Meanwhile, the Labour and Social Policy Ministry and the Finance Ministry are already having second, if somewhat different, thoughts on the second-pillar pension fund (OFE) investment policies, as they can no longer buy Polish or other sovereign or state guaranteed bonds. A 75% minimum equity limit is to come into effect on 4 February 2014.On 1 July, the funds will no longer have to meet a minimum investment return.Instead, their performances will be measured against a benchmark weighted at 90% WIG – the Warsaw Stock Exchange’s index – and 10% three-month Wibor (Warsaw Interbank Offered Rate). According to the pensions industry, the equity limit would turn the funds into high-risk investment vehicles, while the new benchmark has been widely viewed as aggressive and difficult to replicate.On 14 October, deputy finance minister Wojciech Kowalczyk told the Polish Press Agency (PAP) that, in response to market opinion, the 75% minimum equity limit and new benchmark would last for only two years, not in perpetuity as stated in the draft bill. The following day, labour and social policy minister Władysław Kosiniak-Kamysz questioned on Polish radio whether, in the interests of future returns, the funds should be subjected to any limits at all.Kosiniak-Kamysz has also acknowledged that many Poles fail to understand that their pension fundamentally depends on the level of contributions accumulated over their working life. His ministry intends to propose that an understanding of pensions is introduced into the school curriculum.While Kosiniak-Kamysz’s statements offer a welcomed lifeline to the pensions industry, he has no backing thus far from finance minister Jacek Rostowski.Speaking in Luxembourg at an EU finance ministers’ meeting, Rostowski replied that keeping the 75% limit and liberalising OFE investment policies after two years remained the “best solution”.The Polish Financial Supervision Authority (KNF), whose job would include publishing the new comparative benchmark, has joined the bill’s long list of critics.KNF vice-chairman Lesław Gajek told Polish television on 16 October that the proposals were so badly constructed and against the interests of fund members that they would eventually lead to the liquidation of the second pillar. Polish president Bronisław Komorowski has said he intends to examine the government’s bill overhauling the country’s second-pillar pension system.Komorowski told the Polish tabloid Super Express he must see whether the bill is in line with the Constitution, and what the implications are for future retirees.The bill, published on 1 October, is in a 30-day consultation period.The president, who signs off laws and whose prerogatives include returning bills to Parliament and referring them to the Constitutional Tribunal, is acting early in the legislative process.
The Netherlands and the Nordic countries, despite having the world’s most highly rated pensions systems, will fail to solve the problem of population ageing if they rely solely on raising the retirement age, according to Amlan Roy, head of global demographics and pensions research at Credit Suisse Securities.Speaking at the IPE Awards Seminar in Noordwijk, Roy argued that the countries must do more to take advantage of the available skills, health and social benefits of the participants of individual pension funds.In his keynote speech, he stressed that demographics represented the single-most important factor for the future of pensions provision.“Because it gets insufficient attention and is poorly understood, we must ask hard questions of actuaries, asset managers and professors of macroeconomics,” he said. “Demographics is not only about long-term effects or age-related issues, or is predictable – it is about people as consumers and workers,” he said. “It is affecting income statements and balance sheets of households, corporations and countries.”According to Roy, 65-74 year olds are the richest population group currently.“The challenge,” he said, “is to treat future generations fairly.”He noted that demographic changes in both developed and developing countries created many opportunities for financial services industries in terms of product innovation, risk diversification and asset allocation.Roy said demographic changes most affected emerging markets, infrastructure, financial services and the pharmaceutical, biotech, leisure and luxury industries.He also pointed out that emerging markets, such as the so-called BRIC countries, were demographically very diverse.“Russia and China are getting older before they get richer,” he said, adding that, in 2050, nine out of 10 of the most populous countries will be emerging ones.The head of pensions research at Credit Suisse Securities reminded his audience that, in 2030, the number of women in Europe over the age of 80 would outnumber males by 2 to 1.Roy further warned that rising youth unemployment was a threat to growth and stability.
