The €375bn asset manager and pensions provider APG has appointed Philip Neyt as senior public affairs adviser on its strategy and policy team.Alongside Theo Timmermans, head of APG’s international public affairs, Neyt is to focus on international stakeholder management.Neyt has been chief executive at the country’s largest pension fund – the €5bn scheme of telecommunications provider Belgacom – for 15 years, and acted as an adviser on pensions for several Belgian governments.He received numerous awards for pension fund management as well as for his personal contribution to the development of the pensions sector in Europe. Neyt is also chairman of the Belgian Association of Pension Institutions and a member of the Belgian Corporate Governance Committee, as well as the Orientation Council of Euronext.Dick Sluimers, chief executive at APG, said: “We are delighted Philip is joining APG, given his high profile and extensive knowledge.“His broad network will strengthen our stakeholder management in Brussels and abroad.”Neyt resigned as chief executive at the Belgacom scheme in June 2013 after 20 years of service.At the time, local media reported that the departure of Neyt, who was named head of communications at Belgacom in 2011, was due to “internal political reasons” and disagreements with Didier Bellens, chief executive at the company.The move came alongside the dismissal of Steven Van Casteren, managing director of Scarlet, the real estate branch of Belgacom, the same week.Bellens was dismissed by the Belgian government months later.
Archives: September 2020
He also spent nearly a decade at Inchcape as group pensions director.In his new role as pensions manager for the UK and Ireland, he will be in charge of company pensions for employees in the region.Following the sale of the Invensys rail business to Siemens in 2012, the company was acquired by Schneider.The new scheme sponsor said earlier this year it had offered to guarantee £1.75bn worth of scheme obligations.The agreement also saw the proceeds from the Reservoir Trust split evenly between fund and sponsor.As of September last year, the fund had an IAS 19 surplus of £306m.Invensys former chief executive, Robin Claessens, recently joined consultancy Redington as a managing director. Jerry Gandhi, former COO at the UK’s Now Pensions, has been hired by French energy firm Schneider Electric to oversee its UK and Irish pension activities.Gandhi, who stood down as Now’s COO last summer, will now be in charge of the Invensys Pension Scheme, he told IPE.The fund saw part of its sponsor company sold to Siemens in 2012, resulting in the launch of a £225m (€284m) trust to make deficit payments in place of an insolvency event being triggered by the sale.Prior to joining Now in 2011, Gandhi was group pensions director at RSA Insurance Group and in 1999 founded consultancy CAP Services.
European parliamentarians have named the MEPs to oversee negotiations for the passage of the IORP Directive, with a former Irish government minister to lead efforts.Despite the appointment of Brian Hayes, who joined the European Parliament following last May’s elections, there will be a strong Dutch presence among the rapporteurs and shadow rapporteurs.A former junior minister in the current Irish coalition government, Hayes spent three years in the Department of Finance. He will act as rapporteur for the Economic and Monetary Affairs Committee (ECON).As a Fine Gael MEP, he is a member of the European People’s Party (EPP) and was appointed to ECON after joining parliament in July. He is also vice-chair of the parliamentary delegation for relations with Iraq. His appointment comes after several months of uncertainty over the appointment of a rapporteur, who facilitates the passage of legislation and leads negotiations between Parliament, the Council of the EU and the European Commission.Several people with knowledge of the situation told IPE last year that the EPP was behind schedule in naming the rapporteur.Many were hopeful that German Christian Democrat MEP Thomas Mann, an ECON substitute member and former rapporteur for a report on demographic challenges, would be appointed.Jeroen Lenaers, a Dutch member of the Employment and Social Affairs Committee, has been named its rapporteur,The other main political factions have appointed rapporteurs to shadow Hayes, with a further three Dutch MEPs among them.Paul Tang, a member of the Dutch Labour Party, will represent the Socialists & Democrats (S&D), Bas Eickhout will represent the Green parliamentary faction. Eickhout was previously a member of ECON and was appointed as a substitute late last year.Sophie in ‘t Veld, the third Dutch MEP, will represent the interests of the Alliance of Liberals and Democrats. She is also a former member of ECON and has acted as rapporteur and shadow rapporteur on a number of matters relating to civil liberties.The European Conservatives and Reformists Group will be represented by Ashley Fox, in his first term as a UK MEP and an ECON substitute, and Spanish MEP Teresa Rodríguez-Rubio will represent the European United Left.
