Otherwise, it has no minimum assets-under-management requirements, while tracking error guidelines are to be confirmed at a later date.Danske said the product would be launched within a UCITS setup available for sale in all Nordic countries, and the portfolio will be set up as a segregated account and sub-advised mandate.Interested parties should state performance, gross of fees, to the end of September.The closing date for applications is 20 November.The IPE.com news team is unable to answer any further questions about IPE-Quest tender notices to protect the interests of clients conducting the search. To obtain information directly from IPE-Quest, please contact Jayna Vishram on +44 (0) 20 3465 9330 or email [email protected] Danske Capital has used IPE-Quest to conduct a search for an additional emerging market equity manager for its investment platform.According to search QN1348, the $200m (€145m) mandate calls for a minimum track record of three years, preferably five.The mandate will be measured against MSCI Emerging Markets index, and the applicant’s track record must be for a standalone emerging market equity product (no carve outs allowed).Danske said it would also prefer a manager with a “proven track record” and a skilled investment team that has ”worked together for a long period of time within this specific asset class”.
Flexsecurity, the €270m pension fund for so-called ‘flexworkers’ in the Netherlands, has shelved plans to convert itself into the new pensions vehicle PPI.The scheme, which manages pensions for 55,000 flexworkers and 350,000 former flexworkers at the Randstad agency, is currently assessing whether it can continue implementing its pension arrangements on its own under a new board model, according to Raimond Schikhof, its director.Schikhof said the main reason for the scheme’s change of tack on the PPI was the complicated process for obtaining the necessary licence.“We had hoped the supervisor DNB would treat us – as an existing pension fund – differently from any new commercial player,” he said. “Unfortunately, this appeared not to be the case. As the licensing process would have cost us at least half a million, our board has made a rational decision.”According to the director, Flexsecurity’s main reason for transforming itself into a PPI was its wish to bring its board structure of equal representation in line with modern governance requirements“Our board wanted to improve the expertise and availability of the board members,” Schikhof said.“That is why we are now headed for an independent board model, consisting of at least two independent professionals, which reports to a stakeholder body.”He said the new board option had been made possible by the governance legislation that will come into force on 1 July 2014.Flexsecurity’s PPI would have been the largest in the Netherlands, and was scheduled to start on 1 January 2014.At the end of last year, Flexsecurity concluded a new five-year contract for risk insurance with Nationale Nederlanden (NN), and contracted out its administration to NN subsidiary AZL for a similar period.The scheme placed its full asset management with Kempen Capital Management on 1 January.Flexsecurity manages an age-dependent, collective lifecycle scheme, with an age group-related investment mix.
Managing director Markus Hübscher told IPE the recently agreed measures were a reaction to the “increasingly difficult market environment”.Further, the PKSBB also conceded that the introduction of flexible or alternative pension models “might be necessary” in future, while not ruling out further adjustments to its recently changed parameters.The PKSBB’s troubles are not uncommon in Switzerland.Local consultancy ppcmetrics recently warned that adjustments to pension funds’ technical parameters, in light of the low-interest-rate environment, were effectively “inevitable”.Ronald Schnurrenberger, managing director at the PKE, warned that possible adjustments to pension payouts would have to be made in time, “based consistently on sensible parameters”.In 2014, his pension fund – for the Swiss energy sector – was one of the few Pensionskassen to introduce flexible payouts. Schnurrenberger lamented that the historically low interest rates made it very difficult to achieve sufficient returns over the medium and long term, but added that it did not matter whether returns were actually just above or just below zero.Falling return expectations have also led to changes at the Aargauische Pensionskasse (APK).After conducting a recent asset-liability management study, the pension fund reduced its exposure to commodities by 300 basis points to 5% for 2015.Managing director Susanne Jäger told IPE the change had been a “logical” step given the return expectations.She also pointed out that the new level was closer to the average of other Pensionskassen. The APK also made minor adjustments to its money market and liquidity exposure limit, reducing it from 5% to 3%, while slightly increasing its exposure to global bonds and Swiss equities.A recent study by ppcmetrics identified APK as being one of the Pensionskassen where additional risk had failed to “pay off” over the long term.The consultancy also pointed out that the Swiss National Bank’s negative interest rate for certain assets in current accounts had further “accentuated” the low-interest-rate environment.For Swisscanto, the Bank’s move is a “further intensification of the financial repression by central banks”.Thomas Liebi, chief economist at the asset manager, said the Bank had been compelled to respond to the continued appreciation of the Swiss Franc, triggered by the European Central Bank’s expected bond purchasing programme.In this environment, he warned, investors will be increasingly “pushed” into longer durations and riskier investments. The CHF16bn (€13bn) pension fund for federal railways in Switzerland (PKSBB) has finalised talks with members to adjust the scheme’s technical parameters.From 2016, the scheme is to lower its discount rate (technischer Zins) from 3% to 2.5%, while the conversion rate for new members will drop from 5.8% to 5.22%, as contributions are raised.The PKSBB will also begin using ‘generation tables’ to assess longevity risk.Only a few months ago, the pension fund announced it would put on hold plans to introduce flexible pension payouts, after talks with its members broke down.