Toropainen said the advantage for employers in using a private pension fund or foundation was increased control over investments as well as potentially lower costs for well-organised funds or foundations.Private pension funds and foundations manage around €5.6bn of assets in Finland compared to assets under management in the entire private pensions sector of €100bn.“The most important task for me is to try to take care of the legal system surrounding us,” Toropainen said.“The way the Finnish pensions market has developed, the amount of pensions money in our kind of pension fund and foundation has fallen,” he said, adding that he hoped to be able to change the legal framework to allow new funds and foundations to enter the sector.With 12 months to go until the Finnish general election, all political parties were now thinking about how to prepare and position themselves for next year’s vote, he said,“In this situation we have good chances of improving our position,” he said.However, he said bringing about change in the law and the industry would be a long process and things would not happen immediately.“But hopefully in the future during my tenure we will get there,” said Toropainen.Toropainen comes to his new role at the association from 26 years as a political reporter and financial journalist, working at MTV News, Channel Four News and the Helsingin Sanomat. The Finnish Pension Funds Association aims to increase the number of private pension funds and foundations, and get the issue on the agendas of the country’s political parties as they prepare for next year’s general election, according to its newly appointed leader.The association’s incoming managing director Timo Toropainen, who takes up his role officially on May 1, told IPE: “I really hope we can change the legislative environment to make it possible to set up some new private pension funds and foundations.”Toropainen will replace Pasi Strömberg, who has headed up the association since August 2011, when he leaves next month to become chief executive of private pension fund Verso.The Finnish Pension Funds Association, Eläkesäätiöyhdistys, represents the private pension funds and foundations in Finland used by companies to provide mandatory occupational pensions instead of choosing one of the big pensions-insurance companies as the provider.
In order to make proxy voting decisions, investors relied mainly on proxy statements, internal analysis or third-party advice, with only 58% directly engaging with the company.Majority of investors said portfolio managers only became involved in voting decisions around a quarter of the time – and mainly in M&As, contested director nominations and executive compensation.Some 54% said proxies allowed them to make informed decision on compensation, while 58% believed say on compensation was an effective way to influence company pay policies.David Larcker, professor at Stanford, said investors are still frustrated with compensation levels and whether they are justified.Only 21% of investors said chief executive compensation was appropriate and linked to performance. Only a quarter understood executive compensation and long-term performance plans.“These are significantly negative perceptions of executive compensation,” Larcker said.“’Say on Pay’ is having some effect, engaging shareholders in a discussion about plan design. However, investors are still frustrated with pay levels overall and whether the packages awarded today are justified.”Some 57% of investors said it was not clear how proxy statements disclosed the chief executive pay ratio to other employees, with 35% lamenting disclosures on corporate social responsibility and succession planning.Two-thirds said the relationship between compensation and risk was not clearly disclosed by companies, as 48% suggested whether compensation size was appropriate was also not clear.Aaron Boyd, director of governance research at Equliar, an executive compensation information firm, said: “Corporations must do a better job of articulating the rationale behind [compensation] plan design.“Companies should take renewed effort to be clear and concise in explaining their choices.”,WebsitesWe are not responsible for the content of external sitesLink to research conducted by Stanford A third of institutional investors do not use data and analysis collected for proxy voting when deciding to buy or sell stock investments, research shows.The survey, conducted among 64 US asset managers and owners, revealed only 59% used proxy voting data to influence decisions on buying and selling individual companies.The report from Stanford Business School in California said investors were very confident in proxy voting increasing shareholder value, with a score of 7.2 from 10, however, 34% said the foundations to decisions were not considered when making investment decisions.When information was used, investors said performance metrics, pay for performance alignment and corporate governance profiles were most useful.
