UK government publishes framework for DC guarantees, collective DC

first_imgLess than three weeks since, the government has put forward its plans for how these schemes can be created.It said a new legislative framework would be crucial to the success of any defined ambition project and to encourage innovation into risk-sharing models.The government will introduce a new legal definition of ‘collective benefit’, to be allowed under the defined ambition and DC frameworks.These included collective DC models and leaves the potential for other retirement income protection mechanisms, including the use of deferred annuities similar to Denmark’s ATP.In a potentially significant deviation from the current system, the government will expand the definition of DC schemes to allow for self-annuitisation and collective DC arrangements, as long as they do not offer guarantees while members accumulate savings.DC schemes in their current form are prohibited from annuitising member savings, by automatically being reclassified as defined benefit and thus falling foul of additional regulation.This means DC savers have been forced into the insurance company annuity market, often criticised for being uncompetitive and offering poor value.The new framework for defined ambition schemes will have its own regulatory protections that the government hopes will support innovation in risk-sharing and collective models.However, it warned that these schemes would still be strictly governed in the interest of members.“We will also ensure proportionate regulation by applying requirements to certain features – where there is a promise, for example, ensuring it is funded – while still maintaining transparency in the law so employers are clear on the extent of their obligations,” the government said.With regard to collective DC models, the DWP said the framework would draw on the experience of other countries where these models currently exist, with emphasis on clarity and transparency.The schemes will be overseen by experienced fiduciaries, potentially removing the common UK usage of lay, and member-nominated, trustees.“We will also introduce a robust regulatory regime in respect of targeting benefits and internal accounting, providing regulators with the appropriate mandate and tools to supervise schemes properly,” the government said.Aside from collective DC models, the government also consulted on a variety of potential risk-sharing pension schemes.The legislative framework will also set out space for further types of models, focusing on guarantees for retirement income that come into place as a member ages.It will therefore not provide space for any money-back guarantees within DC schemes, but it will continue analysis and work out how other models fit in within the legal parameters.These include capital guarantees, which protect the nominal value of member savings midway through the savings cycle; the use of retirement income insurance, which avoids single-event conversion risk; and the Danish ATP-style pension income builder, which uses continuously purchases deferred annuities.However, the government said these models came with significant issues, namely scale, tax treatment and the ability of schemes to hedge risk.The Bill will go before the UK Parliament today, before entering through the legal process before becoming law.Steve Webb, the Liberal Democrat pensions minister, said: “These reforms meet the needs and concerns of business while, at the same time, standing up for the interests of workers who are doing the right thing and saving for their retirement.“With the backing of consumers and industry, this Bill will bring about new and realistic pension scheme options for those employers who want to do right by their staff.” The UK government has published the legal framework for its defined ambition agenda more than six months since the close of its industry consultation.The publication includes parameters for the creation of “risk-sharing” pension schemes in an entirely new legal framework outside of defined contribution (DC) and defined benefit (DB).In November 2013, the Department for Work & Pensions (DWP) began consulting with UK stakeholders on the creation of risk-sharing pension schemes under the banner of ‘defined ambition’.This was followed by a commitment in the Queen’s Speech, which said the government would put forward legislation to allow the innovation of new pension scheme products in the UK market, focusing around the collective DC model.last_img read more

Ros Altmann replaces Steve Webb as UK minister of pensions

first_imgIndustry veteran Ros Altmann has been appointed pensions minister at the UK Department for Work & Pensions (DWP).She was appointed by re-elected prime minister David Cameron, who reshuffled his Cabinet on Monday after winning the UK general elections last week.Altmann replaces outgoing minister Steve Webb, a Liberal Democrat who lost his seat in the Thornbury and Yate constituency to the Conservatives.Webb served as pensions minister for the last five years, overseeing a major reform of the sector. The UK National Association of Pension Funds (NAPF) welcomed Altmann’s appointment.Chief executive Joanne Segars cited the challenging times for an industry midway through “the biggest reforms in decades” but said her organisation looked forward to working with the new minister.“We want to share our expertise to negotiate the tough challenges that lie ahead – some of which may require difficult decisions,” she said.“We encourage the minister to consider the benefits an independent commission would offer. By providing impartial and independent expertise and analysis, a commission would allow the minister to make policy that stands the test of time.”Altmann boasts more than two decades’ experience as an independent adviser to the pensions industry, financial services companies and the government on pensions policy.She has also worked as an investment banker, fund manager and economist.She was recently appointed the UK government’s Business Champion for Older Workers and awarded a CBE in the Queen’s Birthday Honours 2014 for services to pensioners and pension provision.last_img read more

