Month: September 2020

APG kickstarts ‘national dialogue’ with Dutch consumers on pensions

first_img“For example,” he said, “we want to find out whether someone’s attitude towards pensions is linked to age and the used information channels, and how someone assesses a pensions institution.”During the pilot, Indialoog wants to learn about an employer’s role in pensions and to establish how the subject of pensions can be made more attractive. APG will also try to find out where the public is seeking information about pensions, and which information people expect to find.Participants in the consumer community dialogue can also add themes.Willms said the pilot would be considered successful if it provided new insights, and if people continued discussing new subjects.In that event, he said, Indialoog will be rolled out nationwide.Willms added that APG would share the outcome of a permanent panel with the pensions sector. The €344bn asset manager and pensions provider APG has launched a pilot project to start a dialogue with Dutch consumers on pensions, insurance and other financial issues.During the next half year, APG’s marketing, communications and distribution department is to enter into dialogue with 450 members of the public. But the pilot, called Indialoog’, must make clear whether such an exchange of thoughts will be a good way of involving people in the development of new products and services, said Raoul Willms, strategic marketing manager at APG.He said Indialoog aimed for a broader discussion than merely the “relatively limited enviroment of pension funds”.last_img read more

Melbourne Mercer deems Danish pension system best in world

first_imgSwitzerland (4)73.9 Netherlands (2)79.2 Country (Ranking)Score UK (9)67.6 Country (2013 ranking)Score France (14)57.5 Sweden (5)73.4 Sweden (6)73.4 Australia (3)79.9 Singapore (7)65.9 Austria (17)52.8 Denmark (1)82.4 Finland (4)74.3 Germany / Ireland (12)62.2 Denmark saw its overall rating increase to 82.4 due to improvements across all three categories and increased its lead over both second-ranked Australia and the Netherlands, with scores of 79.9 and 79.2, respectively.The report praised the Nordic country for improving protection of benefits in cases of fraud or provider insolvency, but noted that the better score had been influenced by several minor factors including a higher savings rate.Australia, meanwhile, was congratulated on increasing the rate of the mandatory contribution to Superannuation funds from the current 9.5% to 12%.However, the Australian government last month announced that the current rate would be maintained until 2021, with the increase to 12% now occurring by 2025 rather than the initially planned 2019.The Netherlands, which saw its score increase by 0.9 points to 79.2 compared with 2013, was praised for changes to the conflicts of interest policy.Ranking of ten leading countries within Melbourne Mercer Global Pension IndexTop 10 Countries within Index Denmark (1)82.4 UK (9)67.6 Denmark has retained the only “world-class” pension system, while the Netherlands has fallen to third place behind Australia, according to the latest Melbourne Mercer Global Pension Index.New European entrants include Finland, which came fourth and claimed the highest-ever integrity rating of 91.1, while Austria and Italy ranked 17th and 19th, respectively, behind France and Poland, largely due to the each country’s pension sustainability ratings.The Index, in its sixth year and written by David Knox of the Australian Centre for Financial Studies in Melbourne, assesses pension systems on the three broad categories of adequacy, sustainability and integrity.Italy set a record for the lowest overall sustainability rating, which takes into account coverage, contribution levels, demography and government debt, with a score of 13.4 in the category, slightly behind Austria’s 18.9. Switzerland (5)73.9 The worst sustainability score to date was achieved in 2013 by Brazil, when it scored 26, a rating that this year improved marginally to 26.2The final new European entrant, Ireland, ranked joint 12th overall, the same as Germany.Ireland earned a score of 62.2, with a higher adequacy rating than neighbouring UK but ranking significantly behind on sustainability.Ranking of European countries within Melbourne Mercer Global IndexScore of European countries within Index Canada (6)69.1 Italy (19)49.6 Netherlands (3)79.2 Finland (-)74.3 Poland (15)56.4 Chile (8)68.2 It is unclear if the research was already able to take account of the recent changes to the financial assessment framework (FTK).Knox stressed the importance of communicating clearly and concisely with fund members, as the effectiveness of a system was undermined by lack of community trust.He also said the increasing importance of private provision over state pension payments meant communication would be key.“This shift means communication to members has never been more important or come under more scrutiny from members, regulators, employers, consumer groups, politicians and the media,” he said.France and Germany both saw significant increases in their overall ratings, with France’s 4 point rise to 57.5 credited to an increase in the minimum level of pension.Germany, which saw a slightly smaller score increase of 3.7, nevertheless saw its grade improve from a C to C+, as its score rose to 62.2 due to changes to the provision of annuities.Ireland was told it could increase its score by introducing a minimum level of contributions to occupational pensions, a move that would be made possible through the Irish government’s potential auto-enrolment reforms.Auto-enrolment, and the rising contribution rates, benefited the UK, which saw its score rise by 2 points to 67.6, resulting in its overtaking Singapore and remaining ninth, despite Finland’s entry into the Top 10.Poland slipped behind France to 15th after its score fell to 56.4 after declines in both its adequacy and sustainability ratings, while its integrity rating remained unchanged over 2013.The report urged Poland to maintain a “significant” role for the country’s second pillar – months after the state transferred all of the second pillar’s domestic sovereign debt to the Social Insurance Institution (ZUS) – and to allow at least part of the private savings to be drawn down as an income stream.Sweden retained its strong position in the Index, increasing its overall rating and only falling to sixth due to the addition of Finland, with Switzerland’s rating remaining constant and also falling one spot to fifth.,WebsitesWe are not responsible for the content of external sitesLink to 2014 Melbourne Mercer Global Pension Indexlast_img read more