The €17bn Dutch pension fund of electronics giant Philips is to replace its pensions provider Aon Hewitt with PGGM as of 1 January 2016.In addition to pensions administration management, the new provider will also be tasked with policy and board support, according to PGGM, provider for the €156bn healthcare scheme PFZW.The current 10-year contract with Aon Hewitt is to expire at the end of 2015, the Philips Pensioenfonds said.PGGM indicated that the decision of the “leading” Philips Pensioenfonds was an important development in its multi-client strategy in the Dutch pensions market. Currently, PGGM provides various services to the industry-wide schemes for painters and decorators (Schilders), architects and private security (PPB), as well as the occupational scheme for doctors (SPH).In a joint venture with Rabobank, PGGM also carries out the administration of a defined contribution vehicle (PPI) for small and average-sized companies.A spokesman for PGGM said the new contract with the Philips scheme had been concluded for a five-year period.Jeroen de Munnik, institutional business chief at PGGM, said: “The combination of the company scheme that is known for its innovative approach and our expertise and experience on pensions management and board and policy support will create an excellent cooperation.”Jasper Kemme, chief executive at the Philips Pensioenfonds, said that, during the selection process, PGGM had shown itself to be a “very skilful and customer-friendly organisation”.At September-end, the scheme had 102,640 participants in total, including 14,175 employees and 57,320 pensioners.PGGM carries out the administration for 2.6m participants.BlackRock has been the pension fund’s asset manager since 2005.The management of the scheme’s indirect non-listed property was placed with BlackRock in 2013.A spokeswoman for the pension fund said the scheme’s contract with BlackRock had been concluded for an indefinite period.Aon Hewitt was unavailable for comment.
