Dutch healthcare scheme PFZW grants partial indexation of 0.94%

first_img“Although the economic recovery appears to be taking hold, the financial markets are still volatile,” he said. “This underlines the importance of a new and future-proof pension scheme, which should moderate wide fluctuations.” Almost all asset classes contributed to the pension fund’s return, which the director described as “satisfactory”. PFZW’s liquid equity portfolio returned 21.3%, while its private equity holdings returned 19.4% “due to revaluations”.The scheme added that structured credit delivered 20.4% on lower credit spreads. The scheme’s 11% property allocation returned 7.7%.The healthcare fund further reported results on infrastructure, hedge funds and catastrophy insurance of 5.4%, 5.6% and 9.6%, respectively. In contrast, the pension fund lost 10% on its fixed income securities, mainly as a result of rising interest rates. Its 22% allocation to government bonds, interest and inflation swaps lost 13.8%.However, Jan-Willem van Oostveen, the scheme’s investment manager, pointed out that this figure included the effect of the rising interest rates on the 40% hedge of the pension fund’s liabilities.Within this context, the healthcare scheme concluded that a sustained increase of long-term interest rates may drag on total returns in future. Yet Borgdorff explained to IPE that the pension fund would still reap the benefits of rising interest rates for the non-hedged part of its liabilities, and stressed that the funding ratio was the scheme’s most important criterion. PFZW attributed the 5.9% loss on its investments in high yield and emerging market debt to the depreciation of local currencies against the euro. It also said the return on commodities was close to 0%, “as the price increase of Brent oil and industrial metals was largely offset by price drops of West Texas Intermediate oil and agricultural products”.The scheme added that corporate bonds benefited from a decrease in credit spread, returning 1.1% in 2013.During the presentation, Borgdorff lamented the consecutive delays at the Ministry of Social Affairs in drawing up proposals for a new financial assessment framework (FTK).He said he was worried the new introduction date of 1 January 2015 could not be met either, and added that PFZW still strongly supported a new pensions contract under real terms rather than nominal terms.The scheme’s director also called for a broad debate about the review of the pensions system, involving all stakeholders, and including all controversial issues, instead of solving one problem at the time. The healthcare scheme Zorg en Welzijn (PFZW) saw its assets increase to more than €137bn on the back of an annual return of 3.7%, supported by a fourth-quarter result of 1.9%.Last year, the pension fund’s coverage ratio increased by 8 percentage points to almost 110%, enabling the scheme to grant a partial indexation of 0.94%, according to Peter Borgdorff, the scheme’s director, during the presentation of the preliminary figures. He indicated that PFZW would keep the yearly pensions accrual at 1.95% for its participants this year, and that it would also keep the contribution level at 24.4% of the salary.However, Borgdorff said he remained cautious.last_img read more

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Friday people roundup

first_imgAZL/Nationale-Nederlanden, AMF, Aviva Investors, Spence & Partners, JTC GroupAZL/Nationale-Nederlanden – Arthur van der Wal has been appointed director of pensions at insurer Nationale-Nederlanden (NN) as of 1 July. He takes over from Michel van Elk, who has combined the jobs of pensions director and chief executive during the past six months. Currently, Van der Wal is chief executive of pensions administrator and adviser AZL, a subsidiary of NN. In his new role, he will also be a member of the supervisory board of AZL. Van der Wal has been chief executive at AZL for three years. AZL is still looking for a successor. AMF – Anders Munk has been appointed as the new chief actuary and head of the actuarial department at Sweden’s AMF. He comes to the role from the position of chief actuary at KPA Pension. Munk will take up his new job in August.Aviva Investors – Ian Pizer has been hired by Aviva Investors as senior fund manager of multi-assets. He comes to the company from Standard Life Investments, where he was investment director of multi-asset investing and portfolio manager on the global absolute return strategies (GARS) fund and the absolute return bond strategy. Pizer will be based in London and report to Peter Fitzgerald, head of multi-assets. Spence & Partners – Michael Spink has been appointed by Spence & Partners as DC pension consultant. He will be based in the London office. Spink will act as lead DC consultant on both employer and trustee DC assignments, including auto-enrolment support. He was previously a principal at Aon Hewitt, joining in 1998, and before that was a senior consultant at Watson Wyatt. JTC Group – Angus Taylor has joined JTC Group as group head of fund services. He comes to the company from Herald Trust Company, where he was managing director since 2012. Prior to that, he was deputy chief executive officer for Kleinwort Benson private bank.last_img read more