National and EU policymakers should address regulatory constraints and risks, such as subsidy changes, that are deterring or preventing pension funds from investing in alternative assets such as infrastructure and venture capital, according to PensionsEurope. The European pension fund association bemoaned the lack of infrastructure investment opportunities and said political and regulatory risks could be major barriers to pension funds’ investing in infrastructure over the long term.It called on policymakers at the national and EU level to “ensure a stable regulatory and fiscal framework” for infrastructure investment, although it added that pension funds themselves could take matters into their hands.It cited as an example the creation of the Pensions Infrastructure Platform (PiP) in the UK, which pools investment from a number of pension funds. The PiP received its UK regulatory authorisation in mid-January, having by then mobilised commitments to invest £1bn (€1.3bn), half of its £2bn target size.PensionsEurope noted that infrastructure investments were often made in the context of public assets, in some cases incorporating state subsidies.Such investments require a “stable” public and legal environment over the long term.“Variability in those areas may significantly reduce investor confidence and willingness to invest,” it said.“Reducing subsidies during the life-time of a project could significantly curtail the advantages of these types of investments.”The illiquid and long-term nature of infrastructure investments underscores the importance of stability, it said.PensionsEurope cited “the many shifts” of tariffs for solar energy projects in the EU as an example of political and regulatory risks that could reduce the appeal of infrastructure investments.It cited the UK government’s current consideration of reducing feed-in tariffs for small installations, changes in Spain in 2012-13 to the policy on a guaranteed price for renewable electricity, and plans in Norway to “drastically” reduce transmission fees for gas pipelines.PensionsEurope also called for a better definition of infrastructure investments “to help to support industry-wide best practices or standards for contractual documentation for long-term project financing”.The association also addressed other non-traditional asset classes in its response to the European Commission’s call for evidence on the EU financial services regulatory framework.It said “unnecessary regulatory constraints on financing” were also affecting pension fund investment in venture capital and European Long-Term Investment Funds (ELTIFs).European venture capital funds (EuVECA) have existed since 2013, but there are too few, and the ones that do exist fail to meet pension funds’ basic diversification requirements, said Pensions Europe.The local implementation and promotion of EuVECA should be corrected to allow pension funds to use the vehicles, the association said.The EU ELTIF regulation, meanwhile, has not been fully transposed into local legislation and/or regulation for pension funds, it said, which creates problems.It gave as an example that, in German local pension fund regulation, an ELTIF would be considered an equity vehicle, even if it carried only debt investments.
It remained stable at 4% until 2000, but since then it has been, for the most part, cut.In announcing its decision, the federal council cited the recommendation of the commission and said it decided to lower the rate because of low interest rates and “unsatisfactory” performance in the equity markets.It noted that the yields on Swiss government bonds had fallen to record lows, with the seven-year bond yielding -0.73% at the end of September compared with -0.39% a year before.It said real estate offered a more attractive return but pointed out that this market only accounted for 18% of occupational pension assets.The Swiss trade union federation used the federal council’s Mindestzins decision as an opportunity to push its position in the debate over the AV2020 reform package in Switzerland. Swiss Pensionskassen will have to pay an interest rate of at least 1% on active members’ mandatory contributions as of 1 January next year after the government adopted the recommendation of an independent commission.The government has always followed the recommendations of the BVG Kommission on the minimum interest rate (Mindestzins).In early September, the commission recommended lowering the rate from 1.25% to 1%, and the federal council (Bundesrat) today decided that the new rate would be 1%.This is the lowest the rate has ever been in Switzerland.
Source: The Investment Association The IA said: “One significant barrier to innovation at the moment is that DC decumulation is still in the very early stages. Although around half a million people reach retirement age each year, the median size of a DC pot at retirement is currently around £26,000 [€29,200], so asset managers developing specialist products for this market will need to take a long-term view and accept that it will be some years before this market is of substantial size and for many years the flows into these products may be minimal.”Despite the influence of DC, DB funds remained the most significant institutional segment. The IA reported £1.8trn in workplace DB assets, compared to £410bn in DC. Ruth Meade, senior research analyst, said mixed-asset default funds in DC schemes were a likely cause of the recent increase in flows into multi-asset strategies: 21% of all mandates awarded in 2016 were multi-asset, the IA’s data showed.There was scope for more DC-driven innovation in the post-retirement space, the IA said in its report. With individuals in the UK no longer required to buy an annuity in retirement, the association said there was “a gap in the market for products that were income-focused but offered some way of managing downside capital risk”. The rise of defined contribution (DC) and auto-enrolment is blurring the lines between institutional and retail investors, according to the Investment Association (IA).Presenting its 2016 annual survey of its members, the UK’s asset management trade body said new and growing DC schemes were classified as institutional investors for the IA’s purposes but often behaved more like retail investors because individual members bore the investment risk.Although the IA did not have specific concerns about these difficulties, Anastasia Petraki, head of research and statistics, said it was important to ensure equivalent governance standards for defined benefit (DB) and DC schemes. “We are seeing that with independent DC governance committees,” she said.In addition, the IA’s survey showed a growing trend towards multi-asset strategies, which the association also attributed in part to DC schemes. Elsewhere in the survey, the IA reported that assets in specialist environmental, social and governance (ESG) funds grew but remained steady as an overall proportion of industry assets (1.2%). However, Petraki explained that the IA’s methodology did not take into account asset managers’ membership of the UK’s Stewardship Code or other ESG-related bodies.
