bfinance – Navneet Maheshwari has joined the London-based consultancy in its Middle East office located in Dubai. Maheswari joins from NASDAQ Dubai and will take up a senior consultant role with responsibility for client relations and new business across the Middle East. Mashehwari has worked at Partners Group in its Switzerland and Middle East offices, and investment company The Chatterjee Group and PwC in India.MyCSP – The mutual joint venture between the UK government, Equiniti and former public sector employees is set to expand its operations with 50 more hires. Headquartered in Liverpool, MyCSP provides administration services for public sector organisations. It is now seeking expansion among its IT, project management, team management, compliance and administration teams. AXA IM, MFS IM, Sustainalytics, GVO IM, bfinance, MyCSPAXA Investment Managers – Madeline Forrester has left the French asset manager’s UK office as head of UK institutional and is currently on gardening leave. Forrester, who joined the firm in November 2011, is set to join MFS Investment Management’s London office later this year in a similar role. Forrester joined AXA as head of institutional sales after spending 16 years with Threadneedle Asset Management.Sustainalytics – Gary Hewitt is joining the ESG research and analysis provider to lead the development of new products in corporate governance data research. Hewitt is former head of governance research at GMI Ratings and also held roles in research at Towers Watson and proxy advisory firm Institutional Shareholder Services. Sustainalytics said Hewitt’s product development aim was to provide services complementing and enhancing existing solutions.GVO Investment Management – Adam Khanbhai has joined the firm within its investment team as a research analyst. Khanbhai joins the London-based asset manager from OC&C Strategy Consultants, where he worked for six years in due diligence for strategy projects in private equity. His new role will see him providing analysis on investee companies for the investment team.
The head of Denmark’s largest commercial pensions provider PFA has resigned after more than 13 years at the helm to take on more directorships and give strategic advice, the DKK425bn (€57bn) pensions company has said.PFA’s chief executive Henrik Heideby will be leaving the group at the end of 2014, the company announced.Heideby said: “For almost 30 years, I have been involved with board work in many different industries, from the construction sector to the medical devices business.”He said he had the opportunity to expand his current portfolio in the next few years. “However, it is not compatible with the job as chief executive, which is why I have decided to change careers at the end of the year with the agreement of the chairman,” Heideby said.Svein Askær, PFA chairman, said the board had started the process of finding a replacement for Heideby.“We expect to have them in place by year-end,” he said.He said Heideby had been crucial to the success PFA had achieved over the past 10 years. “We are obviously sad to lose him, but also understand his choice, as Henrik has a lot of skills that will certainly be able to be used on a company’s board,” Askær said.Heideby said there had been some very exciting and challenging years at PFA since he took the top position in the autumn of 2001 after the September 11 attacks on the US, which hit the business hard.He said PFA now had a capital base of more than DKK28bn and total assets of nearly DKK425bn.
Brussels is increasingly confident of attracting institutional interest in Europe’s ‘strategic’ investments, writes Jeremy WoolfeSuccesses, so far, for the European Fund for Strategic Investments (EFSI) are forecast to result in a serious rise of input from the institutional investment sector over the next six months. As portrayed by European Commission sources, the sunny outlook for such funds – currently thought to be a limited to a trickle – is expected to get underway soon.The brightening scene emerged during an announcement by the Commission that overall investment into the EFSI programme was now highly satisfactory. After 18 months, the €315bn Juncker Plan has reached a €100bn estimated to be triggered by the projects already in hand. While no precise figures are available at present, investment flows appear to be taking in funds related to broad-based sources, including venture capital, banks and own-company funds. A proper breakdown of flows is expected in the coming months.As for institutional inputs, such as from the notably diligent pension fund sector, the Commission is taking steps to tackle certain “regulatory or administrative bottlenecks”, to ease the way for their free inward movement. With this in mind, it refers to the “low degree of efficiency and transparency of public administrations, ineffective judicial systems and weakness in the business environment”. It adds: “These include high regulatory and administrative burdens, the lack of a predictable regulatory framework, and sector-specific regulations (involving cumbersome and lengthy approval procedures), which can hamper investment in large infrastructure projects.”To break the evident logjam, the Commission is putting into effect a series of country-specific recommendations. These set economic-policy guidance for individual EU member states to be implemented over the next 12-18 months.Another remedial feature, expected in the autumn, will be an extension of the lowering of capital charges to investors. These are planned to be on the lines of revised delegated acts in the Solvency II Directive. They came into effect for the insurance sector in April. Then, the risk calibration for investment in unlisted equity shares of such projects was reduced from 49% to 30%.Other critical moves ahead, just announced for the Juncker Plan, include an extension of the lifetime of the whole programme – that is, beyond 2018. There is also to be a rapid scaling-up of investment into the SME sector. Here, the Commission notes that geographical coverage lacks balance. Eastern Europe mainly is benefiting from SME agreements under EDSI so far.It notes that improved allocations can be gained using various tools, such as the European Structural and Investment Funds. Another envisaged plan is the establishment of Investment Platforms, involving actions across borders and in regions. Furthermore, the Commission announced that it was exploring an investment model to bring in private investors into “instruments” outside the EU.As for the Common Consolidated Corporate Tax Base policy, set to offer a single set of rules for cross-border companies to calculate their taxable profits in the EU, the Commission intends to come forward with a “balanced, revised proposal in the last quarter of this year”.Optimism resonated at the Commission’s presentation of EFSI results. It was stated that some original scepticism of the application of a 1:15 leverage has since proved to be not “too ambitious”. Looking at the broader EU economic picture, the Commission states that, over the last 18 months, conditions for an uptake in investment have improved. The EU is now in its fourth year of moderate recovery, with GDP growing at 2% in 2015.
