Month: September 2020

Last-minute changes to IORP II Directive spark confusion

first_imgA European Commission source confirmed to IPE there would be “no changes for cross-border funds” in the new text, maintaining the funding requirements put in place by the first IORP Directive.“[The] status quo remains,” the source said. “That means cross-border pension funds need to be fully funded at all times, whereas national pension funds don’t have to be.”The source said the reason behind the Commission’s volte-face was twofold.“The revision of IORP is not about funding, so it makes no sense to deal just with one element of funding,” the source said.  “And although we are not asking pension funds to increase their funding at this stage, we don’t think it makes sense either to encourage them to weaken existing funding requirements.“[This is] not in line with the general movement to improve prudential soundness.”The eleventh-hour reversal is certain to come as a shock to the industry, which had broadly welcomed the leaked draft’s position specifically on cross-border funding.Mark Dowsey, senior consultant at Towers Watson, said: “If the rumour that the fully funded requirement is not going to be removed is correct, it is very, very disappointing.“It is just two years ago that Michel Barnier, [EU commissioner for the internal market and services], stated in a public hearing in Brussels that the pre-eminent reason for the Commission revising the Directive was to ‘contribute to growth and employment and make better use of the Single Market’.“He stated that, to do so, the Commission wanted to ‘facilitate economies of scale’. The full-funding requirement is a major – if not the major – block on achieving the consolidation necessary to achieve that scale.”But Jerry Moriarty, chief executive and head of policy at the Irish Association of Pension Funds, was more phlegmatic, describing the policy reversal as “business as usual”.“The effect of the full-funding requirement has been to greatly reduce the number of Irish cross-border funds, and it is hard to see how DB schemes can operate on a cross-border basis,” he said.“It is a strange decision, as the purported aim of IORP II is to encourage more cross-border schemes.“As individual member states don’t require full-funding at all times and have provisions in place to allow recovery plans, it is hard to understand why that couldn’t apply on a cross-border basis.”The finalised Directive is expected to be published on Thursday, and will include provisions for governance, transparency and long-term investing. There has been confusion in Brussels after what looks like a last-minute lobbying intervention by the insurance industry to amend a key provision in the IORP II Directive regulating pension funds.An EU source has confirmed that cross-border pension funds will need to be fully funded after all.This represents a departure from several widely circulated drafts of the IORP II text, seen by IPE, which suggested cross-border schemes would not be required to be fully funded.One member of the EIOPA occupational pensions stakeholder group expressed anger about what has been interpreted as undue influence by insurers.last_img read more

Finland’s Ilmarinen warns of impact of Russia sanctions

first_imgFinland’s Ilmarinen has warned of the detrimental impact on European growth of widening economic sanctions brought by – and against – Russia.Timo Ritakallo, CIO at the €33.6bn pensions mutual, stressed that the portfolio’s risk exposure to Russia was lowered well before the crisis in Ukraine began.“Ilmarinen is, however, a major owner of listed Finnish companies,” he said, “so our portfolio could still be exposed to some indirect negative impacts.”The pensions provider nevertheless saw a return of 3.4% for the first six months of the year, aided largely by 5.5% returns from its equity portfolio. While the returns from share holdings were down over the same period last year, Ilmarinen managed to outperform results from the first half of 2013 by 0.4 percentage points.Fixed income returns were above the same period last year, at 2.2%, while the mutual’s direct real estate returns were on par with the first six months of 2013.Chief executive Harri Sailas stressed the importance of a diversified portfolio, noting that the mutual’s approach had allowed it to weather the current environment.“The current economic challenges, such as the low interest rate level or Finland’s weak economic state, have not shaken our customers’ pension security,” he said.Ritakallio said ongoing geopolitical risk was causing a “headache” for investors and “rattling nerves” in both equity and fixed income markets.He also said he saw the current situation involving sanctions against Russia and counter-sanctions against European Union products as a “disconcerting” factor for Finland’s economy.“The EU’s economic sanctions against Russia and the latter’s countermeasures to the sanctions are weakening the economic outlook for all of Europe,” he said.“The negative impacts will be especially significant in the profit outlook of Finnish companies that have business ties with Russia.”last_img read more

