On the new board, Höllerer, who will also remain as secretary general of the Raiffeisen Zentralbank (RZB), will be responsible for finances, risk management and internal revision.Rainer Schnabl joined from a regional branch of Raiffeisen to take responsibility for client services – both private and institutional – as well as products, while Dieter Aigner will stay on as board member for asset management.Speaking at a recent fund presentation in Vienna, Marc Renaud, founder of French boutique Mandarine Gestion, said Raiffeisen was a “complicated story”, referring to the whole of the banking group rather than the asset management branch alone.He claimed the group “used to be a risk” for investors, but said this was no longer the case due to a restructuring and a capital increase.Responding to Renaud’s comments, Höllerer said he was “delighted third parties are seeing it this way”, but he argued that “there had not been a problem before either”.According to IPE’s Top 400 Asset Managers survey, RCM had €28.4bn in assets under management, excluding real estate fund assets, as per year-end 2013.Höllerer told IPE RCM would now focus on its institutional business, strengthening the service element and demand-orientated business in particular.He said, at the moment, he saw increasing interest from institutions for sustainable global equity products and euro corporates.In the sustainable segment, RCM hired Wolfgang Pinner last year to create new products. Since then, Pinner has set up a mixed fund product as well as a sustainable bond fund.“We see significant potential in this area,” Höllerer said. Austria-based asset manager Raiffeisen Capital Management (RCM) is to merge its Raiffeisen Vermögensverwaltungsbank (asset management bank) and Raiffeisen International Fund Advisory subsidiaries into the Raiffeisen Kapitalanlage GmbH (KAG), according to new chief executive Michael Höllerer.Höllerer told IPE RCM would continue to be the overall brand for the KAG, the Raiffeisen Immobilien KAG for real estate and the regional Raiffeisen Salzburg Invest Kapitalanlage GmbH.Further, the asset manager will “slim down” the number of departments for various fields of business from seven to three covering fund management, fund services and customer service.Höllerer recently succeeded former chief executive Mathias Bauer, who left together with his fellow board member Gerhard Aigner to “underline the realignment of the asset manager’s organisational structure”, according to local media reports.
“It is only right that, within our fund’s overall governance procedures, we do all we can to understand the strength of employer covenants and minimise risk,” said Williams. He said having a better understanding of the challenges presented by each sector and employer meant the LPFA could try to get assurance or security from the employer, or else set employer contribution rates at a level reflecting their covenant strength and aim to make sure they were fully funded as quickly as possible.The authority said the move to sector-wide covenant checks was a next step following individual employer checks.Requirements for the sector-wide checks had been developed in conjunction with government funding bodies such as the Higher Education Funding Council for England and the Skills Funding Agency, the LPFA said.In the individual employer covenant checks this year, the authority said it took a new risk-based approach as part of the 2013 valuation process.As a result of this approach, it said it was now implementing security arrangements totalling £311m, which had been secured as part of the process. The London Pensions Fund Authority (LPFA) is consulting employers in the pension fund on new sector-wide covenant checks for colleges and universities, which are to be implemented this autumn.The LPFA, which runs a £4.8bn (€6.1bn) multi-employer, public-sector pension fund, said it was also planning another consultation on charities and housing associations in the next few months.Tony Williams, the authority’s employer services team manager, said: “Fairness to all employers in the fund is the key driver for this covenant check approach.”If an individual employer in any local government pension fund cannot meet its liabilities, he said, there is a risk those liabilities will then fall on other employers – the local authority and ultimately taxpayers.
Franklin Templeton Investments has confirmed that Dirk de Vlaam, its head of sales and marketing in the Netherlands, is to leave the company to pursue “other opportunities”.A spokeswoman told IPE the asset manager had put De Vlaam on gardening leave with immediate effect, and that his official employment would terminate on 1 December.She added that De Vlaam – who could not be contacted by IPE independently – did not want to comment.De Vlaam has served as head of Franklin Templeton’s four-strong sales team in the Netherlands since 2005. Previously, he worked at ABN AMRO Private Banking as a product manager for investments, and as an adviser for institutional investors.Franklin Templeton said it planned to hire another senior member for the team in the near future.