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AlpInvest ranked world’s second-largest private equity investor

first_imgThis year, the study looked beyond fund investments for the first time, PEI said, adding that this reflected an increasing trend for institutions to invest outside the traditional primary fund structure.Dan Gunner, director of research and analytics at PEI, said: “In the main, fund managers should be pleased to see such strong commitments and allocations to private equity.“They’ll be less excited to see ever more interest from LPs in direct and co-investment opportunities.”He added that this was a trend that showed little sign of slowing.CPPIB came out as the biggest private equity investor in the latest survey, committing $26.2bn to private equity funds in the five years to the end of February, followed by AlpInvest, which had committed $19.5bn.AlpInvest was owned by APG and PGGM until 2011, when ownership was transferred to the Carlyle Group, but the two Dutch institutional investors remain big investors via the PE manager.Looking at the larger group of the top 50 private equity investors, North American institutions still dominated, PEI said, with about 60% of total commitments coming from US institutions.In the top 50, pension funds were the group investing the most, committing $144bn, followed by funds-of-funds, which were responsible for $93.9bn, or 30% of capital pooled by limited partnerships. AlpInvest Partners, the private equity firm used by Dutch pension groups APG and PGGM, is the world’s second largest private equity investor and the sole European in a top 10 headed by the Canada Pension Plan Investment Board (CPPIB), according to a new survey.The remaining 10 investors are all North American and include pension funds the California Public Employees’ Retirement System (CalPERS), the Teachers Retirement System of Texas and the Oregon Public Employees’ Retirement System, the LP50 survey of private equity investors by information provider PEI showed.The research covered limited partnerships, institutions that traditionally pool their capital with private equity fund managers.Overall, the top 50 such institutions have allocated $313bn (€230bn) to the asset class in the last five years.last_img read more

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Launch of Dutch mortgage-financing vehicle delayed by EC ruling

first_imgIn addition, he said the Dutch Treasury was still waiting for clarity from Eurostat, the EU’s statistical bureau, on whether the NHI would be counted as national debt.In the past, Van Rutte has estimated that the NHI could potentially attract €25bn of investments over the next five years. The introduction of the Netherlands’ proposed National Mortgage Institution (NHI) – a vehicle for mortgage financing – has been delayed yet again due to new conditions set by the European Commission.The NHI’s purpose is to tempt Dutch pension funds to invest in prime residential mortgages by issuing home loans, purchased from banks, as state-secured bonds.The European Commission, however, has demanded that the banks pass on the full benefits achieved through NHI financing to their customers, according to Jan van Rutte, responsible for setting up the institution.Dutch news daily FD quoted Van Rutte as saying: “Otherwise, the European Commission would consider this as state support.”last_img read more

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AP2, AP4 win Statoil backing for climate-change resolution

