” for value transfer. However, it declined to comment on the specific case of the Aon Hewitt scheme.Omtzigt said he feared that the Netherlands could no longer prevent pension funds adopting cross-border arrangements “as IORP II doesn’t allow local supervisors to pass judgement about a situation abroad”.However, the MP also said he did not believe the Dutch supervisory regime was too strict. “We have opted for certainty which means a discount rate of 2.4%,” he said. “Certainly not 3.5%.”DNB, when asked, declined to comment on the consequences of IORP II for cross-border transfers and on how the directive’s criteria differ from the current practice under IORP I.center_img The MP also observed the “strange discontinuity” in the Belgian supervisory regime, which meant that the discount rate used for active and deferred members was 1.6%.last_img read more