Belgian government courts MasterCard for cross-border IORP

first_imgBelgium’s finance minister, Johan van Overtveldt, has been in talks with management of multinationals in New York in order to attract pension funds of multinational companies.Belgian newspaper Het Laatste Nieuws reported that the minister had discussed a potential move with MasterCard, and said that Van Overtveldt wanted to position Brussels as a financial centre.According to the paper, MasterCard is the only known company the minister has visited.It noted that firms were loath to see their name publicly mentioned due of the sensivity of the subject – and earlier resistance to cross-border moves by BP and ExxonMobil. In Van Overtveldt’s opinion, Belgium not only could offer a beneficial tax framework, but also the required expertise for pensions management, the paper noted.“As we appear to be attractive, I want to step up efforts and convey the message to other companies with pension funds all over Europe,” the newspaper quoted the minister as saying.Van Overtveldt’s comments come less than a year after Belgium’s penisons minister Daniel Bacquelaine told the IPE Conference & Awards in Barcelona his government planned to reduce obstacles facing cross-border IORPs in order to attract a greater number of transfers.Several political parties in the Netherlands have voiced their concern about Dutch pensions assets moving to Belgium.Helma Lodders, MP for Dutch prime minister Mark Rutte’s VVD, said the Netherlands was not sufficiently attractive for foreign pension funds to wish to relocate.The opposition Christian Democrats (CDA) and the Socialist (SP) parties said that they opposed pensions funds leaving the Netherlands.Pieter Omtzigt, MP for the CDA said: “Our national employment benefits agency UWV doesn’t move to Brussels in order to carry out its tasks from there either.”Responding to the Belgian efforts to attract pension funds, Omtzigt said he had serious objections in regard to the IORP Directive.IPE has contacted both MasterCard and Belgium’s finance ministry for additional comment.last_img read more

Local government pension funds ‘confident’ over MiFID II outcome

first_imgThe LGPS has been lobbying the FCA for exemptions from the rule, while the Pensions and Lifetime Savings Association in January rejected the regulator’s initial proposal for a workaround, describing it as “costly, complex, and difficult to apply”.However, Phillips said the advisory board was now “very confident” that the FCA would address the concerns in a satisfactory way.“I think what we thought was going to be a huge issue will actually be far less of one,” he said.In February last year, the European Commission delayed the implementation of MiFID II until 2018.Investment return collapses to just 0.1%The overall investment return of the 89 LGPS funds in England and Wales was just 0.1% in 2016, according to its latest annual report, published yesterday. This compared to 12.1% in 2015.The scheme’s advisory board said the decline in performance was “reflective of the difficult market conditions”. It highlighted the FTSE All Share Total Return index’s loss of 3.9% over the period.Despite this, the scheme’s funding position improved over the course of 2016. Assets stood at £217bn (€253bn) at the end of the year, unchanged compared to 12 months earlier, but liabilities fell to leave a deficit of £37bn, £10bn less than in 2015. The UK’s financial regulator is expected to take into account public pension funds’ concerns when finalising the implementation of the Markets in Financial Instruments Directive (MiFID II), according to the chair of the local government pension scheme’s (LGPS) advisory board.LGPS officials were concerned that the wording of the original directive would have meant the pensions funds would be reclassified as retail investors, leading to a potential fire sale of assets they were no longer permitted to hold.Roger Phillips, who is also a member of the committee overseeing the Worcestershire County Council Pension Fund, said he was confident that the Financial Conduct Authority (FCA) would provide a positive conclusion to the long-running debate about the status of LGPS funds.The Europe-wide rule was designed to protect local authorities’ treasury investments, which are largely held in cash or other highly liquid, low-risk assets. However, UK local authorities also have direct responsibility for the management of pension fund assets – MiFID II rules did not account for this.last_img read more