first_imgStatoil, in recommending shareholders to support the proposal, said its board of directors welcomed shareholder interest in better understanding the company’s risk exposure and strategic approach to climate change.It said: “We work to address the climate challenge through our industrial approach to create a resilient company and in support of industrial initiatives contributing to the development of well-designed carbon-pricing schemes, efforts to reduce flaring and methane emissions and to pursue industrial solutions designed to reduce the environmental impact of oil and gas production.”It said it was a leader in the industry on transparency in its financial reporting, and that the board would ensure its 2016 sustainability reporting would evolve further to include the additional information.Danielson told IPE: “Climate change and reporting are two main focus areas for us, and we believe that measuring and managing risks and opportunities related to climate change is important.”Both AP2 and AP4, along with AP3 and more than 50 other investors, co-filed a similar resolution at BP’s AGM on 16 April, which BP’s board supported and was overwhelmingly passed by shareholders.The resolution was driven by the £170bn (€140bn) Aiming for A investor coalition, a UK-focused investor initiative led by charity fund manager CCLA and including the UK’s Local Authority Pension Fund Forum (LAPFF) and church investment bodies such as the Church of England Pension Board.Aiming for A was launched in 2012 to engage on climate and carbon risk with the 10 largest extractives and utilities companies in the FTSE 100.Its name is taken from the highest rating (A) awarded by CDP – formerly the Carbon Disclosure Project – an NGO that rates the performance of global companies on climate and environmental matters. The same group of investors that proposed the BP resolution will co-file a similar resolution at Royal Dutch Shell’s AGM, also on 19 May, which the Shell board is supporting.Helen Wildsmith, head of ethical and responsible investment at CCLA, said: “It’s excellent to hear that BP and Shell’s leadership is being replicated in other markets by Statoil, and that our Swedish co-filers were able to secure another board-supported shareholder resolution at such short notice this year.” The board of Statoil, the Norwegian oil and gas company, has backed a climate change resolution to be proposed by Swedish buffer funds AP2 and AP4 at the company’s annual general meeting (AGM) on 19 May.The resolution – ‘Strategic resilience for 2035 and beyond’ – calls for Statoil to expand reporting regarding greenhouse gas emissions; its project portfolio against relevant post-2035 scenarios; and research and development plans for low-carbon energy.It also asks the company to report how it takes sustainability into its strategic key indicators and bonus system.In a joint statement, Ulrika Danielson, head of communications at AP2, and Arne Loow, head of corporate governance at AP4, said: “Since oil-related energy companies have challenges ahead in terms of both financial and environmental issues, we see this resolution as a good tool to help Statoil to strengthen its reporting on climate change issues.”last_img read more

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Dutch, German associations criticise pan-European pension proposal

first_imgPGGM, asset manager for Dutch healthcare pension fund PFZW, and Robeco recently threw their support behind the concept of a standard cross-border plan.According to the Dutch Pensions Federation, however, EIOPA’s plan would create an “uneven playing field” between EU-regulated providers and IORPs providing occupational pension schemes.It said the European Commission should focus instead on second-pillar pensions, which encourage “solidarity, risk-sharing and the participation of all participants in governance”.This, it said, has “clear advantages” over purely commercial products, which “place risk and the drive for accrual with the consumer”.The aba agreed, arguing that “we need more funded pensions in Europe but with the focus on occupational pensions”, as this pillar offered “good value for money”.It said existing systems should be “further developed and enhanced” before new systems were set up.The Dutch Pensions Federation expressed concerns that cross-border product providers would be unable to offer sufficient service locally.“It would be difficult for a Danish provider of a PEPP to advise a participant in Italy correctly about how to deal with his pension rights during a divorce, unless the provider has a local subsidiary,” it saidIt said EIOPA put too much emphasis on pension products’ accrual phase, when the payment phase was “crucial for the quality of the product”.The aba, meanwhile, highlighted the challenge of pinning down the term ‘pensions’, on which “an EU consensus has not yet been reached”.This will cause taxation problems, as “equal tax treatment for different quality requirements may not appear justifiable by all member states”.It added that an equal tax treatment for products of the same quality “already exists in Germany”. The Dutch Pensions Federation has criticised a proposal by the European Insurance and Occupational Pensions Authority (EIOPA) for a pan-European personal pensions product (PEPP). Responding to EIOPA’s consultation on the introduction of a standard, cross-border, third-pillar product, the industry organisation argued that demand for such plans would come only from the “happy few”, and fail to encourage workers to save more for pensions.Germany’s pension fund association (aba) was also critical of EIOPA’s proposal, describing it as “unconvincing” and arguing that many questions “remained unanswered”.EIOPA, at the European Commission’s request, is exploring the possibility of a standard third-pillar scheme.last_img read more

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Largest pension funds in Netherlands facing rights cuts next year