Universities Superannuation Scheme, Lancashire County Pension Fund, London Pension Fund Authority, ABP, Financial Reporting Council, Hermes Investment Management, State Street, Columbia Threadneedle Investments, Bfinance, Principal Global InvestorsUniversities Superannuation Scheme – Sir Martin Harris has stepped down as chair of the trustee board after nine years in the role.He officially stepped down at the end of March, with the scheme set to announce his successor in the coming days.Harris joined the UK’s largest scheme as a director in April 1991, when he served as vice-chancellor of the University of Essex.He became deputy-chair of the £41.6bn (€57bn) pension fund in 2004, taking over as chairman two years later.The university employers representative, Universities UK (UKK), initially appointed Harris to the trustee board in 1991, before he went on to lead the organisation in 1997.LCCP/LPFA – William Bourne has been appointed chair of the Local Pension Boards (LPB) for both the Lancashire County Pension Fund and the London Pension Fund Authority. The local government pension schemes (LGPS) are currently creating an asset-liability partnership to run the funds jointly. However, Bourne will sit on two separate LPBs. The boards, which must be established at all LGPS by April, have independent oversight of the schemes and sponsoring councils, and must ensure compliance with LGPS regulations. Bourne has more than 30 years’ experience in pensions and also advises the Royal County of Berkshire and East Sussex local government funds.ABP – Huub Hannen has been appointed chairman for the supervisory board (RvT) at the €344bn civil service pension fund. Hannen has had a 38-year career in the co-operative insurance sector. Over the last 13 years, he has been a member and vice-chairman of the executive board at Achmea, focusing on life and pensions, finance, investment, re-insurance and care insurance. Hannen was nominated by the pension fund’s accountability unit. ABP has had an RvT since 1 July 2014, as a consequence of new legislation for pension fund governance. The RvT also consists of independent experts Kitty Roozemond, Anneke van der Meer, Nicolette Loomen and Peter de Groot. Financial Reporting Council – Jennifer Walmsley has been appointed director of investor engagement, joining from Hermes Investment Management. Walmsley will be responsible for communicating with investors and developing policy to support the FRC’s aims. At Hermes, Walmsley was director of engagement.State Street Global Advisors (SSgA) – Ronald O’Hanley has been appointed president and chief executive of the asset management arm of State Street. O’Hanley’s appointment comes after the announcement of current chief executive Scott Powers’ intention to retire later this year after seven years in the role. O’Hanley, who joins from Fidelity Investments, will take over the role in the coming days, working with Powers as part of a handover. He was president of asset management and corporate services at Fidelity, and has previous experience at BNY Mellon Asset Management.Columbia Threadneedle Investments – Florian Uleer has joined the newly branded asset manager as its country head for Germany. Based in Frankfurt, Uleer will join in July from Schroders, where he was a senior sales manager. Prior to Schroders, he worked at Union Investment Institutional, where he was responsible for German institutional clients.Bfinance – Witold Witkiewicz and John Amoasi have joined the investment consultancy as a director in private markets and a senior associate in the fixed income team, respectively. Witkiewicz was previously a portfolio manager at Aeriance Investments, a real estate debt investment platform. He has also been head of European credit at Woodbourne Investment Management, a hedge fund. Amoasi joins from Goldman Sachs Asset Management, where he was a product manager for multi-sector and absolute return fixed income strategies.Principal Global Investors – Helly Pilavachi has joined as director of European fund distribution for French-speaking Europe. She joined the firm’s London office in January and was previously director of European sales at JO Hambro Capital, responsible for Southern Europe.
