EIOPA approach to sponsor valuation ‘inconsistent, arbitrary’, says USS

first_imgThe Universities Superannuation Scheme (USS) has warned that the European Insurance and Occupational Pensions Authority’s (EIOPA) proposed approach to valuing sponsor support risks being arbitrary and applied inconsistently.The £38.6bn (€45.2bn) pension fund, the UK’s second-largest, also said evaluating the support of its higher education sector sponsors would require a “very significant” use of resources, and urged the regulator to conduct further work on potential methodology.In its eight-page response to EIOPA’s discussion paper on sponsor support technical specifications, seen by IPE, USS said it was unclear how the proposals would “deliver any extra insight” on sponsor stability compared with the existing system.“It could be argued that the alternative approach is overly simplistic and mechanistic,” the response said, echoing concerns by lobby group PensionsEurope. “The assessment of sponsor support should rely on the judgement of the trustees supported by their professional advisers, so a broad principles-based approach, rather than calculating a single number, should be adopted that would reflect the variety and diversity of IORPs,” the response continued.It also rejected proposals by EIOPA to adopt asset or income covers – which the regulator argued in the discussion paper were already successfully deployed by banks to assess creditworthiness – as a means of gauging sponsor strength.Citing the example of a technology company where its value stemmed from intellectual property and brands, USS said: “The asset cover would be low, and sponsor support may be identified as weak.“This would not reflect the real value of the business and could lead to actions that would be damaging for the sponsoring employer and IORP. Similar weaknesses may be identified in respect of income cover.”The fund further warned about the practicality and cost involved in assessing covenants for multi-employer schemes such as USS, which caters to nearly 400 institutions.“The time and resource required to collect and collate the data needed to value sponsor support under the alternative approach would be very significant, especially given the arbitrary nature of any formulaic output.“If EIOPA does wish to proceed with this type of approach, a great deal of further work would be required on the above areas,” it said.Its concerns were echoed by the National Association of Pension Funds, which in its own discussion paper response said it would be “impossible” to operate the sponsor valuations in the non-profit or multi-employer sector – both labels applicable to USS sponsors.The NAPF said it would prove ”completely inappropriate” to apply a methodology based around credit ratings and data derived from corporate bonds and credit default swaps to the non-profit sector.The UK lobby group also said EIOPA would be “well advised” to discontinue work on sponsor support – and, by extension, the holistic balance sheet – until the revised IORP Directive with new governance and disclosure guidelines had passed.“Many IORPs do not have the resources to consider both sets of issues, and there is a risk the debate on sponsor support and the holistic balance sheet will distract attention from securing the best possible outcomes on governance and disclosure,” it said.,WebsitesWe are not responsible for the content of external sitesLink to National Association of Pension Funds discussion paper responselast_img read more