Institutional investors in Switzerland are not happy with the government issuing the very first 10-year bond in Europe with a negative rate but they see the need to adjust to the environment in the Eurozone surrounding the country.The pension fund association ASIP pointed out in a statement: “Not only are risk-free bond investments denominated in Swiss Francs no longer yielding any return, they are even costing money.”Last week, CHF230m (€187m) in 10-year Swiss government bonds were issued at a negative yield to maturity of -0.055%.ASIP noted this “mirrored the difficult situation Pensionskassen are currently in” as it is becoming even harder to fulfil the liabilities. Rolf Ehrensberger, CIO at the Swiss pension fund for the energy sector, PKE, said he was ”not surprised after all that had been happening over the last months” to see Switzerland become the first country on the European continent to issue 10-year government bonds with a negative interest.But he added “impact on all savers, especially institutional investors, was considerable” and that this situation “could not have been imagined” a few years ago.Ehrensberger, like many other investors, was convinced this low interest rate scenario would continue “for some time”.He confirmed the PKE would not be buying 10-year Swiss government bonds but added it hardly had done so in the past few years: “Traditionally we have quite a high equity quota compared to other Swiss Pensionskassen.”Currently 40% of the CHF9bn portfolio is invested in equity and this would probably not change, he pointed out.Ehrensberger pointed out it “had been a good decision” to go strong into equities not only because markets were going well over the last years, but also because now the Pensionskasse does not have to chase the market and compete as much with other investors.In fact, because of the regulatory cap on equities the PKE could even use the current market to sell some of its portfolio.Eric Breval, chief executive at the Swiss Federal Social Security Fund (AHV), noted his first pillar buffer fund was “in a similarly very difficult situation as other institutional investors in Switzerland” given the ever lower interest rates .He explained the first negative 10-year Swiss bonds were caused by the various quantitative easing measures and the fact that “Switzerland is considered a safe haven, especially in the middle of Europe”.Breval pointed out they also reflected an “expected deflation” as bond investors were always looking at real returns.Lukas Riesen, partner at Swiss consultancy PPCmetrics, confirmed consumer prices in Switzerland have dropped over the last twelve months by 0.9%.This meant if investors believe in deflation over the long-term, “the expected real yield of this government bond paradoxically is still positive”, he explained.Carl-Heinrich Kehr, principal at Mercer Germany, said from a non-domestic point of view, investors “should not completely exit government bonds from safe issuers” given the volatility in equities and possible setbacks in corporate bonds.However, especially for Switzerland, where the duration of the Swiss Bond Index currently stood at 7 years paired with a “very low yield”, he recommended to move more into satellite bond investments such as high-yield, senior loans, corporates or even into emerging market debt.“It seems prudent to adjust to lower interest rates for a longer period, increase diversification into alternatives and expect possible temporary setbacks,” noted Kehr. Click here to read more about other challenges facing Swiss institutional investors in the liquidity segment.
The overall investment asset breakdown reflected nervousness in the bond markets, and while the funds did not hold Greek securities, events in Greece inevitably dragged down value.The share of bonds and bond funds fell to 54%, from 60% in the first quarter, while the bank deposit share grew by 2 percentage points to 5% and that of cash by 3 percentage points to 8%. The share of equity and equity funds remained unchanged at 30%.Geographically, Latvian markets accounted for the biggest share of investments at 39%, followed by eastern and central Europe (18%), the rest of Europe (17%) and global/international markets (14%).The trend was somewhat different for the 14 open-ended and one closed-end third-pillar funds.Here, year-to-date returns as of end-June 2015 averaged 3.74%. The balanced plans, which have close to 70% of their assets in bonds and bond funds, generated 2.57% and the active ones, with around 40% of their investments in equities and equity funds, returned 5.44%.However, while one-year returns from the balanced funds fell to 4.31%, from 5.41% a year earlier, those of the active funds rose from 7.90% to 8.32%.The third-pillar funds were more geographically diversified than their second-pillar counterparts, with only 33% invested in Latvia and 11% in east and central Europe. The rest of Europe accounted for 25% of asset allocation, and global markets 16%. They also had a higher exposure in North America (7%) and Asia (3%).The third pillar recorded a much faster growth than the second pillar over the previous year, with assets increasing by 21.7% to €306m, and membership by 7.9% to 244,438. Despite a difficult second quarter, Latvia’s mandatory second-pillar pension funds delivered positive returns for the first half of 2015 according to the Association of Latvian Commercial Banks.Year-to-date returns for the sector averaged 2.71%, with the highest yield (3.50%) generated by the eight active (equity-weighted) plans. Returns for the four balanced funds averaged 2.31%, and those of the eight conservative plans 0.89%.Average one-year returns fell to 4.8%, around half that generated three months earlier. The active plans yielded 5.6%, balanced funds 4.3% and conservative plans 2.8%. The respective returns for the end of the first quarter of 2014 were 11.0%, 9.2% and 5.9%.Assets increased by €180m since the start of the year, of which €53m came from investments returns. Assets totalled €2.2bn, a year-on-year growth of 18.2%, while membership declined marginally to 1.24m.