UK specialist insurer Pension Insurance Corporation (PIC) has reinsured against increases in life expectancy four of the pension schemes it administers.PIC agreed the transaction – worth $1.2bn (€1bn) – with Prudential Retirement, part of US-based Prudential Financial. It is the fifth such deal between the two companies, with nearly $5bn worth of liabilities reinsured in total, according to Prudential’s head of transactions for international longevity reinsurance, William McCloskey.“These agreements help PIC to manage longevity risk and thereby secure the retirement benefits of thousands of UK pensioners,” McCloskey added.Khurram Khan, head of longevity risk at PIC, said: “Prudential is now an established longevity reinsurance market participant. This latest agreement covers four sizeable transactions executed by PIC during 2017. “The collaborative nature of the talks and speed of deal completion highlight the things we value in a partnership. Over 2017 to date, PIC has now reinsured around £3bn [€3.4bn] of longevity risk in support of an excellent year for new business.”In a press release announcing the deal, Prudential said it highlighted “rebounding demand for pension derisking solutions”, in particular longevity reinsurance.In July PIC reinsured £1bn worth of liabilities with SCOR, the first time PIC had worked with this company.PIC has taken on liabilities worth more than £2bn in 2017 so far through buy-in and buyout transactions, including:£600m buy-in for the Wolseley Group Pension Plan£400m buy-in for the pension scheme of engineering firm Vesuviustwo deals worth a combined £350m for schemes sponsored by energy company SSE£200m buy-in for the 3i Group Pension Plan£190m buyout of GKN Group Pension Scheme£130m buy-in for the TI Group Pension Scheme£100m buy-in for Alcatel-Lucent Pension Scheme£90m buy-in for Civil Aviation Authority Pension Scheme£33m buyout of the Alps Electric (UK) Limited Pension SchemeThe PIC longevity swap deal was Prudential Retirement’s fourth major transaction of the year, the US firm said. Since 2011 it has reinsured $45bn worth of liabilities.
The University and College Union (UCU), which represents the UK’s higher education employees, will ballot its 110,000 members next week on proposals aimed at ending the ongoing deadlock over changes to university pensions.UCU made the announcement in the face of prospective strikes at 13 universities around the UK starting on April 16. Further industrial action – in addition to the 14 days of protests since February 22 – are planned later in the spring at the remaining 52 universities across the country.Strike action relates to proposals put forward in January to close the defined benefit (DB) section of the £60bn (€68.5bn) scheme. After UCU rejected a proposal earlier this month, the union and universities have since provisionally agreed to keep the DB section open to allow more time for an expert panel to scrutinise the scheme’s valuation.Sally Hunt, general secretary of UCU, said: “These latest proposals were won by the solid action of UCU members and now is the time for them to have their say on what happens next.” The UCU’s move met with qualified support from Universities UK (UUK), which represents the university employers. A spokesperson said: “Employers have indicated their support for this proposal, however this is conditional on the suspension of industrial action.“Suspension of this action would be a huge relief to students ahead of the main examination period.”UUK has claimed that maintaining the DB scheme is too expensive, while UCU said its members could see their pensions cut by as much as £10,000 a year. An average lecturer could lose up to £200,000, the UCU claimed.At present, employers contribute 18% of employees’ salaries to USS, and UUK has claimed that any increase in contributions would lead to a reduction in funding and possible redundancies. UUK said that the cost of future pension benefits had already increased by a third since 2014.Under the terms of the proposals laid out for UCU members, a joint expert panel would be formed from experts nominated by both sides. In a letter to UCU members last week, Hunt said the panel’s task would be to “agree key principles to underpin the future joint approach of UUK and UCU to the valuation of the USS fund”.All member pension benefits as well as employers’ contributions to the USS would be frozen until at least April 2019.At the heart of the dispute is a wider issue over the affordability of DB pensions in the UK. Many firms have since dropped the schemes, moving instead to offer the much cheaper – but riskier for members – defined contribution plans.In December last year, British Airways announced it would close its DB scheme, following in the footsteps of BT. Royal Mail, Britain’s national postal service, has said it intends to close its DB plan to further accruals at the end of March, with a plan to replace it with the country’s first collective defined contribution scheme.Earlier this year, JLT Employee Benefits reported that just 19 of FTSE 100 companies retained DB schemes for employees.