first_imgThe €357bn ABP reported a 3-percentage-point drop in its current funding to 88.2% at the end of February, whereas the trigger level for rights discounts stands at 90%.A coverage of 88.2% at year-end would entail a 1.8% rights cut for its 2.8m participants and pensioners.The discount, however, could be spread out over a 10-year period.PFZW’s coverage at February-end came out at 87% – its trigger level – following a decrease of 3 percentage points.Van Ek pointed out that the trigger level depends largely on the scale of a pension fund’s securities allocation and can range between 85% and 100%.“The larger the allocation combined with a cost-covering contribution, the lower the critical funding is, as the better return prospects for securities weigh heavier than their risks.”According to the actuary, the trigger level for most large schemes is approximately 90%.PMT closed February with a funding of 89.6% after a drop of 2.6 percentage points.Since the start of the financial crisis, the €62bn metal scheme has had to reduce pension rights a couple of times.The same goes for its €41bn sister scheme PME, which saw its coverage fall by 2.2 percentage points to 89.2% last month.With a funding of 102.4% as of the end of February, BpfBOUW, the €48bn scheme for the building sector, is the only large pension fund in the Netherlands managing to avoid the danger zone. Four of the Netherlands’s five largest pension funds have conceded they are facing rights cuts next year if their funding at year-end fails to improve relative to the end of February.Over the last month, civil service scheme ABP, healthcare pension fund PFZW and metal schemes PMT and PME saw their coverage ratios fall below the critical level.Whether they will be required to cut pension rights, however, remains uncertain, as funding has increased by 3-4 percentage points on average in the meantime, according to Mercer.Dennis van Ek, an actuary at the consultancy, pointed out that the MSCI World Index had improved by 4 percentage points over the past two weeks, while the 30-year swap rate – Dutch schemes’ main criterion for discounting liabilities – increased from 1% to 1.2%.last_img read more

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$8trn investor collaboration to shine spotlight on workplace standards

first_imgAn institutional investor-backed initiative targeting better disclosure of company workforce management practices has kicked into action.The Workforce Disclosure Initiative (WDI) has been devised and coordinated by ShareAction, a London-based responsible investment campaign organisation, with funding from the UK Department for International Development. Its initial aim is to gather comparable data related to workforce issues.Founding signatories include 79 investors with nearly $8trn (€7trn) of assets under management between them. The investor group features institutions in 10 countries including major asset managers and pension investors such as APG, RPMI Railpen, NEST, and South Yorkshire Pensions Authority.The WDI officially launched today, after a survey was sent to 75 “megacap” companies: 50 of the largest FTSE-listed firms plus 25 listed on seven other stock exchanges. The request for information covered both developed and developing economies where companies have operations and supply chains. Firms were asked about their governance of workforce issues, global workforce composition and stability, training and development of people, and worker engagement.ShareAction described the WDI as “a streamlined solution to the growing problem of survey fatigue and multiplication of effort by both companies and investors”. Isabelle Cabie, global head of responsible development at Candriam Investors Group, a WDI member, said that over the last 10 years “the market” had not focused on social metrics as much as it had on harmonisation of governance and carbon data. This was despite workforce management policies and practices having had a positive impact on corporate financial performance.However, social-oriented initiatives are gaining momentum, she said, citing regulation such as the UK Modern Slavery Act and voluntary initiatives.ShareAction also cited the 2004 EU Non-Financial Reporting Directive, for which the European Commission recently released guidelines.Cabie said: “At Candriam we are convinced that we are now entering the phase where consolidation is needed and that WDI can perform this role”.The WDI is modelled on the Carbon Disclosure Project, she said.The UK pension fund trade body extended its support for the initiative. Luke Hildyard, stewardship and corporate governance policy lead at the Pensions and Lifetime Savings Association (PLSA), said: “As our research has found, although annual reports nearly always affirm how important their employees are to corporate success, it is often very hard to find meaningful data about how employees are managed, developed and valued.“For pension schemes and other institutional investors this is an important consideration, because companies that think long term tend to perform better over the long term.”last_img read more

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Ortec: Climate change could reduce funding ratios by up to 80%

