Austrian pension fund VBV Vorsorgekasse beat off stiff competition from France and the Netherlands to win the ‘Best Investor in ESG’ (environmental, social and governance) award at the TBLI ESG Leaders Awards in Zurich.The €1.8bn Austrian investor, which has been committed to the inclusion of ESG since it started in 2002, left the French public service supplementary pension scheme ERAFP and Dutch fiduciary manager PGGM behind to claim the prize.Meanwhile, MSCI ESG Research, which has just been selected by the UK’s £40bn (€47.7bn) Universities Superannuation Scheme to provide ESG research, ratings and screening tools, scooped the award for ‘Best ESG Research House.’The other two nominees were UK-based Maplecroft and Germany’s oekom research. Meanwhile, Doris Schönemann, founder of Switzerland-based Investor’s Dialogue, waded into the debate over pension funds’ divestment from fossil fuels.During the ‘Carbon Bubble’ roundtable at the TBLI conference, she said: “As part of the liquidity challenge, [pension funds] also have to invest in carbon-heavy stocks. There is no way out because, at the moment, out of the 10 biggest stocks in the world, eight are energy related.”But institutional investors are aware of this. The pension industry is aware of the carbon risks. What you can do as an institutional investor is to gradually shift to renewable energy, and underweight a little bit the carbon-heavy stocks.”But she acknowledged that, because renewable energy companies tend to be small to medium-sized, liquidity constraints often prohibit pension funds from increasing allocations to them.Schönemann said she was also concerned about the size of mainstream energy companies, which she deemed too big to fail.“If you have an oligopoly, as we know from economics, they are prone to price fixes and prone to fraud – so there is a reputational risk in the big stock companies,” she said.”In general, pension funds do not like reputational risks. What they can do as institutional investors is engagement. Engagement is one of the core instruments for institutional investors.”Secondly, because they are also quite a heavyweight, they can intervene in politics and influence politicians to scale down the big ones.” Zurich-based LGT Venture Philanthropy was named ‘Best Impact Investor.’The shortlist for this category was completed by Bridges Ventures from the UK and Bamboo Finance from Switzerland.Finally, Moringa Partnership – a private equity SICAV vehicle for sustainable agroforestry – won ‘Most Innovative Impact Investing Project’ ahead of Africa Integras and the Media Development Investment Fund.
Maclean laid out a number of possible avenues for the scheme to pursue, including retaining investment staff as employees of Edinburgh Council under different terms from other council employees, outsourcing all investments or shifting investment staff to an outside company.The fund currently manages more than 60% of assets in-house, and noted that the option of shifting staff to a special-purpose vehicle owned by the council was the preferred option.This is being put to the pensions committee for a formal vote today.The shift to a wholly owned company would involve the drafting of a “formal and transparent” remuneration policy and avoid the risk of pay disputes with other council employees were staff to remain legally employed by the local authority.Maclean’s report stressed that salaries paid out under the fund’s preferred model would not necessarily be higher, but rather they would allow the special purpose vehicle’s board to consider industry salary benchmarks when agreeing compensation.It added that if the proposal for a special-purpose vehicle were accepted, it would shift 11 of its staff – including head of investment and pensions services Clare Scott and investment manager Bruce Miller – to the new entity.As part of a further report, Maclean said there remained a risk the fund could lose staff as the UK economy improved, despite lay-offs by local employer Scottish Widows Investment Partnership.The fund also said its FCA authorisation had not yet been submitted but that the application would be lodged with the regulator within the next six months.It said it would initially not apply for authorisation to act as a custodian of assets or operate a collective investment fund, as this would keep the capital requirements for the proposed company to a minimum.However, the report added that there was “scope to vary the FCA permissions at a later date if required in the future”.Lothian, which also manages the Lothian Buses Pension Fund and the Scottish Homes Pension Fund, saw returns of 6.8%, 8.9% and 2.1%, respectively, across the three schemes during the 2013-14 financial year.It currently employs Baillie Gifford and Invesco as managers for its Pacific equity portfolio; UBS Asset Management and Mondrian Investment Partners as emerging market managers; Cantillon, Lazard Asset Management, Harris and Nordea as global equity managers; and AG Bisset as currency hedge provider.Additionally, Standard Life manages part of its property, while Rogge manages its corporate bond portfolio. Lothian Pension Fund may move its investment staff to an external, wholly owned company to ensure it does not lose employees to rival managers.The local authority scheme, which earlier this year announced it would be applying to the Financial Conduct Authority (FCA) to formally register its in-house team, said a recent review of its governance arrangements had raised concerns over the fund’s ability to retain staff.A report by Alastair Maclean, director of corporate governance at the £4.3bn (€5.2bn) scheme, said high turnover was a “recipe for poor outcomes”.“Not only could significant change prompt an expensive contingency plan, it could jeopardise the strategy,” he said.