The new regulations are due to come into effect by April 2017.A PPF spokeswoman acknowledged that the proposed changes to the long service cap would entail higher costs for levy payers, by way of increased compensation costs, but added that “the increase in liabilities of the proposed changes would be smoothed over many years, meaning we expect no jump in levies”.PPF actuarial valuation update The PPF’s consultation is about the actuarial assumptions used for section 143 valuations, which determine a scheme’s eligibility for the PPF if its sponsor goes bust, and section 179 valuations, which determine a scheme’s underfunding.The level of underfunding, in turn, determines the levy a scheme should pay to the PPF.It said the most significant changes it was proposing were to use separate discount rates for pensioners and non-pensioners post retirement and yield indices that have durations that better match average liability durations, including the introduction of a new index-linked Gilt yield.It also proposed updating mortality assumptions.The current assumptions have been in effect since 1 May 2014, based on a review of bulk annuity market pricing carried out in December 2013.Since then, Solvency II regulations for insurers have come into effect, with the PPF taking this into account in addition to buyout pricing as at the end of May 2016 and the immediate impact from the Brexit vote in the UK’s EU referendum in late June.“We used this evidence base,” the PPF said, “for the purpose of resetting the section 143 and section 179 valuation assumptions.”It builds this evidence base in discussion with bulk annuity providers.The cumulative impact of the proposed changes would be to reduce the value of liabilities under section 143, mainly because of the changes to the mortality assumptions.The overall impact is a 5% reduction for pensioner liabilities, and 3% for non-pensioner liabilities.The changes to the section 179 assumptions would improve the aggregate funding position of schemes eligible for the PPF, as tracked by the fund’s 7800 index.The PPF said the aggregate funding ratio would increase from 76% as at 31 August 2016 to around 79%, and that around 150-200 schemes would move from deficit to surplus.The overall deficit of schemes with shortfalls (5,042 out of 5,945 as at the end of August) would fall from £489bn to around £430bn, according to the PPF.The PPF spokeswoman said the fund did not expect the changes to have a material effect on the overall level of levy bills for schemes.“Schemes will not necessarily pay higher or lower levies because of them,” she said.The fund said the assumptions used to measure underfunding in the levy formula would remain fixed until the next triennial valuation period (2018-19 to 2020-21), so that the overall impact on levy for the last year of the current triennium was “expected to be minimal”.The consultation closes on 31 October.The intention is for changes to be introduced from 1 December 2016.,WebsitesWe are not responsible for the content of external sitesLink to PPF consultation The UK’s lifeboat fund for defined benefit pension schemes, the Pension Protection Fund (PFF), is proposing to amend assumptions for key valuations to reflect changes in bulk annuity pricing, which would have the effect of improving schemes’ aggregate funding position captured by the PPF’s 7800 index.Separately, the UK government launched a consultation on a proposal to increase the PPF compensation cap for long-serving members of pension schemes.It is proposing an increase of 3% for each full year of pensionable service above 20 years, subject to a new cap of double the standard maximum.The current cap is £37,420 (€43,909).