Western managers set to access Chinese pensions market through JVs

first_imgSeven foreign asset managers in existing joint ventures with Chinese firms are positioned to share in the management of an initial allocation of what is expected to be around CNY400bn (€55bn) of pension money from Chinese provinces.The allocation is expected to come through China’s National Council for Social Security Fund (NCSSF), set up in 2000 to manage pension savings from Chinese provinces.The NCSSF oversees CNY1.5trn in social security funds.On Monday this week, the NCSSF granted 21 Chinese fund managers mandates to handle domestic equity investment. Among the first batch of firms selected are the largest Chinese financial services companies – China Life Pension Insurance Company (CLPC), Ping An Insurance and CITIC Securities – along with a handful based in Hong Kong, including Harvest Asset Management and ICBC Credit Suisse.Brittany Payne, an analyst with Shanghai-based asset management consultancy Z-Ben Advisors, told IPE: “Our estimate is that the first tranche (of allocation) will be round CNY400bn – and that amount could be disbursed next year. We believe there will be top-ups in coming years, and that these will be significant amounts.”When approached by IPE, a spokesperson for CLPC described the selection of investment managers for domestic securities investment as “a significant milestone” in market reform of the Chinese pension system.The spokesperson said: “CLPC will consolidate its own resources and leverage its advantages to contribute to the safety, stability and long-term growth of the national pension savings fund.”Sydney-based AMP acquired a 20% holding in CLPC in October 2014 for AUD240m (€168.8m).AMP also has a relationship with China Life going back a decade.In 2013, the partners formed China Life AMP Asset Management, in which AMP Capital has a 15% stake.Apart from CLPC, Payne said all the foreign joint ventures benefiting from the mandates were with Chinese fund management companies.Deutsche Asset Management is the joint venture partner of Harvest Fund Management Company, based in Hong Kong, and ICBC Credit Suisse Asset Management Company is a joint venture between ICBC and Credit Suisse.Others foreign firms to receive mandates include Bank of Montreal through its joint venture with Fullgoal Funds Management; BNP Paribas with HFT Investment Co; Eurizon Capital with the Shenzhen-based Penghua Fund Management; and Power Corporation of Canada with ChinaAMC.According to the Chinese Ministry of Human Resources and Social Securities, as of the end of 2015, the total capital of China’s provincial pension funds had reached CNY4trn – up by 12% from the previous year.The NCSSF move this week comes a decade after discussions first began about the need to use professional managers for provincial pension savings.It is seen as a significant breakthrough in moving towards a market-orientated, professionally managed basic pension fund scheme for the whole of China.China’s State Council issued a regulation in August last year that allowed provincial governments to transfer part of their pension funds to the NCSSF.Under this regulation, 30% of total funds could be allocated to domestic equities, shifting away from the then-mandatory requirement to invest only in government bonds and bank deposits.Sources said China’s pension industry comes under three pillars.Pillar One covers the compulsory basic aged pension scheme; Pillar Two covers corporate schemes in the enterprise annuity sector and occupational pension sector for the civil service; and Pillar Three is for individual voluntary savings, including wealth management and insurance products.Pillar Two and Pillar Three funds are already professionally managed by institutional investment managers such as CLPC, whose combined assets under management for enterprise annuity business is around CNY400bn.Sources told IPE the mandates covered by this week’s NCSSF announcement relate to Pillar One.Funds under Pillar One were entirely managed by provincial governments until 2012, when a pilot programme giving some flexibility was launched, involving the Guangdong provincial government.This programme enabled Guangdong Province to allocate CNY100bn from its basic pension fund to the NCSSF.Shandong provincial government followed with CNY50bn. Then, earlier this year, Shandong invested a further CNY100bn with the NCSSF, according to sources.In its annual report, NCSSF noted that total returns by the end of 2015 to Guangdong amounted to CNY31.43bn, and to Shandong, CNY3.7bn.One source told IPE: “Going forward, it is expected that more provincial governments will entrust the NCSSF in the management of their basic pension funds.”last_img read more