The ESG bond fund will focus on US holdings, aiming to achieve an exposure to holdings with a “measurable” social or environmental outcome, she added.O’Brien said the ESG bond fund was likely to be of interest to those seeking exposure to impact investing.Asked whether the new fund launches marked an attempt by TIAA-CREF to further establish itself in the European market, she noted that the company was already known to a number of large asset owners through its agricultural funds. She declined to state the company’s expectations for investments over the first year of each fund’s lifetime, saying only that “strong” demand was expected. TIAA-CREF is set to grow its European institutional presence following the launch of three new UCITS fund strategies.Managed by Nuveen Investments, a subsidiary of the US financial services company, the funds will invest in bonds and global equity with an environmental, social and governance (ESG) focus, and give investors access to emerging market debt.Amy Muska O’Brien, head of TIAA-CREF’s responsible investment team, said the ESG funds would focus on companies deemed “best in class” under its screening procedures.Speaking about the ESG equity strategy, O’Brien said: “The strategy has been offered in the US for some time, and the same [portfolio management] team will be running the strategy as well.”
Netspar, DNB, Tilburg University, Philips Pension Fund, AP3, Hermes Investment Management, Odey Asset Management, Aviva Investors, MN, Legal & General Investment Management, AllianceBernstein, Franklin Templeton, Kames Capital, Beroepspensioenfonds Loodsen (BPL), ASR, Vesteda, MAN Group, SackersNetspar – Industry veteran Jean Frijns has left Netspar as supervisory chairman. Job Swank, director of monetary affairs and financial stability at regulator De Nederlandsche Bank (DNB), is to succeed him. Between 1993 and 2005, Frijns was CIO at the €345bn civil service scheme ABP. Last year, he resigned as supervisory chairman at Delta Lloyd. In 2010, he chaired a committee tasked with identifying weaknesses in the Dutch pensions system. Separately, Casper van Ewijk, director at Netspar, has been appointed as part-time professor of capital-funded pensions at Tilburg University. He succeeds economist Lans Bovenberg, who is to become professor of economics at the same university. Van Ewijk is already professor of macroeconomics at both Tilburg University and Amsterdam University.Philips Pension Fund – Anita Joosten has started as director of investments, as well as a member of the executive board, at the €17.3bn Philips Pensioenfonds. She has been tasked with strategic investment, risk management and asset-liability management, as well as managing outsourced investments. She succeeds Rob Schreurs, who became chief executive at the National Grid UK Pension Scheme in November 2015. Joosten has been working for the Philips scheme for a long period, closely involved in establishing the pension fund’s targets and the introduction of its new investment policy.AP3 – Sandra Blomgren has been named the Swedish buffer fund’s head of risk control and yield analysis, assuming the role from March this year. Blomgren, who currently works as a risk management analyst at If P&C Insurance, replaces Marcus Nilsson, who has been part of AP3’s risk management team since October 2013. In addition to working at If, Blomgren also spent nearly four years at Folksam and has worked as a non-life actuary for consultancy PwC. Hermes Investment Management – David Stewart has been appointed chairman of the board, succeeding Paul Spencer, who has been chairman since 2011. Stewart previously spent nine years at Odey Asset Management, initially as chief executive and latterly as a non-executive director. He is chairman of IMM Associates and a non-executive director of the Caledonia Investment Trust. He also sits on the investment committee of MacMillan Cancer Care.Aviva Investors – Mike Craston has been appointed global head of business development. He joins from Legal & General Investment Management, where he was head of distribution. The appointment comes as the asset manager grows its senior management team, also naming David Clayton as CFO.MN – The €113bn asset manager and pensions provider has appointed Sandra Spek and Hanny Kemna as members of the supervisory board (RvC). According to MN, Spek, a corporate economist, has ample experience in international finance and governance on pensions and insurance, in part accrued at insurance group Achmea. Kemna has expertise on IT, innovation, management and finances. She has been a partner at Ernst & Young, responsible for Europe-wide auditing at large financial institutions.AllianceBernstein – Jamie Hammond has been appointed head of the EMEA Client Group and chief executive of AllianceBernstein in London. He joins from Franklin Templeton, where he was managing director of Europe, heading its retail and institutional efforts across the region. Before then, he was sales and marketing director for Europe at Fiduciary Trust International, having previously served as the national sales manager at Hill Samuel Asset Management.Kames Capital – Andy Kelly has been appointed business development manager. He joins from Legal & General Investment Management (LGIM), where he was head of corporate and financial institutions. Before that, he was head of