The pension funds for marine pilots (Loodsen), the meat, cold meat and snacks industry (VLEP), the agricultural and food trade sector (AVH), and Robeco’s own pension fund had €6bn of fiduciary managed assets in total with Robeco.John Klijn, VLEP’s employee chairman, today said his pension fund had selected BMO Global Asset Management as new fiduciary manager for its entire €3.1bn portfolio, including the management of its liability-driven investment (LDI) holdings.He said that BMO had offered the best proposition “because of its tailored approach and its ability to empathise with VLEP’s specific position”.Rogier van Harten, BMO’s head of institutional distribution and client management for continental Europe, said that in the past two years BMO had invested in its Dutch organisation “to serve its customers optimally in an increasingly complex environment”.On its website, Loodsen said it had started discussions with two candidates. AVH, the pension fund for the agricultural and food trade sector, could not be contacted for a comment.Tom Steenkamp, chairman of Robeco’s scheme, said he couldn’t provide any clarity yet about a new fiduciary manager for his pension fund.Fiduciary activity transfer expected H2 2020Currently, less than 20 Robeco staff are involved in fiduciary management. The company said that a limited number would be made redundant.Robeco said it expected that it could transfer all its fiduciary activities in the second half of 2020.Robeco explained that another reason for ceasing its fiduciary management was that it could better serve its clients in other ways.The asset manager – part of Japanese firm Orix since 2013 – said that it would keep focusing on investment strategies for sustainable investment, quant and factor investing, credit, equity emerging markets and Asia Pacific as well as on trend and thematic investments.It added that it would also keep on offering multi-asset and LDI strategies, as well as voting services at annual general meetings and engagement with companies.Last year, Robeco sold its manager selection division Corestone. Several executive board members have left since 2013. Lukas Daalder, chief investment officer, Harry Horlings, director for institutional business development and Jacqueline Lommen, specialist for European pensions, have taken roles at other firms. Dutch asset manager Robeco will cease offering fiduciary services to pension funds and insurers, it has said.The decision of the €186bn pure play asset manager followed the departure of its largest customer, the €30bn Dutch sector pension fund for private road transport (Vervoer), which left for Achmea Investment Management earlier this year.At the time, Robeco was not able to say what this would mean for its fiduciary management, but indicated that the profitability of this part of its business was already limited.As a consequence of the asset manager’s decision, the four schemes still using Robeco for fiduciary management are to find these services elsewhere.
Isio, a UK pensions advisory firm, has said that the pension savings of those close to retirement are likely to have declined on average by 8.7% during the first quarter of 2020.In its Q1 Defined Contribution (DC) default review, DC default review: Weathering the storm, the firm analysed the performance of a selection of the leading master trusts’ default strategies available to UK DC members as at 31 March 2020.The review showed that late-career members – those with two years until retirement – were better protected from market volatility over the first quarter. Their investments in defensive strategies with higher allocation to Gilts have offered them downside protection.“Diversification is crucial in the pre-retirement phase but even more important is the way strategies diversify as these members do not have the luxury of time to recoup any losses, and the falls in their pot sizes might have severe consequences for them,” Isio said. According to the firm’s analysis, members at the start of their careers and who still have about 30 years until retirement have seen their pension savings fall between 13.2% and 20.8% over the past three months.These younger members are in the growth phase of the sample master trust default strategies and, therefore, have a heavier exposure to equity-driven strategies, which were generally the worst hit by the recent market sell-off, the review revealed.it also showed that regional allocations and the impact of currency had an impact on performance for providers with similar equity exposures. Additionally, exposure to listed alternatives, such as REITs, has hurt performance given their higher correlation with equity markets, it added.Mark Powley, head of DC investment at Isio, said: “By the end of 2019, financial markets had experienced several years of positive returns. However, the impact of COVID-19 in the first quarter has tipped markets over the edge, wreaking havoc across risk-based assets with volatility at its highest since 2008.”He said that, although younger members have been more affected by market volatility, for these members “future contributions will be the main driver behind their pot size in the future”.“We would, therefore, encourage these investors to be patient and take more of a long-term approach to assessing success or failure in the growth phase,” he added.