In a joint statement, the consortium members said: “Following the expiry of the offer period, the offeror [DK Telekommunikation] has learned that a number of investors, including some index trackers, continue to be interested in selling their shares to the offeror on the same terms and conditions as set out in the offer document.”If the 90% threshold is reached, DK Telekommunikation “intends… to initiate a compulsory acquisition of shares held by the remaining minority shareholders and to apply for a delisting of TDC’s shares”, the group said.Excluding treasury shares held by TDC, DK Telekommunikation holds around 88.5% of the company.Allan Polack, chief executive of PFA, said on behalf of the consortium: “With the majority of shareholders approving our offer, we are pleased to have reached this important milestone as TDC now transitions into new long-term ownership.”As a consortium of highly-experienced investors, he said, the group’s focus was turning to realising its vision and development plans for the growth of Denmark’s digital infrastructure, in which TDC would play a leading role.“We look forward to working in close collaboration with all of TDC’s stakeholders as we embark on this journey under the leadership of the company’s management team and the more than 8,000 dedicated employees in Denmark and Norway,” Polack added.The consortium’s offer won backing from the TDC management board in mid-February, just days after the board had rejected an offer from the group. Three of Denmark’s largest pension funds have succeeded in their bid to buy TDC, the country’s former national telecommunications operator, after receiving majority shareholder approval.However, the trio of ATP, PFA and PKA – in a consortium led by Macquarie Infrastructure and Real Assets (MIRA) – fell just short of the threshold required to delist the company from the Copenhagen Stock Exchange.Shareholders representing about 87.4% of TDC’s share capital and voting rights accepted the consortium’s bid, according to announcements made late last week. A 90% acceptance level would have allowed DK Telekommunikation – the consortium – to force a delisting.The pension funds said they may yet be able to increase their ownership and cross this key threshold.
Anne-Marie Jourdan, chief legal officer and head of public relations at FRR, told IPE that the fund wanted to avoid penalising UK-based managers and potentially deprive itself of high-quality investment management. Many managers of small-cap strategies in particular were small, specialised UK-authorised firms without any branches or subsidiaries elsewhere in the EU, she said.FRR said it wanted UK-based managers to present an “alternative candidate” registered in the EU or EEA to take on the mandate in the event of UK firms losing their European passporting ability.The alternative manager could then outsource the investment management function to the UK-based firm.“We wanted to allow them to apply as a UK-based candidate,” said Jourdan. “It might not be a perfect solution and we hope there’ll be a soft Brexit, but we preferred to be prepared for a hard Brexit.”Some larger asset managers have increased their presence in the major EU fund domiciles of Ireland and Luxembourg, including Royal London, Aberdeen Standard Investments, Jupiter and M&G.Last month, Irish investment experts said managers realistically had until July to apply for authorisation to operate in Dublin. France’s €36bn pension reserve fund has taken steps to remove Brexit-related uncertainty from having an adverse effect on a newly launched investment manager search.The tender is for two small cap equity mandates totalling up to €1.7bn, one for domestic small cap companies (€600m) and the other for European small cap companies (€1.1bn).Managers outside France bidding for the mandates must have a European fund ‘passport’, FRR said, allowing them to conduct their activities throughout the EU or the European Economic Area (EEA).However, given uncertainty about Brexit and FRR’s lengthy procurement process – it is expected to be finalised in April 2019, shortly after the UK’s expected departure from the EU – FRR was concerned that some UK-domiciled asset managers might not bid for the mandates due to the risk of losing their European passports.