Brussels attempting to ‘run before it can walk’ on pan-European pensions tracker

first_imgThe European Commission is being overly ambitious in its attempts to launch a pan-European pensions registry, as member states must first find a level playing field for their national systems, according to the director general of the not-for-profit in charge of the Belgian national pensions database.Steven Janssen of SIGeDIS noted that there were many problems that needed addressing before the Commission could consider a continent-wide database – such as the one in Belgium – or a service similar to PensionsInfo.dk in Denmark.In a panel at the WorldPensionSummit in Amsterdam, Janssen said the model would have a problem not only with establishing identifiers for individual pension fund members, a system not in place in many of the EU member states, but also a clear way of linking the national identifiers with each other across tracking services.“For instance, if a Dutch person were to come to work in Belgium, he would get a unique identifier in Belgium, too,” he said. “Now we have to link the Dutch unique identifier with our identifying key, and someone has to do the interlinking and guaranteeing that the links are correct and stay correct.” Of the Commission’s ambitions for a pan-European system, which saw the European executive ask Dutch, Danish and Finnish providers to advise on how such a system could look, he said: “You should not, like we say in Flemish, try to run before you can walk. The European Commission is already thinking about running, and we are still not at the same level of creating registers at the national level.”Ole Beier Soerensen, currently chief of research and strategy at Denmark’s ATP and involved in the launch of PensionsInfo.dk 15 years ago, agreed with Janssen, although he joked that the reason the Danish system’s launch had been successful was the fact the country was “one of the existing communist monarchies”.“At present, the Belgians have [a tracking system], the Swedes have it, the Dutch have it and the Danes have it – but there are 490m people in the European Union who don’t have it,” he said.“Make national systems first, and once you’ve got them, please come and talk to us.”He added that he did not expect the pan-European project to launch within his lifetime.Evert Hoeksma, director of operations at the Dutch venture Stichting Pensioenregister, nonetheless was strongly in favour of tracking systems being rolled out in other nations, and said countries such as the UK would benefit.“Especially in the UK, it’s more or less a necessity because, if you’re in the UK and you’ve worked for four, five, six different companies – which many people have – and they have quite poor pension information, you’ll probably [be] at a loss.”He said the fragmented nature of the UK pension system – which currently has more than 6,000 active defined benefit funds and many more smaller scale defined contribution (DC) arrangements compared with around 400 pension funds in the Netherlands – only underlined the necessity for a tracking service, but also likely meant the government would need to introduce legislation to require pension funds to provide the data.“It is an effort,” he admitted, “but, in Holland, basically, the information we need is a very small set of data on each participant in the pension scheme.”Beier Soerensen said opposition to launching such systems would often come from within the industry, but that the existing examples had proven the infrastructure could be developed.Failure to launch such systems was a matter of the “political inability to accept collectivity and enforcement as a tool”.“We [the Danes] do that,” he said. “Trust the tools – they are no big deal in ideological terms. Of course, it doesn’t look like that in the US and UK.”,WebsitesWe are not responsible for the content of external sitesLink to Danish service PensionInfo.dkLink to Dutch system MijnPensioenOverzicht.nllast_img read more

Swedish pensions body calls for smaller-scale EU stress tests for IORPs

first_img“I’m rather afraid the people who want the stress tests conducted would like to test as many angles as possible and are not taking into account the additional costs that in the end pensioners have to bear,” Hansson said.Although he said EU pensions oversight was necessary, he said the new IORP law could not be the same for the whole of Europe because pensions in each EU member state were based on local social law.“If you had an IORP law that was the same for all of Europe, that would be a problem because there are so many different conditions in different areas,” he said.“Pensions are member-based contracts based on labour law, negotiated by employers and unions, and they are different across Europe.”Last week, IPE reported that Patrick Darlap, chairman of EIOPA’s Financial Stability Committee, said the European Insurance and Occupational Pensions Authority was preparing stress tests for IORPs for some time in 2015. Early stress tests for institutions for occupational retirement provision (IORPs) in the EU – now likely to happen next year – must be designed in a limited format in order to keep costs down for pension funds, the Swedish Occupational Pension Fund Association has said.Peter Hansson, chairman of the association (Tjanstepensionsforbundet), told IPE: “If we are to have stress tests, the exercise needs to be very limited, and the cost of producing the stress tests needs to be very low.”He said that, at 170 pages in small print, the stress tests conducted last year were impossible for many IORPs to handle, and the outcomes were hardly representative of the European pension industry.He said it was unreasonable for pension funds, purpose-built to provide workplace pensions, to be burdened with huge additional costs as a result of the tests.last_img read more

Dutch regulator replaces Sleijpen as director of pension fund supervision

first_imgBert Boertje has been appointed director of pension fund supervision at De Nederlandsche Bank (DNB) as of 1 May, replacing Olaf Sleijpen, who has held the job since January 2011.The appointment is part of a larger reshuffle at the Dutch regulator, in which four division directors have exchanged roles.In his new position, Boertje is to become responsible for the supervision of more than 300 pension funds and premium pension institutions (PPIs).He currently heads the Financial Markets division, after having been in charge of DNB’s Intervention & Enforcement and Risk and Asset & Liability supervisory expertise centres. Boertje has studied economics at the Rijksuniversiteit Groningen and obtained a master’s degree in risk management from New York University.He is a member of the Markets Committee of the Bank for International Settlements.Outgoing director Sleijpen will be put in charge of the DNB’s department for policy supervision, focusing on the development and implementation of national and international policy for financial supervision and supervisory strategy, according to the regulator.He is to succeed Paul Hilbers, who is to head the division for financial stability.last_img read more