As of December last year, Pioneer’s AUM exceeded €200bn.Santander Asset Management is partly owned by Spanish bank’s Banco Santander, after the bank sold half of its stake to private equity firms Warburg Pincus and General Atlantic last year.According to recent rumours, UniCredit was in talks to retain the US arm of Pioneer.However, Ghizzoni said an agreement with Santander “would concern the whole of Pioneer”.Milan-based UniCredit has been looking to shift Pioneer from its books for some time and saw the collapse of a sale to French asset manager Amundi during the euro-zone crisis.According to earlier reports, the Italian bank had been evaluating bids for Pioneer before entering exclusive talks with Banco Santander for the potential merger.Other bidders were reportedly from the private equity space, including Advent International and a group including CVC Capital Partners and Singapore sovereign fund GIC.Under the new arrangement, UniCredit, Banco Santander and private equity owners Warburg Pincus and General Atlantic would each own one-third of the merged business.The move by UniCredit and Banco Santander comes as European banks look to offload asset management businesses to shore up capital reserves in light of new EU regulation.Earlier this month, it was reported that UBS Global Asset Management (GAM) hired Pioneer Investments’ Oliver Bilal to lead its EMEA business.Bilal was distribution head for the Italian asset manager’s German operations.He left Pioneer after four years and was the second high-profile departure so far this year.Chief executive Sandro Pierri left Pioneer at the end of January, replaced by deputy Giordano Lombardo, after two and a half years in the role and 11 at the company. Italian bank UniCredit is closing in on a deal to merge its asset management arm, Pioneer Investments, with Santander Asset Management.According to news wire reports from Italy, UniCredit chief executive Federico Ghizzoni suggested the signing of a merger between Pioneer and Santander was only days away.A UniCredit spokesperson confirmed the reports were correct.A merger of the two business, which was first reported in September last year, would create a European asset manager with assets under management (AUM) of around €380bn.
The dispute has been ongoing since 2009, when SPVG increased its gold holdings to 13% as a form of “insurance” against a drop in the value of its assets.The regulator, however, considered the allocation a concentration risk and ordered the scheme to cut its gold exposure to 3%.SPVG argues it lost returns, as the price of gold rose steadily after the forced divestment in 2011.It won several successive court cases, receiving a positive verdict even from the Netherlands’s highest court.The level of compensation, however, remained to be decided.The CBb court, according to the FD, has now ruled that SPVG failed to show it would have offloaded its gold holdings between 2011 and 2013, when prices reached their highest point over the period. Since 2013, the gold price has more or less fallen back to its 2011 level, when SPVG had to sell most of its holdings, the court said.Meanwhile, SPVG decided to liquidate itself in 2014, joining the €21bn industry-wide pension fund PGB in October.As a consequence, it was forced to cut pension rights by more than 4.3 percentage points, despite a €7.5m contribution from the employer together with an extra €4.2m as a “dowry” for joining PGB.At the time, it also guaranteed payment of the amount it expected to receive from the regulator.According to Erik Lutjens, a pensions expert at law firm DLA Piper who advised SPVG, all options for an appeal have now been exhausted. The Dutch financial regulator (DNB) is under no obligation to compensate SPVG for the losses the pension fund claims to have incurred after the watchdog forced it to divest most of its gold holdings. A corporate appeal college ruled that SPVG – the pension fund for glass manufacturer Vereenigde Glasfabrieken – had failed to make its case, according to Dutch news daily Het Financieele Dagblad (FD).With the verdict, the Netherlands’s highest court for social and economic administrative law (CBb) overturned an earlier decision by a Rotterdam court that the regulator had to pay €4.8m in compensation.The regulator appealed the decision, arguing that there had been “no damage” to the scheme, while SPVG did the same, claiming it lost nearly twice the amount awarded by the court.