Universities UK (UUK), the representative group for employers in the Universities Superannuation Scheme (USS), has revised proposals to manage the scheme’s deficit as trade unions continue industrial action plans.The £41.6bn (€50.3bn) USS saw its latest published report suggest the scheme’s triennial valuation to reveal a “substantial deficit”, with expectations of £8bn.In response, sponsoring employers of the scheme, mainly UK universities operating before 1992, began consulting on changes to the USS model, including ending its final-salary defined benefit (DB) offer and moving all members to career-average DB, which it began in 2011 for new members.The new proposal would also include a defined contribution (DC) hybrid. The trade union representing members, the University and College Union (UCU), began balloting on industrial action after modelling showed some members would lose a significant amount of retirement income.UUK has now brought a slightly revised proposal to the negotiating table to help convince members of the necessity of the reforms.Its original proposal was to have a DB career-revalued earnings (CRE) for all members, up to £40,000 of salary, and a DC arrangement for earnings thereafter.However, the UCU said the £40,000 threshold was unacceptable, and UUK has since increased this to £50,000 and announced that member contributions would remain flat at 6.5% while sponsor contributions would increase by 2 percentage points to 18%.The UUK said that it would come into effect in April 2016.It added that, with new proposals, two-thirds of members currently earning career revalued benefits would see their pension remain entirely the same, until they earned more than £50,000.It also said keeping the 6.5% member contribution rate was linked to an agreement on the £50,000 threshold not being forced any higher.Professor Anton Muscatelli, chair of the Employers Pensions Forum (EPF), said: “The changes proposed are designed both to address the substantial deficit in the USS and to mitigate the risk that contribution rates will become unaffordable for both employees and employers.“Any pensions already in payment or deferred in the scheme will not be affected at all by any of these changes, and past service accrued rights are protected by law.”However, the UCU said the proposals were not massively different to the original version, and that the ballot would continue to run for members to take industrial action.Head of bargaining Michael MacNeil said: “We do not accept the way the scheme’s deficit is being valued or share the overly cautious and pessimistic view.“Like the UUK, we want a solution that protects the pensions of staff and ensures the scheme remains attractive to new members of the profession. “But what the UUK proposals try to do is substantially shift risk from big institutions on to our individual members’ shoulders.”
Hearthstone Investments has launched its Housing Fund for Scotland and said it aimed to invest up to £150m (€187m) in affordable, social and private-rented sector housing in the country.The UK company, which runs residential investment funds, confirmed the actual launch of a fund it first announced back in April.The fund could lead to the creation of more than 1,000 new homes in Scotland over the next few years, Hearthstone said.Falkirk Council Pension Fund said in April it was committing £30m to the forthcoming fund. The investment manager said part of the Falkirk commitment would be invested in the Falkirk, Clackmannanshire and Stirling areas, thereby having a big effect on the local area.Christopher Down, Hearthstone’s chief executive, said: “Residential property throughout the UK remains a strong long-term investment, with significant scale, low volatility and attractive demand/supply characteristics.”Hearthstone is already in “active discussions” with a number of other Scottish pension funds, he said.The investment manager described the investment case for Scottish housing as compelling. New housing supply in the country is still 42% below pre-recession levels, it said.On top of this, the mix of tenure has changed in the last few years towards private-rented sector and mid-market affordable housing – and away from home ownership. Hearthstone pointed out that the Scottish government currently working to build 30,000 new affordable homes by the end of 2016, adding that the new fund would play a role in meeting that target.
In May, the government, also trying to cut costs, published a consultation on the creation of two collective investment vehicles for the 89 LGPS funds in England and Wales, ending speculation over scheme mergers.The Department for Communities and Local Government (DCLG) is considering responses over whether to mandate LGPS funds into investing all listed assets passively.OCC and BCC said it was this consultation that compelled them to end negotiations with RBWM, as any potential shift in government policy would affect the cost/benefits previously identified.RMBM said the Berkshire Pension Fund met on 3 December and approved collaboration with the two funds, expecting their Buckinghamshire and Oxfordshire counterparts to do likewise.However, a spokesman for OCC said: “Following the presentation of a report on the potential savings, Oxfordshire’s pensions committee deferred any decisions on collaboration.“The council is awaiting an expected announcement by central government on whether it will in future require LGPS funds to use passive investment for all listed shares, as this will significantly impact the financial business case for future collaboration.”The pension fund’s committee did suggest it would explore options for collaborations with “more suitable” funds.According to Nick Greenwood, manager of the Berkshire Pension Fund, the Buckinghamshire committee also said it was not prepared to make a formal move until the DCLG decision.Greenwood said the BCC committee was uncomfortable with the differences between its own and the Berkshire Pension Fund’s investment strategies, and that the committee wanted to investigate the benefits of leaving RBWM out of the arrangement.The note from Greenwood added that both BCC and OCC announced they were approaching the government, alongside Northamptonshire Country Council, seeking permission to create a three-county authority, which could potentially include pensions in the long term.