Bulk of Polish second-pillar assets looks set to stay in private sector

first_imgPoland’s current pension review is nearing the end of its consultation period, with the final decision postponed from the end of this year to the first quarter of 2017.According to the Social Dialogue Council – the co-operation forum between employers, trade unions, government officials and representatives from the presidential office, central bank and national statistical office – the most likely outcome is that three-quarters of the assets of the second-pillar pension funds (OFEs) will be transferred to newly created third-pillar accounts, and the remainder to the Demographic Reserve Fund (FRD).This plan was co-authored by finance and development minister Mateusz Morawiecki and colleagues in the FRD and the Ministry of Family, Labour & Social Policy (MRPiPS).The new accounts would be run as investment funds (TFIs) and in the first two years managed by the FRD’s own TFI. Thereafter, they will be managed by the private sector, while the second-pillar fund management companies will themselves be transformed into TFIs.The alternative proposal, a full-scale transfer of all OFE assets into the FRD, is the preferred option of, among others, the state Social Insurance Institution ZUS, OPZZ (one of the two biggest trade union confederations) and reportedly sectors within the MRPiPS itself.It remains in play because of suspicions that the Law and Justice (PiS) government could be forced into tapping into pension assets to keep its budget and public debt deficits within EU limits, just as its predecessor did when it removed all state bonds from OFE portfolios in 2014, and continue funding its flagship projects, notably the 500-plus child-benefit programme, and next year’s reversal of the previous government’s raising of the retirement age.Poland’s 2017 budget remains just within the deficit thresholds only if GDP grows by 3.6% year on year, and inflation does not exceed 1.3%, two targets seen as highly optimistic.The full nationalisation of OFE assets is the nightmare scenario for Poland’s capital markets.Earlier in December, Poland’s Chamber of Brokerage Houses (IDM) wrote to the government spelling out the catastrophic consequences for the Warsaw Stock Exchange (WSE), Polish companies’ access to finance, foreign investment and the overall economy.The document points out that the OFEs have shareholdings in more than 250 WSE-listed stocks and account for more than 20% of the exchange’s market capitalisation and 43% of the free float.In the case of the free float, a nationalisation would lead to an automatic offload of Polish assets by passively indexed ETFs, followed by sell-offs by remaining foreign investors, and a liquidity drainage and eventual marginalisation of what is the CEE region’s biggest stock exchange.last_img read more

APG, PGGM set out investment routes to UN development goals

first_imgThe intention was to “kickstart the conversation about a market standard for SDIs”, said Kruse.The managers of the €389bn Dutch civil service pension scheme ABP and €187bn healthcare scheme PFZW identified 13 investable SDGs, with two deemed not investable, and two deemed potentially investable. SDG #16, for example, which refers to “peace and justice, strong institutions”, was deemed not investable by APG and PGGM, as they said it was “not possible to contribute to this goal through investment activity”.However, within SDG #11 (“sustainable cities and communities”), for example, the investors identified potential areas of investment including “public transport, rail [infrastructure], transport sharing” and “traffic management systems, vision and sensor systems, airbags”.#*#*Show Fullscreen*#*# Dutch pension managers APG and PGGM say they have identified investment opportunities linked to 13 of the United Nations’ 17 Sustainable Development Goals (SDGs).The results of the research – which the investors have referred to as “taxonomies”, or classifications – demonstrated areas they consider potential “sustainable development investments” (SDIs), bridging the gap between the UN’s targets and tangible investment opportunities.Claudia Kruse, managing director for responsible investment and governance at APG Asset Management, told IPE the “taxonomies” were designed to provide “clear guidance on what type of investments qualify as SDIs”.“The taxonomy is by no means perfect yet,” she said. “A lot of work and thought has gone into it but what we are really hoping is that it is the start of an in-depth conversation between asset owners on how we can take this further as we gain more and more experience implementing this in our portfolio.” Source: APG, PGGMMore detailed guidance is under development but has not yet been published.Wider asset owner backingAPG and PGGM have shared the taxonomies and supporting guiding materials with several other institutions. Sweden’s four main buffer funds and Australia’s Construction and Building Unions Superannuation fund are said to have explicitly expressed their support.Kruse said APG and PGGM believed the guidance was the first to come from asset owners that are private market entities.Els Knoope, senior responsible investment and governance specialist at APG, said the intention was to share the work with external managers to encourage the development of investment opportunities meeting APG’s and PGGM’s standards.“We already see some proliferation of products being developed at the moment that maybe are not as close to what we intend, so we really hope that sharing this work and further developing it will help,” Knoope said.She also hinted that accountability to beneficiaries was a consideration fuelling the work on the taxonomies.“We want to speak the same language to ensure it’s as close as we can get to what our ultimate beneficiaries aim for with this approach,” she said.Kruse and Knoope both emphasised that a lot of judgement was involved in deciding whether an investment can be labelled an SDI. The work done by APG and PGGM could serve as a standard for guiding that judgement, they said.APG and PGGM had a commitment to invest in “solutions to sustainability challenges” before the launch of the SDGs at the end of 2015. At this time, ABP, APG’s main client, set a target of doubling its allocation to what were called then “high sustainability investments” by 2020, from €29bn to €58bn. Over the course of 2016 APG worked with PGGM, whose clients have also made commitments to sustainability investments, to align their definitions of these investments with the SDGs. In September 2016 they and other Dutch asset managers and the Swedish buffer funds published a statement setting out their commitment to invest in line with the SDGs.last_img read more