Lufthansa sees pension fund liabilities soar 40% in three months

first_imgIndustry association PensionsEurope recently warned that pension funds risked being “collateral damage” as further monetary easing policies were launched, and urged regulators to consider postponing valuations or being more lenient as deficits increased. Lufthansa saw staff costs increase by more than 5%, despite a fall in employees, citing the fact it needed to increase pension provisions.The 90-basis-point drop in the discount rate led to the pension liabilities increasing by €2.9bn to €10.2bn, coming close to doubling compared with March 2014.In its first-quarter report, the company said: “Looking ahead to the quarters to come, it is not possible to rule out a further reduction in interest rates as a result of monetary policy and therefore the resulting impacts this would have on both the amount of the pension obligations shown on the balance sheet and equity.”The airline in 2013 announced that it would close its DB arrangement after expressing concern over rising costs.The shift to a defined contribution arrangement triggered a number of strikes as recent as March 2015. Lufthansa’s pension liabilities have increased by nearly €3bn after the current low interest rate forced the airline to cut its discount rate by almost 1 percentage point.The German flag carrier said liabilities rose by 41.2% compared with December – when a discount rate of 2.6% was still applied – after the rate was cut to 1.7%.The airline is the latest company to see its pension arrangements impacted by the European Central Bank’s quantitative easing programme that has seen yields fall.Mercer Netherlands recently warned that the low rate environment could increase the cost of pensions by 10%, and the new approach to monetary policy has also exacerbated the deficit within the Bank of Ireland’s defined benefit (DB) scheme.last_img read more

AP1 invests $100m in bespoke BlackRock EM impact fund

first_imgThe investment strategy was devised by BlackRock’s Systematic Active Equity (SAE) division, which manages more than $100bn of assets.AP1 said the fund was designed for clients wanting to invest in a way that takes measurable social and environmental impacts into account without compromising on financial returns or the need for benchmark awareness.AP1’s Majdi Chammas, head of external asset management, and Tina Rönnholm, portfolio manager for external management, said in a statement: “As an asset owner, we are constantly looking at how we can improve our portfolio from a sustainability point of view while targeting the returns we need for the pension system.”The pension fund preferred to integrate environmental, social and governance factors into investment processes, the pair said, adding that the use of differentiated sustainability insights was no longer an obstacle in emerging markets. BlackRock has made the new fund available to other investors“We are therefore very pleased to see that our discussions with BlackRock have evolved into the development of this innovative new fund, open to other professional investors as well, where technology can help improve not only investment but also sustainability insights,” Chammas and Rönnholm said. Debbie McCoy, managing director and head of sustainable investments in the BlackRock SAE team, said the company saw strong interest from clients who wanted to incorporate sustainability into portfolios alongside traditional financial return targets in all areas including emerging markets. “We are pleased to have the capabilities to deliver this solution for AP1, and respond to the sentiment being expressed by investors, especially in the Nordic region, to expand the sustainable investment universe,” McCoy said. Sweden’s AP1 has put $100m (€83.5m) into a new emerging markets equity fund created by BlackRock at the fund’s request.The BlackRock Emerging Markets Equity Impact fund was launched by the investment giant in response to AP1’s desire to invest with sustainability considerations in emerging markets, the Swedish pension fund said.A spokeswoman for AP1 told IPE the pension fund had invested $100m in the new fund initially, but planned to put more into it over time.The product – which is a UCITS fund and available to other investors – uses data on returns and sustainability to put together a “highly diversified” portfolio.last_img read more