The chief executive of Sweden’s KPA Pension has called for more affirmative action to bring about gender equality in pension outcomes.Britta Burreau pressed the issue directly at a recent meeting with the Swedish minister for social affairs, Annika Strandhäll.The pension fund, which covers staff at local authorities, said that women’s pensions are on average worth 67% of the value of men’s pensions on retirement.KPA Pension has been campaigning for action to change the impact of women taking more responsibility for home and family tasks than men, which eventually feeds through into lower pensions. Annika Strandhäll, Sweden’s social affairs ministerAt Burreau’s recent meeting on the matter with Strandhäll, the pension fund said the minister talked about the government’s planned investments for stronger pensions and said equal pensions were a key issue for the government.The fund, which ran SEK172bn (€15.9bn) in assets at the end of 2018, said that roughly 80% of its 1.8m customers were women.The gender gap in pensions cemented an unequal society, KPA added.KPA Pension released a humorous TV advert last year highlighting the responsibility that fathers also have for their children, in which a child turns up to school without her gym bag.The Swedish prime minister has since cited the school gym bag as a symbol of pension inequality.Earlier this year, Swedish pension and insurance group Länsförsäkringar published data that showed women received an average of SEK4,114 a month less in pensions than men.The company said that, according to figures from the Swedish National Mediation Office, women had nearly the same salary as men, but a real gap could be found in pensions that are based on an individual’s income.The study attributed the difference to womens’ absence from the labour market, which includes factors such as the increased number of women in part-time work, but largely the fact that women take parental leave more frequently than men.Last year a UK report from labour union Prospect showed the gender pensions gap in the UK to be 39.5% – approximately £7,000 (€8,000) a year. Burreau said: “It is in the workplace and in the division of responsibility for home and family that the changes need to take place, as the pension system as such is equal.”
The study differentiates between public pension funds with funding ratios under 100%, and private funds with funding levels of around 107.5%.“The coronavirus crisis leads to uncertainty, to problems for the financial market and to negative returns,” said Jürgen Rothmund, investment analyst and author of the report.This year Complementa expects different performance levels from pension funds, which will depend on their reaction to the crisis. “There will be funds with less strong negative returns and funds with very strong negative returns,” he added.Returns reached -3.9% at the end of April compared to 10.6% in 2019. Higher returns were only recorded in 2005 with 11%.“The coronavirus crisis leads to uncertainty, to problems for the financial market and to negative returns”Jürgen Rothmund, investment analyst at ComplementaIn the last decade, between 2011 and 2020, funds achieved average returns of 3.6%, according to the analysis. “This is a high figure if you think how low the interest rate is,” Rothmund said.Swiss pension funds have invested the returns of 2019 to build up their funding ratio (49%), while 19% was spent on interest payments, 1% on administration, 6% on administration of losses, and 25% on adjustment of technical parameters, including technical interest rate, the report disclosed.The study compared the impact on investments caused by the COVID-19 crisis to other crises in the past, including the financial downturn of 2008, and found similarities with the consequences brought by the collapse of the Long-Term Capital Management (LTCM) hedge fund in the 1990s.“Pension funds will have to continue to fight against low interest rates” when the coronavirus crisis will eventually ease, Rothmund added.The interest rate on employees’ savings was 2.2% in 2019, relatively high in relation to a minimum interest rate for occupational pensions of 1%, and for the fist time since 2002 over the technical interest rate, the analysis showed.“It is certain that the technical interest rate will continue to drop, we estimate from 1.9% in 2019 to 1.8% this year,” Rothmund said.The Umwandlungssatz (UWS), the conversion rate used to calculate pension payouts from accrued assets upon retirement, will decrease in 2020 to 5.53%, and in the next five years even further, to 5.26%.“It is very far away from the established 6.8% and from the correct actuarial conversion rate of 4.48% we calculated, but the difference will decrease in the next five years,” Rothmund said.In the study, Complementa asked pension funds whether the Swiss second pillar pension system was fit for the future – 80% of respondents found it reasonable to increase the retirement age to make it sustainable, but only 25% believe the measure will be executed.Complementa said pension funds must generate a return of at least 2.2% in order to maintain a stable funding ratio.To read the digital edition of IPE’s latest magazine click here. The funding ratio of Swiss Pensionskassen bounced back to 103% in April after declining to 99.8% for a short time at the end of March, according to Complementa’s latest “risk check-up” analysis report.Central banks have sent a clear message through a series of interventions to say they “stand by” the equity market “whatever it costs”, Thomas Breitenmoser, head of investment consulting at Complementa, told IPE during a conference call.The funding ratio of Swiss pension schemes will depend on the future of equity markets, he said, adding that it should not drop further as long as national banks keep their current policies in place.The analysis focuses on 158 Pensionskassen with total assets of CHF396bn (€371), and it is based on previous year’s data of 437 pension funds with assets worth CHF650bn, which represents 70% of the Swiss occupational pension system.