Other pension funds also posted positive quarterly results largely as a consequence of rising equity markets. In addition, rising interest rates led to a reduction of liabilities, meaning coverage ratios also improved.The €8.5bn Pensioenfonds Vliegend Personeel KLM made 2.2% on its investments, with equity generating 6.1%.The scheme noted that US high yield bonds and emerging market debt had also benefited from positive equity market sentiment, resulting in an overall return of 0.3% from its fixed income portfolio. KLM said it made a similar profit on its property holdings.The KLM scheme’s funding rose almost 3 percentage points to 117.4%.Equity and emerging market debt were also the main drivers behind the 1.2% quarterly result from the €18.8bn company scheme of Philips.However, it indicated that it had lost 0.7 percentage points due to negative results on its combined interest and inflation hedge.During last quarter, the Philips Pensioenfonds reduced its fixed income allocation from 60% to 50% – through selling euro-denominated government bonds – as it expected an interest rate rise in the coming years.It has reinvested the proceeds in cash as well as asset classes that are less susceptible to interest rates, such as equity and property.The Philips scheme closed the quarter with a coverage ratio of 110.3%.Finally, the €24.5bn Pensioenfonds PGB reported a quarterly result of 2%, citing profits on equity (6.2%), property (2.4%), infrastructure (3.1%) and private equity (4.2%). In contrast, it lost 2% on its government bonds allocation.In particular, PGB said its French inflation-linked bonds lost 5.1% due to the possibility that the National Front or a candidate of the extreme left could win the first round of presidential elections.At March-end, PGB’s funding stood at 98.4%. Equity performance helped some of the Netherlands’ largest pension funds achieve returns of more than 2% during the first quarter.The €5.6bn sector scheme PNO Media said it returned 2.5% on investments, attributing the result in particular to a 7.6% profit on its equity portfolio. Equities make up more than a third (36.5%) of its overall portfolio.The equity yield more than compensated losses on government bonds (-2.8%) and mortgages (-0.2%) in the wake of rising interest rates.Private equity (3.9%), emerging market debt (2.1%), property (1.5%) and infrastructure (0.4%) also delivered positive results for the media scheme, which saw its funding rise by 2.1 percentage points to 93.5%.
“The aim is to contribute towards solutions which eradicate poverty and hunger, tackle climate change and ensure access to education and work for all.”She said the UK association would work closely with actuarial bodies in other countries. The IFoA has already been pushing environmental issues up the actuarial profession’s agenda, with the new initiative seemingly indicating a broadening of its focus and ambition to social issues. The UK actuarial association has launched an initiative to explore how the profession could contribute to the achievement of UN sustainable development goals (SDGs).The Institute and Faculty of Actuaries (IFoA) is seeking proposals from actuaries around the world on how they would address the question ‘How are actuaries relevant to the Sustainable Development Goals and how can they contribute to the goals being met?’It said submissions could include practical examples of actuaries considering the SDGs in their work, evidence that demonstrates the impact of the SDGs on the actuarial profession as well as the industries that they work in, and evidence that demonstrates how the actuarial profession can help their clients and employers contribute towards the SDGs being met.IFoA president Marjorie Ngwenya said: “Actuaries are experts in providing answers to complex questions around long-term global risk. We hope submissions will help to shape ideas and provide structure on how to channel that expertise.
In its statement, MMC said the purchase “accelerates MMC’s strategy to be the preeminent global firm in the areas of risk, strategy and people”. Investors in JLT – which is currently listed on the London Stock Exchange and is a constituent of the FTSE 250 index – will receive £19.15 a share in cash, representing a premium of 33.7% based on JLT’s closing share price on 17 September. JLT’s largest shareholder, Jardine Matheson Holdings, has already confirmed support for the deal, as have JLT directors.The transaction has also been aided by a $5.2bn bridging loan provided by Goldman Sachs.MMC estimated that integrating the company into its structure would cost $375m, but generate annual cost savings of $250m over the next three years.The deal is expected to complete in the spring of next year, subject to regulatory approval.Investment consultants and fiduciary managers in the UK are currently the subject of an inquiry by the Competition and Markets Authority. Marsh & McLennan Companies (MMC), the parent company to investment consulting giant Mercer, has announced a $5.6bn (€4.8bn) deal to acquire Jardine Lloyd Thompson Group.JLT Group is one of Mercer’s main competitors in the pension scheme advisory market in the UK, and also provides insurance, reinsurance and brokerage services.Dan Glaser, CEO and president of MMC, said in a statement to the stock market this morning that the two firms were a “complementary fit” and would create “a platform to deliver exceptional service to clients and opportunities for our colleagues”.Dominic Burke, JLT Group’s chief executive, will join MMC as vice chairman following completion of the transaction. He said: “MMC is, and always has been, one of our most respected competitors and I believe that, combined, we will create a group that will truly stand as a beacon for our industry.”