IPE August 2017 Expectations Indicator: Managers shift on Japan

first_img% predicting rise (previous month) 10 (10) 4 (6)8 (7)  10 (8) EquitiesUSEuro-zoneJapanAsiaUK % predicting fall (previous month) 25 (22)18 (15)  16 (18) % predicting stability (previous month)50 (52)20 (23)26 (35)38 (41) 54 (57)  % predicting stability (previous month) 41 (46)46 (39) 48 (41)  % predicting fall (previous month) 65 (64) 35 (32) 52 (46) 68 (64) % predicting fall (previous month)20 (19)6 (3)9 (8)10 (8)19 (18)  % predicting stability (previous month) 25 (26) 61 (62)40 (47) 22 (28)center_img The trend for more asset managers to adopt a bullish to neutral outlook for sterling bonds came to a halt last month. For the first time in several months, there was an increase in the share of managers expecting prices to fall. After a six percentage point increase, this is now narrowly the majority view (52%).Asset managers were most bearish on euro bonds, with 68% expecting a fall in price, up from 64% the previous month. There was a small increase – three percentage points – in negative sentiment on euro-zone equities, although this is the equity market managers were most upbeat about. The biggest changes in asset managers’ expectations for different markets last month were reserved for Japan, according to IPE’s August Expectations Indicator.Every month IPE polls asset managers on their six to 12-month views on regional equities, global bonds, and currency pairs.In July, the sample of 89 investment managers turned positive on Japanese equities for the first time in several months, with 65% predicting a rise, up from 57% the month before. The last time there was a positive shift was in March.Belief in dollar strength continued to fade, with the biggest change in sentiment – a 10 percentage point decline – registered in managers’ outlook for the greenback to rise versus the yen. There was a corresponding increase in those expecting stability in the dollar’s relationship with the yen.  Currencies $/€ $/¥ $/£  Bond prices $ ¥ £ € % predicting rise (previous month)30 (29)74 (74) 65 (57) 52 (51)27 (25)  % predicting rise (previous month) 34 (32)36 (46) 36 (41) last_img read more