UK signs off further reporting requirements for pension funds

first_imgTrustees can also comply with these rules by explaining why they do not have a policy on certain specified matters. They will have to comply with the rules from 1 October 2020.The regulations come shortly after the UK’s asset management regulator, the Financial Conduct Authority, adopted stewardship rules for asset managers that also implemented the SRD II. It is the second change to UK pension scheme investment regulations in less than a year. Stuart O’Brien, partner at Sackers, said the new regulations would be a big change for most trustees, although perhaps more so for those of defined benefit (DB) schemes.“Not a lot of schemes are currently doing what the new regulations will require them to disclose a policy on,” he said. “It will be interesting to see whether this prompts a complete sea change in how trustees review and incentivise their managers, or whether this will just provide a list of things that trustees just disclose that they don’t do.”Duncan Watson, senior associate at Mayer Brown, said: “At a time when trustees are already burdened with numerous compliance and regulatory requirements including in relation to the SIP, these regulations may well be a substantial challenge for some trustees.“While the matters to be included in the SIP will have to be examined closely, it appears from a practical perspective that trustees will need to assess how best to address these areas – in conjunction with their investment consultants and other professional advisers – and these requirements seem to represent a major change of mindset on the part of trustees and managers.” In contrast to 2018 changes to pension scheme investment regulations, the new SRD II-implementing rules impose public disclosure requirements on all pension schemes, not just defined contribution (DC) schemes.O’Brien said: “Many DB trustees may have breathed a sigh of relief with the [2018] investment regulation changes that they don’t have to report annually against their policy and make it public, but with these changes they’re going to have to do exactly that. This is going to apply across the board, DB and DC schemes.”Under the 2018 changes, schemes will be required to set out their policy on stewardship and on “financially material considerations,” which the rules state can relate to climate change, other environmental matters, and/or social and corporate governance matters. Additional requirements apply for DC schemes, which from October 2020 must annually publicly report how they implemented their SIP.A partner at a law firm recently told IPE that pressure groups were writing to trustees following the updated investment regulations to ask them how they were going to deal with the new requirements.“This can be quite unhelpful for trustees,” the lawyer said. “They can feel under undue pressure.” Fresh changes to UK investment regulations will likely be a big challenge for UK pension funds, according to lawyers. Laid before parliament yesterday, the new regulations implement the revised EU Shareholder Rights Directive (SRD II). The deadline for member states to transpose the legislation is 10 June.The regulations require trustees to set out in their statement of investment principles (SIP) “their policy in relation to trustees’ arrangement with any asset manager”, setting out – or explaining why they don’t – matters such as:how the arrangement with the asset manager “incentivises” it to align its investment strategy and decisions with the various policies set out in the trustee’s SIP;how that arrangement incentivises the asset manager “to make decisions based on assessments about medium to long-term financial and non-financial performance of an issuer of debt or equity and to engage with issuers of debt or equity in order to improve their performance in the medium to long-term”; and“how the method (and time horizon) of the evaluation of the asset manager’s performance and the remuneration for asset management services are in line with the [other policies stated in their SIP]”.last_img read more