“No mention of these discussions was made at our 17 November meeting with the two councils,” Greenwood said.“Consequently, it is clear both councils have no intention to collaborate with RBWM on managing pension funds.”The DCLG consultation response was expected to be published in 2014.However, it is now expected to be published in early 2015.Aside from mandating all 89 funds to invest listed assets and alternatives through collective investment vehicles, the government will also consider a ‘comply-or-explain’ approach. Three English county pension funds looking to collaborate over investments and administration have called off their plans due to the government consultation on changes to the Local Government Pension Scheme (LGPS).The Royal Borough of Windsor and Maidenhead (RBWM), Buckinghamshire County Council (BCC) and Oxfordshire County Council (OCC) had been in discussions since 2013, in a bid to increase efficiencies and cut costs.RBWM sponsors the £1.6bn (€2.1bn) Berkshire Pension Fund, with the other pension funds holding £1.8bn and £1.5bn in assets, respectively.However, discussions between the three neighbouring funds were abandoned as the central government debates the future of LGPS investments
The IORP Directive could be further revised to establish a clear link between the needs of defined contribution (DC) members and a fund’s investment strategy, according to the European Insurance and Occupational Pensions Authority (EIOPA).Publishing a detailed report on DC investment behaviour across EU member states, the supervisor noted the diversity of approaches, with some savers required to select an investment option, while others were offered a default fund they could opt not to use.It said the funds should have an Investment Policy Statement (IPS), outlining how long-term investments would be and the fund’s liquidity needs, with the document also laying out return objectives and a member’s willingness to take on risk.Accepting that such practices were already in place in some markets, notably the Netherlands and UK, EIOPA said there would still be “room to improve the link between the Statement of Investment Policy Principles (SIPP) […] and the characteristics of the target group”. It added that it would conduct a review of the IORP Directive’s clause on the SIPP, which currently only mandates a review of the policy every three years and that asset allocation be in line with the “nature and duration” of liabilities.The SIPP must also be made available to members upon request, and EIOPA questioned whether this would be required of the IPS.The review would seek to offer “concrete” recommendations on strengthening governance, the report said, with EIOPA open to drafting guidance on how to mitigate investment risk for DC members.Additionally, it said it could offer advice on “unsuitable” investment strategies or investment options, extending to options deemed inappropriate for default funds.EIOPA said the clear regulatory focus on a pension fund’s fiduciary duty had already seen funds in the Netherlands base its investment approach around a member profile.The supervisor’s report was published on the same day as a consultation paper on good practice for transfers between occupational pensions.The call for advice, closing 10 April, was asking for feedback on voluntary transfer agreements and criteria that could be used to halt any transfer, including when a transfer would impact the future sustainability of a scheme.Read more on the debate surrounding the nature of pensions provision in Europe in the current issue of IPE,WebsitesWe are not responsible for the content of external sitesLink to EIOPA report on DC investment options
The chairman said SPC’s ultimate choice could also be a hybrid arrangement split across a pension fund and an insurer, “if this were in the interest of groups of participants”.He stressed, however, that the pension fund aimed to keep its current collective defined contribution plan intact for as long as possible.This year, SPC was forced to cut the annual pensions accrual from 1.75% to 1.57%, as the initial accrual rate grew too expensive.However, Bakker suggested that a merger with PGB or PNO Media, due to their relatively low implementation costs, would allow SPC to reverse the accrual cut as early as 2016.Last spring, the pension fund of the Consumentenbond announced that it was considering liquidation, with its chairman citing surging financial and administrative costs.He also highlighted the problem of board continuity, pointing out that four of the six board members were older than 60, and that he had decided to step down at the end of this year after 10 years at the helm. SPC, the €70m pension fund of Dutch consumer association Consumentenbond, has narrowed the number of potential merger partners to two – the sector-wide scheme for the printing industry PGB and the industry-wide pension fund PNO Media.Chairman Rob Bakker, in a letter to participants, said the €20bn PGB and the €5bn PNO Media were both “attractive” candidates for the continuation of SPC’s current pension arrangements.He said both had close ties with corporate publishing – one of the core activities of the employer – as well as an investment strategy similar to SPC’s.Bakker said his pension fund also requested quotes from insurers Aegon, Nationale Nederlanden, Delta Lloyd and Centraal Beheer Achmea for taking over SPC’s pensions plan.