Head of alternatives exits Nestlé in-house manager

first_imgThe head of alternative investments at Nestlé’s internal asset manager has retired, IPE has learnt.Thierry Ralet was head of alternatives at Nestlé Capital Management from September 2010, according to his LinkedIn profile.He was chief financial officer at Nestlé Capital Advisors (NCA) for almost four years before that.His retirement is effective 1 December. His departure coincides with Nestlé overhauling its global pension management operations, as part of which it is withdrawing from providing regulated services such as asset management. The activities of NCM are being discontinued in connection with this.As reported, Nestlé recently stripped its internal asset managers of a number of mandates and appointed BlackRock as interim investment manager.Other departures at NCM include that of Duncan Sanford, who led NCM’s UK operations as CEO and CIO and is understood to have left the manager effective 3 May 2017. This was the same day BlackRock officially took over from NCM and NCA as manager of the Robusta funds, which is the umbrella fund through which pension assets of Nestlé’s international pension schemes are pooled.Alliance, its €622m Dutch pension fund, has divested from hedge funds that were part of Robusta, and also withdrew an allocation to European small caps.Jayne Atkinson, previously investment manager for Nestlé’s UK pension fund, left the company earlier this year. She is now CIO for Unilever’s UK pension fund.Nestlé has CHF23bn (€21bn) in pension assets across the countries in which it operates. Many of its branches have separate pension entities.According to the company’s 2016 full-year report, NCM was managing CHF10.4bn at year-end, almost unchanged compared to 2015 (CHF10.8bn). External managers ran most of the remaining assets, including the majority of investments for the Pensionsfonds and Pensionskasse in Germany.last_img read more

UK roundup: Fiduciary manager 2019 performance ranges widely

first_imgUK fiduciary managers produced a wide range of performance outcomes last year despite buoyant market conditions, according to research from XPS Pensions Group.Focussing on the “best ideas” growth portfolios, net of fees, of 16 fiduciary managers, the pensions consultancy found there was a 12 percentage point difference between the best and worst performing managers, with the worst returning 8.3% and the best 20.5%.Over a three-year period, the return difference between the fiduciary manager with the best and worst return equated to a 20% cumulative difference.Compared with a selection of more than 20 high-profile DGFs, the majority of fiduciary managers in 2019 delivered returns broadly in line with or above the median DGF return. André Kerr, head of fiduciary oversight at XPS Pensions Group, said: “While the risk profile of the investment strategies used by the strongest performers won’t suit every scheme, we would have expected all fiduciary managers to have outperformed the average DGF given the favourable market conditions of 2019.”According to XPS’ analysis, the fiduciary managers who achieved the greatest returns over one and three years did so with a higher allocation to equity markets, thereby also registering the greatest volatility of returns.Looking ahead to the COVID-19-triggered market downturn in the first quarter of 2020, Kerr told IPE that the managers that did well last year with high equity allocations “were probably the best positioned coming into Q1”.XPS has analysed fiduciary managers’ 2020 first quarter performance for a report due out soon, and Kerr said the dispersion was once again large, at around 14 percentage points.“COVID-19 represents the first major test for fiduciary managers, as most did not provide a UK offering during the global financial crisis of 2008/09,” he said.“In order for schemes to benefit over the long term from strong performance of their fiduciary manager during 2019, their portfolios also need to be resilient to downside shocks to financial markets.”The full report can be found here.Isio DB platform attracts 40th schemeThe Cumberland Building Society Pension and Assurance Scheme, with around £60m (€67m) in assets, has joined an operational consolidation platform run by Isio, a newly launched pensions advisory firm.Governed by Entrust Pension Limited, an independent professional trustee company, Enplan Pension Platform offers defined benefit schemes a “one-stop shop” for specialist governance solutions, professional advice and technology, and bespoke strategic direction. It can help employers modernise the running of legacy DB schemes.Richard Ellison, chief financial officer at The Cumberland Building Society, said: “Following a competitive tender process, we appointed Enplan for the clear benefits we saw in their ability to simplify the operation of our DB pension scheme and bring it in line with the strategic objectives of the Society more widely.“The additional upside we found is their continuous and professional governance. Enplan is an effective solution for building societies at a time when the industry is focused on improving governance and creating efficiencies.”The Cumberland Building Society’s DB pension scheme covers 450 members across the company’s key operations centres in the north of England and Scotland.Looking for IPE’s latest magazine? Read the digital edition here.last_img read more