liquidity distribution at LGIM. He has also held roles at Fidelity International, RBC Dexia Investor Services, JP Morgan, Morgan Stanley and Barclays.KAS Bank – The supervisory board of the custodian bank is to appoint Mark Stoffels as a member of the executive board, as well as chief financial and risk officer. Stoffels is a member of the company’s management committee. He will be responsible for strategic and tactical reporting. He is also chairman of the pension fund of KAS Bank.Beroepspensioenfonds Loodsen (BPL) – Robert de Jonge has been named chairman of the occupational pension funds for maritime pilots as of 1 January. He is to succeed Jan Willem Duyzer, who has been chairman since 2008. De Jonge has been a trustee at BPL since 2008 and the scheme’s secretary and treasurer over the last three years. Pieter Bas Schoe, trustee since 2012, will take over De Jonge’s current positions on the board.ASR – Pensions insurer ASR Nederland has appointed Herman Hintzen as a member of its supervisory board (RvC). Hintzen has been in several management, advisory and supervisory roles at internal financial institutions. Most recently, he was senior adviser at UBS Investment Bank in London. Before then, he worked at JP Morgan, Morgan Stanley, Credit Suisse and APG Investments. Currently, Hintzen is chairman of the RvC of insurer Amlin Europe.Vesteda – Hélène Pragt is to step down “by mutual agreement” as CFO at the €3.7bn property investor Vesteda after 15 months in the job. Vesteda attributed her early departure to “differing views” on managing the company. It acknowledged Pragt’s contribution to the firm, such as an improved financing structure and investor relations, as well as organisational and IT development. Vesteda focuses on investments in Dutch residential property for institutional investors. Its clients include APG and PGGM, the asset managers for the €345bn civil service scheme ABP and the €161bn healthcare pension fund PFZW.Man Group – Lord Livingston of Parkhead has been appointed as a non-executive director. He will succeed Jon Aisbitt as chairman following the company’s next AGM. Lord Livingston has been a serving member of the UK House of Lords since 2013 and was previously minister of State for Trade and Investment for the UK government from December 2013 to May 2015. In the corporate world, he most recently served as chief executive at BT Group.Sackers – Philippa Connaughton has joined the UK law firm for pension scheme employers, trustees and providers as a partner. She was a partner at RPC and head of pensions from 2013 to 2015.
A poll of UK company secretaries has shown support for strengthening The Pensions Regulator’s (TPR) powers to block takeovers to protect pensions.In the poll, carried out by ICSA: The Governance Institute and recruitment specialist The Core Partnership, 64% of company secretaries surveyed said they were in favour of this, with only 15% opposed to the idea, and 21% undecided.Simon Osborne, chief executive at the ICSA: The Governance Institute, said: “With FTSE 100 pension deficits soaring in the last year and the BHS pension debacle still fresh in people’s minds, it is little wonder we are seeing calls for more powers to be handed to The Pensions Regulator.”However, he said the organisation itself would advise some caution, arguing that it would stifle corporate transactions if pension members had the ability to block all deals. This, in turn, would drive investment out of the UK at a time when it was much needed, he said.“It might be more sensible to ensure there are robust safeguarding provisions in place in any takeover agreement so the TPR can ensure pensions’ interests are adequately protected,” Osborne said.The poll also puts more responsibility on directors to look after a company’s pension fund.Some 55% of respondents said directors’ duties should be expanded to include a specific duty of care for a company’s pension fund, while 14% were uncertain about this, and 31% opposed.The acronym ICSA stems stems from the Institute of Company Secretaries and Administrators, out of which the current form of the organisation has grown.In other news, the Transparency Taskforce – an organisation campaigning for greater transparency in financial services around the world – is proposing to call on the Work & Pensions Select Committee to open an inquiry into pension charges.Andy Agathangelou, founding chair of the organisation, said: “I can’t think of anything better for the cause of wanting greater transparency in the UK’s pensions and investment system, particularly in relation to costs and charges, than if the Work & Pensions Committee were to open an inquiry into the matter.”He said he thought the public interest in such an inquiry would be enough to warrant the time, effort and expense involved, and it would represent a very good use of government resources.“I say this because a 20 year old, saving £100 per month into a pension until age 65, will lose 24.6% of the value of the fund in charges if the total charges amount to 1% per annum, and the gross market return is 5% per annum,” he said.At 2% a year, total charges for the pension saver would amount to 42.55% of the value of such a fund, he said.Agathangelou said he would write an open letter to the chair of the Work & Pensions Committee, asking his committee to think about opening an inquiry.