Pensions and Lifetime Savings Association, NEST Corporation, VNO-NCW, AP3, Riksbank, BMO Global Asset Management, Legal & General Investment Management, Towers Watson, Pensions Akademie eV, KAS Bank, JS-Financial Service & Consulting, Aviva Investors, Société Générale, Friends Life Investments, Deutsche Asset & Wealth Management, GAM, IC SelectPensions and Lifetime Savings Association – Tim Gosling has been appointed policy lead for defined contribution pension funds. He joins from NEST Corporation, where he was most recently senior account manager, overseeing pensions policy for the organisation. Earlier this month, Luke Hildyard was appointed policy lead for stewardship and corporate governance. The UK pension association hired Hildyard to fill the vacancy left by Will Pomroy, who left for a role at Hermes Investment Management.VNO-NCW – Hedda Renooij has been appointed secretary for pensions policy at employer industry organisation VNO-NCW. As of 1 January, she will succeed Ap Fraterman, who is to retire after eight years in the job. Renooij comes from employer organisation AWVN, where she has been working as a pensions adviser, focusing on communication and the new financial assessment framework (nFTK). She is a member of two working groups of the Social and Economic Council (SER) looking into the future of the Dutch pensions system.AP3 – The external management team has recruited Veronica Wahlberg as portfolio manager. She leaves her position at the Riksbank, Sweden’s central bank, where she worked in the Monetary Policy Department and in the Markets Department. Wahlberg has also worked at Ålandsbanken and Kaupthing Bank within manager research and selection. BMO Global Asset Management – Max Peacock has been appointed LDI portfolio manager, while Arthur Stroij has been appointed LDI Solution Structurer. Peacock joins from Legal & General Investment Management, where he was on the LDI portfolio construction team. Stroij joins from Towers Watson, where he was an investment consultant in the structured solutions team.Pensions Akademie eV – Frank Vogel, managing director at KAS Bank’s German branch, and Jürgen Scharfenorth, chief executive at JS-Financial Service & Consulting, were named chairmen of the newly founded Pensions Akademie eV in Germany. Representatives from the pension industry, politics and academia formally established the think tank this week to discuss issues related to occupational pensions. It will focus particularly on administration and transparency in occupational pensions.Aviva Investors – Ahmed Behdenna has been appointed senior multi-asset strategist. He joins from Société Générale, where he was a senior strategist within the multi-asset research team. Marc Semaan has also been appointed a multi-asset strategist, joining from Friends Life Investments, where he was a macro strategist.Deutsche Asset & Wealth Management – Matthew Lamb has been appointed co-head of alternatives coverage in the Global Client Group. Lamb will co-head the team with Gianluca Muzzi, who steps into the role in addition to his existing responsibilities as co-head of real estate for Europe. He joins from GAM, where he was head of institutional and wholesale distribution for the UK and Middle East and global head of multi-asset sales.IC Select – The fiduciary manager and investment-consultant evaluation company has appointed Carole Ryden as a director. She is a Fellow of the Institute and Faculty of Actuaries and an active member of their governing body the IFoA Council. She is also deputy leader of the Scottish Board of Actuaries.
BPL92.2%18.7 Scheme Coverage ratio Assets (€bn) Bakkers93.5%4.2 ABP93.9%442 Levensmiddelen92.3%6.3 The ratios are expected to drop further in August. Earlier this month Aon calculated that the coverage ratio fell by 4 percentage points in the first week of August compared to the end of July. Dutch pension industry publication Pension Pro analysed the Netherlands’ 50 largest schemes and found that, the end of July, the country’s largest pension fund ABP had a funding level below the critical line, along with five others. At this position they cannot recover to full funding within 10 years and must implement a cut to pension rights and pension payouts next year. The funding level of industry-wide pension funds in the Netherlands fell to an average of 96.9% in July, according to figures provided by De Nederlandsche Bank (DNB).Five of the country’s largest funds were already below the critical funding ratio at the end of July, which triggers mandatory cuts to pension rights. The funding ratio of industry-wide schemes is thus approaching the critical limit that indicates whether a fund can recover to full funding within 10 years.For an average pension fund, this critical level is set to rise from 88.2% to 94.7% as a result of new parameters that schemes will have to use from next year. Schoonmaak91.2%5.4 Source: Pensioen Pro research. Asset figures from 2019 update of IPE Top 1000 Pension Funds.Company funds came out a lot better, with an average funding level of 113.4% at the end of July. This was, just as the 96.9% figure for industry-wide funds, a weighted average calculated on the basis of the DNB’s interest rate structure including the ultimate forward rate. Credit: Igor OvsyannykovThe pension fund for Dutch bakers is among five that are below the country’s critical coverage ratioFor all funds together this average amounted to 100.6%, a decrease of 1.1 percentage points compared to the end of June. Another six industry funds have a funding level below the 100% and therefore not enough money to meet their nominal obligations. The PNO Media fund (95.8%) has already warned its scheme members that the chance of cuts has greatly increased. If it has to lower pension rights and payouts, it will spread out the cuts over a period of 10 years.Healthcare pension fund PFZW has also warned that it may have to cut due to reaching the critical limit. In addition, the pension fund for physiotherapists has a coverage ratio of less than 100%. The exact figure is not known, because the fund only publishes the policy coverage ratio. Its annual report showed that the funding level at the end of 2018 was 97.5%. Of the company schemes, the pension fund of the Dutch employment and benefits agency UWV had the lowest funding level at the end of July: 99.4%. This scheme will have to apply unconditional cuts next year, just like the schemes for metal workers PMT and PME, because their ratios are below 100%. The minimum funding level was recently lowered to 100% as part of a new pension agreement, but it was still insufficient to avoid pension cuts.