Eight distinct pools are emerging, with the schemes having until next week, 15 July, to submit detailed proposals for the pools to the Department for Communities and Local Government (DCLG).Government ministers and spokespeople have been referring to the new pools as British “wealth funds”, a controversial label, as it implies the pension assets becoming public money. The reform talks have also highlighted the role the LGPS can play in financing national infrastructure, and a new national infrastructure platform for the asset pools is one option being considered by the DCLG. The new cross-party group will be chaired by Clive Betts, a Labour Party MP.He said: “Local authority pension funds are off the radar for most parliamentarians, yet their role as pension providers and investors in the UK in new British wealth funds is critical.“Parliament needs to better understand what local authority pension funds can offer the country. They also need to be aware of what planned changes to the investment regulations mean, not least for local constituents.”Kieran Quinn, chair of the Greater Manchester Pension Fund (GMPF), the largest LGPS, said the cross-party group was vital to address the “significant changes” local authority pension funds were undergoing.Quinn is also chair of the LAPFF, of which 70 local authority pension funds are members, with combined assets of more than £175bn.“Government plans around pooling, [and] attempts to strengthen local government funds and drive greater investment in UK infrastructure, place a whole new set of requirements and responsibilities on the sector,” he said, adding that these “must be effectively negotiated and managed to be successful”.He added: “This is why a new All Party Parliamentary Group is essential.”The APPG already plans to have discussions with the minister for local government, Marcus Jones MP, and Andrew Adonis, chair of the National Infrastructure Commission.The APPG will count as one of its vice-chairs Bob Kerslake, president of the Local Government Association (LGA) and former permanent secretary of the Department for Communities and Local Government (DCLG).He is a member of the House of Lords.The other vice-chairs are Ian Blackford MP, Mark Prisk MP and Lord Goddard.The other members are:- Julian Knight MP- Bob Blackman MP- Kevin Hollinrake MP- Ruth Cadbury MP- John Healey MP- Steve Reed MP- Alan Brown MP- Mary Robinson MP- Jeff Smith MP- John McNally MP- Lord Larry Whitty- David Anderson MP- Lord Jonathan Mendelsohn- Lord Richard Best- Lord Jeremy Beecham- Roger Godsiff MP- Richard Burden MP The UK Local Authority Pension Fund Forum (LAPFF) is sponsoring a new all-party parliamentary group (APPG) that will provide a forum for discussion about the development of “British wealth funds”, among other areas of change affecting local government pension schemes (LGPS).The group is described as providing a forum for local authority pension fund members “to talk to Parliament and the government about making greater use of pension fund money for infrastructure, local growth and housing”.Also on the group’s agenda is the role of pension funds in corporate governance and shareholder activism and the reform of the LGPS.The 89 LGPS in England and Wales have been asked to combine their assets in at least half a dozen pools of at least £25bn (€29.2bn).
Local government pension schemes (LGPS) generated an average investment return of 21.4% in the 12 months to the end of March, according to Pensions & Investment Research Consultants (PIRC).PIRC’s sample of 60 local authority pension funds – out of 89 in England and Wales – recorded a five-year annual average return of 10.7%. Over 20 years, the average annual gain was 7.4%.Karen Thrumble, head of performance services at PIRC, said: “The strong performance has been driven by the excellent results from equities which returned almost 30% for the year. The outperformance of benchmark indices by alternative assets was the key driver in the unusual statistic that more than three quarters of funds managed to outperform their benchmarks in the latest year.”Thrumble added that LGPS assets were “in good health”.Employer withdraws from Milk Pension FundNational Milk Records (NMR), a service provider for UK dairy farmers, is exiting the Milk Pension Fund, the industry-wide scheme for the milk and dairy industry.As part of the “flexible apportionment arrangement”, NMR will pay just over £10m (€11.4m) to the fund to cover some of its liabilities.The company will also pay £4.7m in cash and NMR shares to Genus, a genetics company and another member of the Milk Pension Fund, to take on other aspects of its pension liabilities. NMR also plans to sell a subsidiary company to Genus.In a statement to the stock exchange this morning, NMR chairman Philip Kirkham said: “Our liabilities to the Milk Pension Fund have been a key issue for the company, restricting its ability to attract new investment. We believe that withdrawal from the fund will facilitate growth, enabling NMR to focus on its cash-generative core business and rebuild its historic strong balance sheet. Furthermore, it will give shareholders and potential investors in the company greater clarity as to the group’s underlying performance, while freeing up valuable resources and management time.”NMR paid £2.7m into the scheme in the five years to 31 March 2016, the company said, and is expected to pay £10.2m in the next