The UK could face a bill of between €7.7bn and €10bn for its share of the EU officials’ pension and benefits funds, according to a comprehensive study of European finances.However, EU officials may have been underfunding the pension scheme due to discrepancies between discount rates used to calculate liabilities and staff contributions, the study by Brussels-based think tank Bruegel said.The figures are likely to be a major sticking point of the UK’s negotiations to exit the European Union.Authors Zsolt Darvas, Konstantinos Efstathiou, and Inês Goncalves Raposo made the pension estimates as part of a broader study of the UK’s likely financial obligations towards the EU. The UK’s estimated contributions relate to unfunded defined benefit plans for EU staff and a Joint Sickness Insurance Scheme, with combined liabilities of €63.8bn at the end of 2015.Staff are expected to contribute one-third of annual pensions costs, with member states paying the balance. Based on this, the study’s authors estimated the UK’s bill for future pension payments at between €7.7bn and €10bn, depending upon whether the calculations take into account rebates from the EU to the UK.However, the authors noted that the liability figures were “rather uncertain” – largely due to the discount rate issue. The 2015 liability figure was based on a 0.6% discount rate, an average of one-year interest rates across the euro-zone.At the same time, staff contributions were measured using a discount rate based on a much longer-term average. This went from a 12-year historical moving average until 2012, when it moved to an 18-year average. This is set to increase gradually to a 30-year average by 2021, two years after the UK’s exit talks are expected to have concluded.“Since nominal and real interest rates have fallen in many advanced countries in the past 30 to 40 years,” the authors wrote, “there was a big decline in the balance sheet discount rate after the euro crisis abated after 2012. This decline pushed up the present value of pension/sickness insurance liabilities. In contrast, since the length of the historical moving average used for the staff contribution calculations has gradually increased in recent years, that discount rate has in fact increased, contrasting with the global decline in interest rates.”The authors argued the use of a long-term moving average was “unjustified”, as it had resulted in staff collectively contributing less towards annual pension costs than the one-third they are supposed to.“This implies that EU staff have been underfinancing their pensions relative in the past years and will continue to underfinance for more than a decade to come, compared to the theoretical requirement,” the authors said.If liabilities were calculated using a risk-free rate, as is common practice in the UK, then the figures could increase “substantially”, the authors added.UK prime minister Theresa May officially served notice of the country’s intention to leave the EU yesterday.EU leaders have made clear that the UK will have to pay its fair share of bills and obligations before it leaves. Newspaper reports have referred regularly to a rough estimate of €50bn in total, but the Bruegel study said the total bill could be more than double this figure.“Depending on the scenario, the long-run net Brexit bill could range from €25.4bn to €65.1bn,” the authors said. “Upfront UK payments could reach €109bn, followed by significant subsequent EU reimbursements.”Bruegel’s board is chaired by former European Central Bank president Jean-Claude Trichet, and includes academics, investment professionals, and current and former government ministers from across Europe.