Australia reneges on retirement age increase

first_imgMorrison said the government would ratify the decision next week.   Australia has abandoned plans to legislate for a rise in the retirement age from 67 to 70.Prime minister Scott Morrison – who has been in his role less than two weeks – said the decision came after a series of announcements as part of this year’s budget, which were designed to support older Australians to live longer, healthier and more active lives. “If they want to keep working, well they can, and things like the pension work bonus and programmes like that will support them in that choice,” he said. “But for those who aren’t in that position, then the pension will be there and the retirement age will remain at 67.”  Scott MorrisonThe government decided in its 2014-15 budget to lift the age at which Australians can claim the ‘age pension’ from 65.5 years to 67 years by July 2023. It was then due to rise again to 70 by 2035.At the time, the federal government forecast that lifting the retirement age to 70 would save the country AUD5bn (€3bn) in pension payments over a decade. The Australian Institute of Superannuation Trustees (AIST) described Morrison’s announcement as a “big win” for older Australians. The AIST had been lobbying the government to change its policy, according to its chief executive CEO, Eva Scheerlinck.Speaking at a superannuation profit-for-member conference in Cairns, she said: “Raising the access age for the age pension to 70 would have been unfair and discriminatory to many older Australians who simply do not have the opportunity to continue in paid work.”According to the World Bank, the average life expectancy of Australians is 82.5 years.last_img read more

Dutch roundup: ABP launches energy transition fund

first_imgABP said its investments in sustainable energy were aimed at carbon reduction and increased energy efficiency.It added that its investments through ANET would specifically target energy techniques, including hydrogen, energy storage, thermal grids, geothermal energy, waste processing and biomass, as well as electric vehicles and related infrastructure.Smurfit Netherlands targets liquidation Dutch civil service scheme ABP has launched an energy transition fund focusing on local small projects and companies involved in the generation, distribution and usage of energy.The €399bn pension fund said that it would immediately commit €50m to the fund, known as ANET, with more commitments likely in the future.“We want to be a social partner for the local energy transition and take our responsibility for tackling climate change,” said Geraldine Leegwater, board member at ABP. “ANET enables ABP to make an extra step in contributing to the transition to sustainable energy, while also generating decent returns for ABP’s participants.”The Netherlands has committed to reducing carbon emissions by at least 49% by 2030, relative to 1990 levels. Packaging company Smurfit Kappa is seeking to merge away one of its two pension fundsThe board of the closed pension fund Smurfit Netherlands aims to liquidate and transfer its assets to insurer Nationale Nederlanden and sister scheme Smurfit Kappa.The two Smurfit pension funds originate from a merger in 2005 between a former subsidiary of Irish firm Smurfit and Dutch company Kappa, resulting in a large worldwide manufacturer of packaging.The new company started merging its two pension funds in 2017, when the Smurfit Kappa scheme took over pensions accrual for the participants of its sister scheme, which subsequently closed to new entrants.Pension fund Smurfit Netherlands, which has 1,200 participants, runs a defined benefit (DB) plan for salaries up to €40,000 and a defined contribution (DC) scheme for any earnings over this level.However, it has now decided to liquidate altogether, citing significant costs of maintaining the scheme, increasingly complex legislation and regulation, and stricter requirements for trustees.If regulator De Nederlandsche Bank (DNB) approves the liquidation plan, Smurfit Netherlands’ pension assets accrued under its DC scheme – and currently managed by NN Investment Partners – will move to Smurfit Kappa.Its €150m of DB capital will transfer to Nationale Nederlanden.Steven Stoffer, chairman of the €700m Smurfit Kappa fund, said his scheme would continue to exist “in particular as its funding has increased to over the required minimum level of 104.3% in 2018”.Pensioenfonds Smurfit Kappa has approximately 5,000 participants and has outsourced asset management for its DB plan to PGGM.Robeco runs the pension fund’s DC arrangements, and NN subsidiary AZL is its administrator.Professional pension advisers join forces in PensioenordeTwo Dutch industry organisations for pension advisers and experts have joined forces in order to increase the professionals’ voice in debates about various issues.The Register Pensioenadviseurs (RPA) and the Nederlandse Orde van Pensioendeskundigen (NOPD) have named their new merged organisation Pensioenorde.It will be co-chaired by Borgert Tegel and Johan van Eekhout, the chairmen of the NOPD and RPA, respectively. “We want to increase the combined number of members from 300 to 500, covering more than 50% of the market,” said Tegel.He added that the goal was to become a true occupational association, with education requirements as well as disciplinary rules. Tegel said the Pensioenorde wanted to join debates about new rules and legislation “as we see in practice where things can go wrong”.He said that the organisation had already taken part in consultations on new rules about pensions and divorce.The members of the Pensioenorde work at a variety of large and small consultancies, but have joined the organisation on an individual basis. However, Tegel said that the industry organisation would also open its membership to companies.last_img read more