nine years. Shareholders will be asked to approve the withdrawal at a meeting later this month.DB deficits hold steady in MayAcross all private sector defined benefit (DB) schemes the shortfall edged slightly higher to £183bn, up from £182bn in April, according to JLT Employee Benefits.A separate estimate from PwC using its Skyval DB index recorded a fall in the aggregate UK deficit to £510bn. However, adjusting for new life expectancy data, the deficit was an estimated £210bn.Charles Cowling, director at JLT employee benefits, said addressing DB shortfalls would continue to be the “single biggest headache” for many companies.The Pensions Regulator recently warned companies to ensure a fair balance between payments to DB schemes and to shareholders, while a proposed change to accounting rules could see companies forced to disclose more information about their pension liabilities on their balance sheets. 3i Group seals £200m buy-inPrivate equity giant 3i Group has agreed a £200m buy-in for its DB scheme with Pension Insurance Corporation (PIC).The transaction covered roughly 40% of the scheme’s liabilities for pensions in payment, according to a statement from PIC. Carol Woodley, chair of trustees for the scheme, said: “The [pension scheme] has been de-risking for a number of years, primarily by moving our asset mix to favour index-linked gilts.“We are very pleased to have been able to complete this logical next step in our long-term de-risking programme. PIC demonstrated significant expertise while helping us to manage a complex project and ultimately deliver the transaction we required.”Michelle Wright, partner at LCP and lead adviser on the deal, said it was “an excellent example of the attractive pricing that persists in the market for well-prepared pension plans”.Scottish National Party supports state pension ‘triple lock’Scotland’s main political party has pledged support for the ‘triple lock’ on the UK’s state pension in its general election manifesto.The Scottish National Party (SNP) said it would maintain the policy, introduced in 2010, which guarantees that payments will increase by the level of inflation, average earnings, or 2.5%, whichever is highest.The party also voiced its opposition to increasing the age at which people can claim the state pension beyond 66.“We will support the establishment of an Independent Savings and Pension Commission, to ensure pensions and savings policies are fit for purpose,” the manifesto said. “The remit of the commission should include consideration of the specific demographic needs of different parts of the UK in relation to [the] state pension age.”The SNP also backed plans to extend auto-enrolment to include lower-paid workers and self-employed people are covered. The Conservative Party, predicted to win an overall majority of
Some analysts have pointed out that, over the past few years, the bond market landscape had not only been changed by quantitative easing (QE), but also by the economy itself. Companies from the technology sector such as Apple and Google have become more influential and have to pay very low interest on their bonds.At the same time, industrial sectors take up a smaller share of the economy and are deemed more at risk of default as they have to pay higher interest on their bonds.To prepare for this scenario, Jachs said he was seeking to “diversify into as many liquid asset classes as possible” via active management. “We need liquidity for rebalancing, arbitrage and opportunistic investments because too many unforeseen things can happen,” he said.Despite the ‘lower for much longer’ outlook, institutional investors need to prepare for future rate hikes, said Peter Becker, managing director at Wellington Management.“The low returns we have leave no buffer to protect from [QE] tapering, and it is clear that federal banks will want to get out of the current situation sooner or later,” Backer said.He added: “Short duration credit should still be going well even if there is limited potential for further narrowing of the spreads.”However, Bernhard Goliasch, head of asset management at the Signal Iduna Group, had a more relaxed view on markets: “Currently we have a period of relative calm compared, for example, to 2001 to 2003 when we lost 90% with equities.”Signal Iduna, which incorporates insurers and other financial service providers, has “a higher equity quota” than other German insurers, Goliasch said.“Part of the equity investments offer stable dividend income which can be seen as the ‘new coupon’,” he added.He added: “Investors have to decide whether they accept worse, more illiquid credit investments or rather go into equities.” No matter what the central banks decide in future, institutional investors are convinced bond yields will remain at a very low level.At the Institutional Retirement and Investor Summit in Vienna last week, asset owners and asset managers voiced their belief that bond yields were unlikely ever to return to old levels.“The ‘low for longer’ scenario will remain, and this is not only down to the national banks but because of technological reasons,” said Walter Jachs, head of portfolio management for the pension reserve fund of the European Patent Office in Munich.Even an interest rate increase by the US Federal Reserve would not change this outlook, he said. Yesterday the Fed raised its main interest rate for the third time in seven months, to 1.25%.