ESMA consults on short-termism in financial markets

first_imgThe EU financial markets watchdog has launched a consultation on potential short-term pressures on corporations emanating from the financial sector.The consultation takes the form of a survey addressing investors, issuers, and trade associations, and covers six areas:investment strategy and investment horizon;corporate reporting on environmental, social and governance (ESG) matters and its contribution to long-term investment strategies;the role of fair value accounting in better investment decision-making;engagement by institutional investors;fund manager and corporate executive pay; andthe use of credit default swaps by investment funds.The European and Securities Markets Authority (ESMA) said it was “not claiming there is a causal relationship” between these areas and short-termism, but it was seeking stakeholders’ views on them “to better understand their interaction with short-termism”. In the context of its sustainable finance action plan, in February the European Commission issued ESMA and the other two European supervisory agencies with a request to collect evidence on “potential undue short-term pressure from capital markets on corporations”.ESMA said the Commission’s mandate indicated that decisions taken by corporations did not “fully reflect long-term aspects that would be required to put the EU economy on a sustainable path and manage the transition towards a low-carbon economy”.The questionnaire will be open until 29 July. ESMA is due to report to the Commission on the findings by December.last_img read more

Danish schemes open to central bank’s ‘separable’ green bonds plan

first_imgFour of Denmark’s biggest pension funds have indicated they are receptive to investing in a new type of green sovereign bond, the pioneering design of which has just been outlined by the country’s central bank.Danmarks Nationalbank said it and the ministry of finance are looking into the possibility of green issuance where the bond and the green premium can be traded separately.The innovative sovereign debt instruments are being devised as a way to issue sought-after green government-backed paper while at the same time ensuring “a continued well-functioning and liquid market for Danish government bonds”, the bank said, announcing the plans last week.The main part of the bond would be a standard government bond – giving it the advantage of being more liquid than a green bond – with a separately-tradeable green element sold alongside, which can be kept attached where a green bond is required. “A liquid government bond market is essential, as a high degree of tradability means that investors are willing to pay a higher price for the bonds”Danmarks Nationalbank“Buying a package of a conventional government bond and a green certificate will enable investors to support the green agenda to exactly the same extent as if they had bought a conventional sovereign green bond,” it said.The bank stated work on the idea would continue until a final political decision on green issuance was made.Pension funds await final details and pricingWhen asked by IPE for their reaction to the plans, Danish pension funds – big investors in bonds and with growing requirements for environmentally-friendly assets – were cautiously receptive to the idea as outlined.Jan Ritter, head of liability hedging and treasury at the country’s largest pension fund ATP, said: “We need to see the specific characteristics of the product as it has not yet been issued.“However, from a general point of view it could be an interesting product development issuing green bonds through a green certificate and at the same time maintaining the liquidity in the bond series,” he said.Danica Pension is also positive about the idea.Poul Kobberup, the Danske Bank subsidiary’s investment director, told IPE: “We have participated in some of the green bond issuance this year from Ireland, the Netherlands and the World Bank, and I have also had a chat with the Danish central bank about this.“They have to think about the liquidity issue, and here they have found a way to get enough liquidity into these bonds. Now we will have to see how the market reacts,” Kobberup said.The success of any first issue could depend on the pricing, he said. “If someone thinks it’s worth 10 basis points (above standard government bonds) then that could be a problem,” he said.Kobberup said Danica Pension sees the green bond plans as a definite step in the right direction.“But every time you invest in something you truly believe is a green investment, you have to take a really good look at it,” he added.Jesper Nørgaard, deputy chief investment officer of Sampension, said the pension fund is positive regarding the idea, but has not yet decided whether it would participate in such bond issues.“We believe the idea is well thought out – it’s a transparent pricing of the issuers ’green’ efforts and it retains the liquidity of the overall bond issuances,” he told IPE.Sampension understands that other European sovereign debt offices have considered the same model, he said, notably the German Finance Agency.“They are currently expected to pursue a related but different approach,” said Nørgaard.A spokesman for Danmarks Nationalbank said Denmark was the first country with this model, as far as it was aware.Sampension recently invested DKK300m in green bonds issued by Ireland and Germany.At PFA Pension, head of ESG Andreas Stang said that as an investor, which had no target for green bonds within its fixed income investments, this new type of green bond could present a profitable opportunity.“We could invest in these,” he told IPE. “What would then be interesting is if we would see value growth from holding the green certificate.“If you assume more investors who need green investments will be coming to the markets in next few years, then there should be a premium for holding the certificate in few years’ time,” he told IPE.Investors could potentially buy the certificate alone and match it to other debt issued by the same sovereign, he said, even though it was designed to apply to specified issuances by Danmarks Nationalbank. Countries with larger funding needs than Denmark had already issued sovereign green bonds, “but in ways that may challenge liquidity for small sovereign issuers such as Denmark”, the bank said.Models they used either fragmented government issuance programmes, or put big demands on the amount of green spending, it explained.“A liquid government bond market is essential, as a high degree of tradability means that investors are willing to pay a higher price for the bonds, implying reduced funding costs for the Kingdom of Denmark,” the central bank said.All else being equal, it said, the larger the bond size, the more tradable it was.While a conventional sovereign green bond comprised two commitments – one financial in terms of coupon payments and redemptions, and one commitment that spending on green projects at least matched the bond proceeds – in the new model, these commitments are split, or stripped, into two, the bank added.last_img read more