Where to buy near the water from Cairns to Cassowary Coast

first_imgPeter Bachelor checking on his boat in Half Moon Bay Marina, Yorkeys Knob. Picture: Stewart McLean Clump Point Median sale price (past 12 months) Median sale price (past 12 months) Bingil Bay $355,000Mission Beach $310,000 Bluewater Marina, Trinity Park This suburb has beaches, cafes, a tight-knit village atmosphere and the Half Moon Bay marina where you can safely berth your vessel close to the northern beaches of Cairns.Yorkeys Knob Boating Club manages moorings in the 197-berth marina just 15 minutes from the Cairns CBD.The marina was constructed in 1994 and includes the multimillion-dollar marina clubhouse built out over the water. Bingil Bay and Mission Beach residents not only live a glossy, tourist-brochure lifestyle but they are also in the best position to take advantage of the new Clump Point marina currently going through the approvals process.The upgrade of the current Perry Harvey jetty will add a new boat ramp lane, floating walkway, improved breakwater, carpark and new moorings and is set to get underway next year.More from newsCairns home ticks popular internet search terms2 days agoTen auction results from ‘active’ weekend in Cairns2 days ago Median sale price (past 12 months) Five localities on the shores of Lake Tinaroo offer space as well as proximity to the region’s best inland fishing, water skiing and boating spot.Tinaroo, Kairi, Barrine, Danbulla and the bigger township of Yungaburra are all popular with retirees or those seeking a tree-change prompting the construction of a number of small housing developments.Lake Tinaroo also has five camping areas located in the Danbulla State Forest. Tinaroo $312,500Yungaburra $381,000 Trinity Park $440,000 Tinaroocenter_img Inner-city Median sale price (past 12 months) Yorkeys Knob As you might expect for a tropical, waterside metropolis, Cairns has two moorings in the city, the Cairns Yacht Club at Pierpoint Rd in the CBD and Cairns Cruising Yacht Squadron at Portsmith. The city offers plenty of apartment options with buildings on the Esplanade high on the wishlist of newcomers to the city.Just a few kilometres out, Bungalow, Parramatta Park and Westcourt are the places to look for proximity to the Portsmith marina. Perry Harvey Jetty. Photographer: Liam Kidston. Median sale price (past 12 months) State government regulations mean this Cairns canal development, where you can park your boat right outside your home, is the last for the region. FNQ Hot Property principal Nathan Shingles said it was a shame there would be no more house and marina packages.“Environmentalists think they’re bad but it provides a habitat for fish,” he said.“Bluewater harbour has good partnership in place with state government and there is regular dredging. It costs about $800,000 a year for the dredging.”With 108 berths, Bluewater Marina is cyclone-rated with deepwater access and the Great Barrier Reef is as close as 20 minutes offshore. Elysian at Bluewater. Residential development.FAR North Queensland has some of the best boating and fishing opportunities in Australia so where can you buy to minimise travel time to the water and maximise on-deck hours. Yorkeys Knob $371,000 Bungalow $365000Parramatta Park $452,750Westcourt $345,000Cairns City $295,000 (unit)last_img read more

A ‘social’ house has the best chance of selling

first_imgThis house at 103 Wendouree Crescent, Westlake sold for $1.65 million.SOCIAL media campaigns have led to the sale of two prestige properties in Brisbane’s Centenary suburbs. One buyer walked around the corner and another drove down Mt Tamborine to secure their new homes. SEE WHAT ELSE IS FOR SALE IN THE CENTENARY SUBURBS McGrath Paddington sales agent, Reuben Packer-Hill, said both properties received one offer after buyers saw the properties on Facebook.“That first week or two weeks are the most critical in the campaign,” Mr Packer-Hill said.The five-bedroom house at 4 Bowman Place, Mount Ommaney, sold for $1.2 million in its second week with McGrath Estate Agents.More from newsDigital inspection tool proves a property boon for REA website3 Apr 2020The Camira homestead where kids roamed free28 May 2019This house at 4 Bowman Place, Mount Ommaney sold for $1.2 million.“They were renting around the corner and were just waiting for the right thing,” he said.“Negotiations took a couple of weeks; they wanted a pool installed in the property.”The five-bedroom house at 103 Wendouree Crescent, Westlake, sold for $1.65 million after its first open house, to a Mt Tamborine couple who were downsizing and moving closer to family. >>>FOLLOW THE COURIER-MAIL REAL ESTATE TEAM ON FACEBOOK<<< MORE REAL ESTATE STORIES Located on the bank of the Brisbane River is 103 Wendouree Crescent, Westlake.“There is still a big portion of people looking for homes with self-contained areas whether they are granny flats or rumpus rooms with kitchenettes,” Mr Packer-Hill said.last_img read more