The change – which resulted in hundreds of funds being culled from the funds marketplace (fondtorget) – was the first part of the two-stage reform to the system of individual accounts agreed upon by the cross-party pensions group.The first stage was aimed at curbing abuse of the system and making the funds platform safer, following several scandals over rogue players.The second stage, which is still being debated, is set to include big changes to the operator of the default fund, AP7, and the introduction of a procured range of investment options instead of the current funds marketplace which is open to all providers meeting certain criteria.The next stage of the reform is likely to see the number of private products offered in the defined-contribution premium pension system whittled down still further.Even though the details have yet to be finally agreed, an implementation date of 1 April 2021 has been set for stage two of the reform.Shekarabi said the second step was not “in itself” dependent on the effects of the first step.“But as part of the preparation of the procured fund marketplace, current experience of the reform’s first step is of value,” the government minister said.Looking for IPE’s latest magazine? Read the digital edition here. The Swedish Pensions Agency (Pensionsmyndigheten), which runs the private funds marketplace underlying the country’s first-pillar premium pension system, has been told by the government to perform an evaluation of the two-year-old overhaul of the platform – and given less than a month to do it.The Ministry of Health and Social Affairs said it was instructing the agency to assess the effects of the November 2018 reform, under which stricter requirements were introduced for funds and fund managers in the premium pension system.In the notice to the pensions agency, minister for social security Ardalan Shekarabi said: “The evaluation shall refer to all measures proposed in the bill ‘A safer and more sustainable premium pension system’ (Bill 2017/18: 247) and which constituted the so-called 29-point programme.”He said the agency’s report was to be submitted to the government no later than 14 October.
23 Clarendon St, Hyde Park 23 Clarendon St, Hyde ParkA FORMER North Queensland Cowboy has sold his character-filled Townsville home to a local family.NRL star Jacob Lillyman, who now plays for the Newcastle Knights, sold 23 Clarendon St in Hyde Park earlier this month for $420,000. QLD’s Jacob Lillyman. Queensland vs New South Wales for game one of the 2017 Origin Series at Suncorp Stadium. Pic Peter WallisRay White Geaney Property Group selling agent Brett Lipscomb said the family who bought the home loved the character of the house.“They loved the Queenslander style and the location,” he said.More from newsNew apartments released at idyllic retirement community Samford Grove Presented by Parks and wildlife the new lust-haves post coronavirus18 hours ago 23 Clarendon St, Hyde Park 23 Clarendon St, Hyde Park“They weren’t actually NRL fans but they were intrigued by the home’s history.“We’re pretty ecstatic with the price and from the price feedback I had gotten the sale price was right in the middle of that.”Mr Lillyman, who has also represented Queensland in State of Origin, bought the house to live in during his Cowboys playing days.He said he hung on to the house with hopes of pulling on the Cowboys jersey again but with a move north unlikely in the short-term he decided to sell the home.The house has four bedrooms, two bathrooms and is on a 567sq m block.The Queenslander has been immaculately maintained.
59 Carmody Road, St LuciaThe house was built on a 405sq m block, and was designed so the living and entertaining areas overlooking tropical gardens and Ironside Park.With its numerous decks, balconies and terraces, the home benefits from breezes and natural light.On the main living level there is a central kitchen with granite bench tops, stainless steel appliances and a bold red backsplash. It links directly to the entertainment deck via a servery window.Four bedrooms can be found on the upper two floors, as well as a central lounge, a bathroom and ensuite. Green views from the kitchen.“It is very much an executive style house … had a lot of professionals looking at, professors, people who work at the university,” he said.“The real standout is the entertaining area at the back, with its large deck, pool and the outlook over the reserve.” 59 Carmody Road, St LuciaMore from newsDigital inspection tool proves a property boon for REA website3 Apr 2020The Camira homestead where kids roamed free28 May 2019She said there was no way they could afford a similar property in Melbourne, noting that the St Lucia property was “like an oasis close to the city”.Dixon Family Estate Agents director Jack Dixon said the home was drawing the attention of professionals. 59 Carmody St, St Lucia.WITH its horizon-edge pool, covered deck and leafy views, this St Lucia home was built to celebrate the Queensland outdoor lifestyle.The four-bedroom home at 59 Carmody Rd was built in 2005 and bought by the current owners, Santina Lo Grasso and Richard Checketts, in 2015.The couple have now moved to Melbourne for work, and are living in an apartment near a tram line. The leafy outlook at 59 Carmody Rd, St Lucia“It is nowhere near as peaceful as it was in St Lucia,” Ms Lo Grasso laughed. “The St Lucia house felt like we were on a tropical holiday.”Her favourite part of the house was the indoor-outdoor entertaining space. The deck overlooks a reserve.In addition, there is a powder room, an office, a double lockup garage, water features in the gardens, and the yard is fully fenced.The house is within easy reach of Ironside State School and the University of Queensland, and within walking distance of shops, transport and a golf clubIt will go to auction onsite at 11.30am on July 28.