first_imgAnother difference with traditional ALM models was that Ortec’s model’s duration was much longer than the usual 15 years, because the physical effects of climate change were expected to become clearer over the course of several decades.“Climate effects pose a system risk that pension funds have to take into account anyway,” argued Verdegaal. “If sea levels rise, the impact will have an effect everywhere. It would be almost impossible to avoid this through diversification.”According to Ortec Finance, the 1.5°C scenario would lead to a chaotic energy transition, but resulting in a significant carbon reduction and opportunities for recovery.However, in the 4°C scenario, the economy would increasingly suffer from extreme weather conditions combined with a one-metre sea level rise by 2100.This would cause GDP to drop by more than 10% as of 2060 and would be disastrous for the economy and pension funds, said Verdegaal.She added that purchasing power would also be affected.According to Verdegaal, Ortec’s results didn’t include a potentially enormous increase of the number of climate refugees, “as the impact would be very difficult to factor into the ALM model”.Ortec also made clear that a 4°C rise would pan out better for pension funds’ coverage in the short term – up to roughly 2050 – as costs for energy transition would be lower in a ‘business as usual’ scenario.Verdegaal said that Ortec’s ALM model would enable pension funds to assess how hard they would be hit.“In addition, schemes can use the model to find out how they can make their investment portfolio less susceptible to certain climate risks,” she said.In August, Schroders warned that investors had not been paying enough attention to physical climate risks, as opposed to the risks posed by steps to combat climate change.With temperature rises lagging increases in greenhouse gas concentrations in the atmosphere by around 40 years, further disruption from the effects of changing weather patterns looked unavoidable, the asset manager said.In an earlier report, Schroders had warned that the world remained on course for a 4.1°C temperature rise, as developments in the oil and gas industry had been offset by a slowdown in low-carbon investments. The coverage ratios of pension funds could drop by up to 80% if global temperatures rise by 4°C, a new model for asset-liability management has suggested.The model – developed by Ortec Finance in co-operation with the €19.4bn Philips Pensioenfonds and the €47bn metal scheme PME – assumed that funding levels could still drop by 20% if global average temperatures only rise by 1.5°C above pre-industrial levels.Speaking at an ALM event hosted by the Dutch branch of the CFA Society, Willemijn Verdegaal – co-head of strategic climate solutions at Ortec and one of the developers of the model – said that Ortec had factored in the economic impact of an energy transition as well as the physical effects of a temperature rise.“By making assumptions of the impact of climate change on, for example, trade flows and the local energy mix, we assessed the impact on important variables, such as GDP, interest rates and inflation,” she explained.last_img read more

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Belgium adopts IORP II law with transitional measures

first_imgThe regulator, the FMSA, is understood to be preparing the publication of several “circulars” to provide further explanation and guidance about IORP II implementation, some of which are due out this quarter.The key IORP II implementation elements for Belgian pension funds, according to Sommerijns, were the risk management function and own risk assessment requirements.“This is new for the pension funds,” she said.Although they already had several risk functions and addressed certain risks – for example in the statement of investment principles or via the compliance officer or internal auditor – Belgian pension funds were not required to have a centralised, co-ordinated risk management function.“This is where we expect the most input and most ‘translation-into-practice’ of what the FMSA circular will look like,” said Sommerijns.The regulator had indicated it would be open to comments and suggestions from the industry, she added.Parliamentary problems Source: European ParliamentCharles Michel, former Belgian prime ministerBelgium’s IORP II transposition law was voted on 20 December, two days after the Belgian prime minister, Charles Michel, tendered his resignation in response to a vote of no confidence being proposed in his government. The king accepted his resignation on 21 December, and Belgium is now under a caretaker government.Michel’s resignation followed a disagreement over a UN migration pact, which led to the federal coalition government losing its majority after five ministers from the right-wing party N-VA walked out. Michel tried to continue with a minority government, but failed to secure parliamentary backing.Transitional measuresThe IORP II law passed by parliament before the winter holidays included transitional measures in response to industry requests, one of which relates to the risk management function.It stated that pension funds had until the end of 2019 to fill the role, but needed to give the FMSA three months’ notice of their choice, to allow the regulator to make sure a “fit and proper” person had been appointed.Sommerijins has advised pension funds to ask whoever they had appointed to fulfil the risk function to produce a report covering the entire 2019 calendar year to ensure they fully complied with the EU directive. Another transitional measure gave Belgian occupational pension funds two years to formally adapt or introduce documentation to meet new requirements, for example in relation to the statement of investment principles or the own risk assessment. The Belgian parliament has approved the country’s law for implementing the new EU pension fund directive, including transitional measures.The country’s IORP II transposition law enters into force on 13 January, which is also the deadline for individual EU countries to implement the directive into their domestic legislation. Lut Sommerijns, partner at law firm VWEV, suggested it was positive that Belgium had managed to pass legislation implementing the EU directive within the time period set.“I think everyone is happy, but also concerned about the extra work everyone will have,” she added.last_img read more

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