UK consultants flag up divergent IAS19 practice over inflation, mortality assumptions

first_imgSparking the uncertainty is the news that the UK government plans to consult next year on proposals either to slight RPI with CPIH at some point between 2025 and 2030 or leave the matter to 2030 when the UK Statistics Authority can take the decision on its own account.The government move follows the publication in January of a House of Lords Economic Affairs Committee report, Measuring Inflation, addressing the future of RPI.Andrew Mandley, a UK IAS 19 specialist with Willis Towers Watson, added: “The big issue to watch for is whether companies reduce the assumed gap between RPI and CPI for this year end.“The numbers we are talking about in the accounts are potentially very big numbers”Simon Robinson, consultant actuary at Deloitte“Looking at the 30 September accounts we have seen so far, some companies have stuck with a 1% difference, but others have reduced it to a 0.8% gap. I expect we will see a similar pattern in the year-end reports, too.”In terms of the financial impact, Mandley said it all depends on “how much of your pension liability is linked to each of RPI and CPI inflation. But if you think about a 0.2% change in inflation assumptions, potentially you could be talking 2-4% of the DBO.”Simon Robinson, a consultant actuary with Deloitte, added: “The numbers we are talking about in the accounts are potentially very big numbers and could be as extreme as a reduction of 20% of the gross liability.”He also warned that a sponsor with a net asset position of £100m could end up in a deficit situation simply if they had hedged their inflation exposure because of the impact of the change on the asset side.On the issue of diversity in practice, LCP partner Tim Marklew told IPE: “The FRC hasn’t opined on any particular course of action.“We have sat down with all the major auditors and they have slightly different views. Some are quite conservative and their approach is to carry on as before, and others see the September announcement as a reason for firms to re-evaluate how they set inflation assumptions.”Meanwhile, it has emerged that it is unclear whether DB sponsors will uniformly adopt a so-called initial addition to the CMI 2018 to reflect the fact that those with access to DB provision tend to lead more affluent lifestyles than the wider population on average.Mandley said: “The introduction of the CMI 2018 has meant changes to some of the parameters underlying that model. In particular, less smoothing of the downturn in the rate of mortality improvement this decade produces lower life expectancy figures than in previous version, CMI 2017. On it’s own this could reduce the calculated DBO by 1% to 3%.”“The FRC hasn’t opined on any particular course of action”Tim Marklew, partner at LCPHe explained that those sponsors that opt to include the new initial addition “could find that there is little change to their overall mortality outcome and hence little change to their DBO.”In a statement addressing both inflation and mortality assumptions, an FRC spokesperson told IPE: “The two matters you raise are technical issues relating to Defined Benefit pension provision which do not come under the supervision of the FRC.” Three of the UK’s leading pensions consultancies have warned that uncertainty over the way defined-benefit (DB) pension plan sponsors should set their inflation and mortality assumptions under International Accounting Standard 19, Employee Benefits (IAS 19), could lead to substantial diversity in practice this year-end.In particular, sponsors are reportedly struggling with whether they should factor in the UK government’s announcement on 4 September over plans to consult on a move from the Retail Prices Index to the Consumer Prices Index as the basis for measuring inflation.IPE has also learned there is similar uncertainty over the transition adjustment from the Continuous Mortality Investigation 2017 to the latest 2018 model.Lane Clark Peacock partner Alex Waite said: “Some people take the announcement as implying that RPI will no longer exist in its current form in a decade’s time and we will effectively all use CPI. Alternatively, there is another view that nothing really changed on 4 September.”last_img read more