In addition to Hitchen’s appointment, the consolidator has also brought in former Hannover Life Re chief executive Wolf Becke as a member of its commitments committee, which assesses new clients for transfer into the SuperFund.Becke led Hannover Life Re as it became the first reinsurance counterparty for Pension Insurance Corporation (PIC), a specialist UK insurer of DB pension funds. PIC was set up by Edi Truell, whose Disruptive Capital investment vehicle has also backed the Pension SuperFund.Becke currently chairs for supervisory board of reinsurer Aegon Blue Square Re and the board of directors at UK life insurer Vitality.Luke Webster, the Pension SuperFund’s CEO, said: “We are building a team at The Pension SuperFund that will ensure first class leadership and governance for the future, all united by our purpose to improve the security of members’ pension promises.”He indicated that further appointments would be announced in the next few days, as the company continued to prepare for its first deal.The appointments follow the loss of the Pension SuperFund’s first chief executive, Alan Rubenstein, who left after just six months at the helm. Private equity firm Warburg Pincus also backed out of providing financial support for the venture last month. The Pension SuperFund – set up earlier this year to promote consolidation among UK defined benefit (DB) schemes – has appointed Chris Hitchen as its first board chairman.Hitchen has held senior roles in the UK pension industry for more than 20 years, including as chief investment officer and then chief executive officer of RPMI Railpen, the industry-wide scheme for the country’s railways sector.He left this role last year and now holds non-executive positions at several financial services groups, including chairing the Border to Coast Pensions Partnership, a collaboration between 12 local authority pension funds. He also chairs two pension schemes for UK housing associations and is board member at NEST. Hitchen described the Pension SuperFund as “an important and timely innovation”, adding that “well-run, right-scaled institutions” were vital to improving retirement outcomes.
Screening based on ESG criteria would exclude companies that produced tobacco or controversial weapons and companies scoring poorly on ESG criteria across industry sectors.The index also omits companies that show weak adherence to the United Nations Global Compact Principles of corporate behaviour.S&P DJI worked with SAM, the unit of RobecoSAM, on the ESG scoring methodology for the new index and planned country-specific and regional ESG indices. The scores are used as inputs to evaluate companies on the indices.The new index targets 75% of the traditional S&P 500’s market capitalisation by excluding the weakest quartile of in terms of ESG profiles. It targets sector neutrality in relation to the parent index and aims to deliver a tracking error below 100bp.Reid Steadman, global head of ESG indices at S&P Dow Jones Indices, said: “An increasing number of investors require indices that are aligned not only with their investment goals but also their individual and institutional values. The S&P 500 ESG Index is constructed with both of these needs in mind.”The new index was broader than many other ESG indices and “developed to target the core of an investor’s portfolio,” he added.In February many institutional investors called on the main index providers to exclude manufacturers of controversial weapons from their mainstream indices. S&P Dow Jones Indices (S&P DJI) has launched a version of its widely-tracked S&P 500 equity index that excludes companies based on environmental, social and corporate governance (ESG) criteria.The S&P 500 ESG Index was designed to serve as a performance tracking tool as well as a building block to create new ESG index-based investment products and passive investing solutions, the index provider said.UBS Asset Management swiftly followed up on S&P DJI’s announcement to announce it had launched an exchange-traded fund (ETF) built on the new index.It said the ETF enabled investors to get similar exposure to the S&P 500 index but with a “light ESG overlay”.
Germany’s Social Democratic Party (SPD) has offered its support for the expansion of occupational pensions through tax incentives in exchange for the vote of the Union, the alliance between the CDU and CSU, in favour of the basic pension, IPE has learned. The final parliamentary vote on the so-called Grundrente is scheduled for tomorrow, 2 July.The Union wants to further support occupational pensions in a bid to encourage individuals to start saving in pension schemes early, a source told IPE.Models to change occupational pensions had already been designed, and could be negotiated in the course of the year to become law. Up to two million additional employees could benefit from incentives for occupational pension schemes, the source added.The SPD has additionally promised to the Union a reform of the Riester-Rente after the summer break in order to win the latter’s support for the proposal of a basic state pension. IPE reported last week that the German ministry of finance, led by the SPD’s Olaf Scholz, is working behind the scenes with insurance companies and banks to evaluate possible changes to the privately funded Riester-Rente pension system.The leader of the parliamentary groups of the SPD and the Union have agreed to first adopt the basic pension, but IPE has learnt that negotiations have taken place also with regards to the Riester-Rente, IPE has learnt.Grundrente debatesThe SPD pushed strongly for the basic pension, which was included in a contract to support Angela Merkel’s government in 2018.But debates erupted about how to put in place the measure and its long-term financial sustainability.Alexander Dobrindt, chairman of the CSU regional group in the Bundestag, announced that the Union accepted funding the basic pension using resources from the federal budget, but accused the labour and finance ministers, both SPD, of not sticking to their promises to fund it through a European financial transaction tax.The German federation of employer representatives (BDA) said the coalition had failed to clarify how the basic pension will be financed.The Grundrente is estimated to cost €1.3bn in the first year in 2021, when it would enter into force.The Union would approve the basic pension, but reluctantly, the source told IPE.The Deutsche Rentenversicherung (DRV), which administers the state pension scheme, has raised questions about the process to grant basic pensions.Pensioners can request a basic pension from January 2021, but it will probably be paid from the middle of next year.The BDA considers the administrative costs for the basic pension “absurdly high”. It said the Grundrente was ”the most unfair and bureaucratic reform” since the introduction of the pay-as-you-go pension scheme.