“On the flipside, recent sell-offs have illustrated the need to diversify in the right way and dial down risk as members approach retirement. Getting this right has a massive impact on members’ retirement outcomes and chasing returns could result in disaster.”Nick Evans, head of investment advisory at Isio, added: “We believe that for those Master Trusts that have the ability and the governance structure to react to the current environment, there will be genuine investment opportunities in the coming months. In the meantime, we recommend carrying your umbrella to weather the storm.”Hymans Robertson Foundation launches hardship fund for charitiesA charity hardship fund has been launched by The Hymans Robertson Foundation in response to the growing and urgent needs of the UK’s most vulnerable people and communities as a result of COVID-19.As of last week, the fund opened for applications for the aid of more than 50 charities which are already funded and supported by the consultancy’s foundation. Charities will be encouraged to complete a short application for individual grants between £500 (€564) and £5,000 and the foundation will meet weekly to make funding decisions.In an announcement, the consultancy said the Hymans Robertson Foundation would also like to hear from other limited liability partnerships (LLPs), professional services firms or businesses that may be interested in joining this initiative, either through a donation or by co-funding.The foundation has established governance, policies, procedures and payments in place to assure other co-funders that funding will be targeted to reputable UK based charities, it added.Clive Fortes, the foundation’s chair, said: “We are living in unprecedented times which has been particularly tough for the charity and voluntary sector. The Hymans Robertson Foundation’s Hardship Fund represents the beginning of our efforts to meet the growing and urgent need.”He added: “While the UK and Scottish governments’ response to increased funding to the third sector is very welcome, we know that our charity partners desperately need emergency funding now.”He said the fund offers the foundation’s existing partners access to additional funding and remote volunteering support to the most vulnerable.
It can be completely opened up to the outdoor area. This Casuarina house looks like it has come from the future.A FUTURISTIC house that appears to defy the rules of gravity has hit the market with an impressive price tag to match.The beachfront property at Casuarina, which is listed for $3.888 million or 471 Bitcoins, has been designed to push the boundaries of architecture.Its second level balances on top of the ground floor at a terrifying angle, making it look like it could topple at any moment. The entire wall of windows on the ground floor opens up to the outdoor area. It looks like it could fall over at any moment. The open kitchen, dining and living area takes up the majority of the ground floor.Owner and designer Greg Costello said its daring design was what made the building so impressive.“There’s over 80 tonnes of weight (hanging) there,” he said.But he was quick to assure the top level was not at risk of falling, explaining the structure was “anchored to the earth”. HOME WITH ‘SECRET ROOM’ TOPS CHART More from news02:37International architect Desmond Brooks selling luxury beach villa15 hours ago02:37Gold Coast property: Sovereign Islands mega mansion hits market with $16m price tag2 days ago COAST AMONG MOST EXPENSIVE CITIES TO RENT Mr Costello, who is a builder and property developer by trade, bought the Beech Lane block in 2016 with plans to design the unusual home, aptly named “The Jetsons’’.“I’ve got a bit of an ability to see what should be on blocks of land,” he said.“It comes to me quite quickly. I stood on this block of land and said, ‘This is what it needs’.”He called on Dimension3Architects to help design the five-bedroom house, which draws inspiration from Googie Architecture, in which buildings are defined by geometric shapes and bold use of glass, concrete and steel. The windows make it look like the inside of spaceship. It has modern fixtures and fittings throughout.“It only took six months from start to finish. Everything went really well in the build,” he said.“This is the most liveable house I’ve ever owned or been in. It has an amazing flow.”The north-facing wall of windows on the ground floor was his favourite part of the house.“That entire wall opens up,” he said.“The 28m of opening doors, it really feels like the inside is the outside. It’s very seamless.”LJ Hooker Kingscliff agent Nick Witheriff, who is marketing the property with colleague Carol Witheriff, said Mr Costello had used the 841sq m block’s space well.“They wanted to really draw on that 58m of north frontage that the block has,” he said.The property had already generated plenty of attention in its first two weeks on the market.“We had close to 3000 views online in the first five days,” he said.“We’ve probably had six really decent inquiries as well.”Mr Costello is selling the house to invest money in his cryptocurrency business. The property pushes the boundaries of architecture and is unlike any other surrounding it.