UK pension policy fails construction workers

first_imgA freedom of information request made by Unite, the UK and Ireland’s largest union, has revealed that the government’s pension policy is failing construction workers, with fewer than one in four regularly paying into a workplace pension.The figures obtained from the Department of Work and Pensions (DWP) show that just 23% of blue collar construction workers are “participating in a workplace pension”.A breakdown of the figures reveals that the Office of National Statistics (ONS) estimates that 1.5 million workers are employed in blue collar construction work. The DWPs figures show that just 349,000 blue collar construction workers (skilled trade occupations, elementary occupations, plant and machine operatives) are paying into a pension.The paucity of construction workers paying into a pension is a major failure of the government’s auto-enrolment pension scheme, which was designed to ensure that all employees pay into a workplace pension. The revelation that the majority of blue collar construction workers don’t have a pension is likely to result in them facing poverty in retirement.Unite assistant general secretary Gail Cartmail said: “These figures show that the government’s auto enrolment pension policies are failing construction workers.“This failure will result in hundreds of thousands of construction workers being forced into poverty when they retire.Factors that result in construction workers not having a pension include:- rampant bogus self-employment with roughly half of blue collar construction workers being officially registered as self-employed and therefore not eligible for the auto-enrolment scheme;- the extensive use of umbrella companies where workers are required to contribute both employers’ and employees’ pension contributions making them unaffordable for many;- short-term engagements that result in workers believing it is not worth making pension contributions;- construction employers’ hostility to paying pension contributions.Cartmail said that rather than tackle the factors that “make it difficult or impossible for construction workers to contribute to the auto-enrolment pension regime, the government has acted like an ostrich and chosen to ignore the problem”.She added that “until rampant casualisation and bogus self-employment are tackled in the construction industry, workers are not going to be eligible or prepared to register for a workplace pension.”last_img read more

Cricketing great Ian Healy sells Brisbane home of nearly 20 years

first_imgThis home at 15 Buena Vista Ave, Coorparoo, has sold. The view from the home at 15 Buena Vista Ave, Coorparoo, which has sold.The home has five bedrooms, two bathrooms, a pool and two-car garage and sits on a large 974 sqm block.The property was sold off market by Steven Gow of Ray White Bulimba, who declined to comment.It was marketed as being located in “one of the best streets on the south side of Brisbane” with “spectacular city views”. COFFEE KING SELLS GOLD COAST APARTMENT More from newsParks and wildlife the new lust-haves post coronavirus17 hours agoNoosa’s best beachfront penthouse is about to hit the market17 hours ago The front of the home at 15 Buena Vista Ave, Coorparoo.The property offered the potential to renovate, rebuild or sub divide subject to council approval.Records show the property last sold for $685,000 in June 1999.Coorparoo is a high demand suburb 5km from Brisbane’s CBD and has a median house price of $875,000, according to property researcher CoreLogic. NO DELUSIONS OF GRANDEUR HERE Former Australian Test cricket wicketkeeper Ian Healy. Picture: Nigel Hallett.AUSSIE cricketing great Ian Healy has sold his Brisbane home of nearly 20 years for $2.215 million.The former Test cricket wicketkeeper has lived in the house at 15 Buena Vista Ave, Coorparoo, with his wife, Helen, and their three children for nearly two decades. GET THE LATEST REAL ESTATE NEWS DIRECT TO YOUR INBOX HERE Ian Healy dives low to claim a catch off skipper Hansie Cronje during the Australia vs. South Africa Third Test match at Adelaide Oval in 1994. Picture: Leigh Winburn.Brisbane born and bred, Ian Healy was considered one of the greatest wicketkeepers to have graced the game during the 1980s and 1990s.Post retirement, he became a television sports presenter and commentator. Healy now owns the Hoppy’s car wash business, which has 10 sites in southeast Queensland.last_img read more