Freshwater townhouse sells for just $172,000 in Cairns

first_imgThe downstairs living and dining area at 5/74-78 Old Smithfield Rd, FreshwaterMore from newsCairns home ticks popular internet search terms2 days agoTen auction results from ‘active’ weekend in Cairns2 days agoAfter six weeks on the market, Professionals Cairns — Edge Hill agent Leveaux Gartner sold the two-bedroom townhouse at 74-78 Old Smithfield Rd for $172,000.The price was almost $20,000 less than the previous owner bought it for in 2007.The split-level home has a large open plan living and dining area downstairs with a kitchen and breakfast bar, plenty of storage space and an outdoor balcony and barbecue area. 5/74-78 Old Smithfield Rd, FreshwaterFORGET a hefty mortgage, one new homeowner now has their own piece of land in leafy Freshwater for less than $200,000.The sale went through on October 31 but settled last week making it the best bargain buy in Cairns for the week to November 20, according the RP Data. The kitchenUpstairs are the two large bedrooms, both with balconies. The small complex of six units was built in 1989 and commands $250 per week rent.The September Real Estate Institute of Queensland Market Monitor revealed that the Cairns house market had been a steady performer for the past year, with the median price increasing by 1.2 per cent from $405,000 in June 2017 to $410,000 in June this year.center_img The bathroomThe annual median sale price for Freshwater properties jumped 33 per cent over the last five years.last_img read more

A new survey has revealed how clueless many Aussies are about their finances

first_imgNatalie Jones fears she will never own her home and is stuck on the rental wheel.day, November 28, 2018 (AAP/Image Steve Pohlner)ARE you financially fit? A new survey has seen homeowners and renters go to head-to-head to test their ‘financial consciousness’.The Financial Consciousness Index (FCI), which was commissioned by comparethemarket.com.au and developed by Deloitte Access Economics, tested 3000 individuals’ belief in their ability to influence their financial outcomes, as well as their willingness to make a change to improve their financial wellbeing. Whether some owned their own home was a major contributing factor affecting a respondents score, as was their age, income, gender, location, and education. As a result, Aussie homeowners came out on top, scoring 56 out of 100 compared to renters, who scored 44 in the financial test. Natalie Jones, 34, can’t imagine ever owning her own home. She works full-time as an administrator in manufacturing services, but says saving for a deposit seems impossible.“Over a quarter of my wage goes to paying rent for a studio apartment (in Auchenflower),” she said. “My savings are dwindling, wage growth is barely CPI, job security is a concern.“I have had to cut right back on lots of things, but it seems to be getting harder and harder to make ends meet.” Many Aussies are clueless about the cash rate Thinkstock.Alarmingly, the survey found that many Aussies were “lost’ when it comes to the cash rate, while over two thirds of homeowners (68 per cent) had never or don’t know if they have stress tested their loan. One in 10 respondents (11 per cent) admit they would have to draw down on their mortgage or take out a loan if they were suddenly unemployed.Mr Attrill said 54 per cent of respondents very rarely or never monitor cash rates, and a further quarter (24 per cent) had never heard of the RBA cash rate announcement. “This dearth in financial literacy and a general lack of engagement with other key financial indicators is concerning given its potential for broader economic implications to the nation’s financial health,” he said.Further, the survey revealed that 27 per cent of respondents were not convinced they were getting the best deal on their home loan, but many admitted to not shopping around. Mr Attrill likened it to “decision paralysis”, saying many respondents feared making the wrong decision. Natalie Jones fears she will never own her home and is stuck on the rental wheel (AAP/Image Steve Pohlner)More from newsParks and wildlife the new lust-haves post coronavirus15 hours agoNoosa’s best beachfront penthouse is about to hit the market15 hours agoOther survey findings included that 73 per cent of homeowners believed their property would either hold or increase in value next year, and 70 per cent believed their home had either held or increased its value compared to last year.Comparethemarket.com.au general manager of banking Rod Attrill said homeowners should not presume their property would always rise in value.“Like all investments, the property market demonstrates a cyclic pattern with stagnation following a period of growth,” he said. “Although the cash rate still remains unchanged, there are obvious signs that the market is turning and we’re seeing out-of-cycle rate increases by major and non-major banks alike. “Interest rises should be a reminder for consumers to compare home loans to see if they can get a better deal.”last_img read more