German roundup: Nord/LB, KAS Bank

first_imgThe institutional asset management subsidiary of German regional bank Nord/LB has grown its assets to more than €17bn, as of the end of June, up from €15.4bn at year-end 2013.Nord/LB said 20% of the increase in the first half was down to inflows from Versorgungswerke, corporates and banks.One major addition to the subsidiary’s assets was the first real estate debt fund it issued this spring, in cooperation with Deutsche Hypothekenbank for an unnamed German institutional investor.In total, the fund has more than €200m invested in real estate financing backed by “high-quality real estate in Deutsche Hypo’s core markets”. Over the first six months of 2014, Nord/LB issued four new open-ended funds – or Publikumsfonds – for institutional investors, three of which were regional REITs covering the EMEA, the US and Asia Pacific, respectively.The fourth was a regional index fund tracking stock markets in developed countries of the Pacific region.In other news, the Netherlands’ KAS Bank has vowed to become investment service-provider market leader for the German pensions industry.It said it aimed to increase its market share in the country, where it first established a presence in 2010, to 10% among pension funds over the next five years.KAS Bank’s German division said it would target all pension providers, including Pensionskassen, Versorgungswerke, Pensionsfonds and insurers, as well as “corporate investors with assets between €200m and €3bn”.The Dutch company said it expected opportunities to arise from “major upheavals” resulting from regulatory reforms such as IORP II and Solvency II.It said the changes resulting from these reforms would lead to “considerable additional effort and costs for German IORPs, Versorgungswerke and Pensionskassen”.It added that many of the mooted changes had already been implemented in the Dutch market, and said it wanted to bring this know-how to Germany.last_img read more

Aegon Poland set to acquire Nordea’s second-pillar pension fund

first_imgThe number of Polish second-pillar pension funds (OFEs) is set to shrink to 11 following yesterday’s announcement that Aegon Poland had signed an agreement to take over Nordea’s pension fund, pending approval from the Polish Financial Supervision Authority (KNF).The Nordea OFE currently ranks seventh in terms of assets and eighth by membership.As of the end of May, according to KNF data, it had net assets of PLN6.5bn (€1.5bn), a market share of 4.7% and a membership of 986,257 (6.0%).While Aegon is currently in tenth place, with an asset share of 4.2% and a membership share of 5.6%, the takeover will push it into fourth place, behind Nationale-Nederlanden, Aviva and PZU. Claus Stoltenborg, chairman of the board at Nordea PTE (pension fund management company), told IPE the sale would complete Nordea Group’s strategy, initiated two years earlier, of withdrawing from customer-focused business in Poland.In 2013, Nordea divested its Polish banking, finance and life insurance businesses to PKO Bank Polski, the country’s largest bank“In addition to this,” Stoltenborg said, “after the nationalisation of the 51.5% of the assets of the OFEs and the implementation of the zipper [slider] mechanism, where gradually assets are transferred to the state for the older part of the portfolio, it makes sense to consolidate and create larger units with critical mass to be able to service the customers well also in the years to come.”Michał Biedzki, chairman of Aegon PTE’s supervisory board, said on Aegon’s website that the transaction would improve the quality of customer services and strengthen its market position.“This latest transaction clearly supports Aegon’s ongoing strategy in key areas,” he said.“In addition to divesting remaining non-core operations over recent years, it is Aegon’s ambition to further grow distribution and scale in core activities, including pension administration and asset management.”According to Stoltenborg, the transaction, pending KNF approval, should be completed towards the end of the year.This is the first sectoral consolidation since 2013, when PKO BP Bankowy took over Polsat’s pension fund, while the Warta fund was bought by Allianz.It has nevertheless raised eyebrows given the uncertainties overhanging the second pillar, including the outcome of the current transfer window, which lasts until the end of July, and which, as of last week, had only seen some 55,760 applications.Following this, the sector is set for its three-year statutory review that must be completed by the end of 2016.last_img read more

Mandate roundup: FRR, National LGPS Frameworks, IPE Quest

first_imgIn the event of any underlying fund’s being invested outside France, the manager of an FRR fund will, for example, have to negotiate a clause with the underlying fund to excuse the FRR fund, according to the tender documents.The underlying investee funds could be regional or national funds investing in very small to medium-sized companies seeking capital investment for different development purposes (risk capital, development capital and transfer capital).However, FRR has ruled out participation in turnaround and “hostile” financing operations.Caisse des Dépôts et Consignations (CDC) will be the depositary of the FRR funds.The deadline for applications is noon (CET) on 29 July.Elsewhere, Norfolk County Council, which has been overseeing the National LGPS Frameworks, has put out to tender a multi-provider framework agreement for stewardship advisory services.It is seeking bids for five types of services: voting, engagement, voting and engagement, stewardship research and data services, and “stewardship-related project services”.The latter includes advising on “issues such as fossil fuel investment, human capital management, etc.” and providing advice on “preparing stewardship due-diligence tools for specific asset classes, e.g. real estate, forestry, etc.”.The voting and engagement services being sought include supporting clients in relation to meeting stewardship best practice, such as that set out in the UN Principles for Responsible Investment and the UK Stewardship Code.Providers can bid for any or all of the mandates, which the council has valued at between £4m (€5m) and £10m, depending on the take-up of the framework.As a National Framework, it can be used by any of the local government pension schemes (LGPS), the asset pools they are in the process of forming to meet government demands, and other public pension funds such as the Pension Protection Fund (PPF).  The framework agreement is for four years, with “call-offs” up to seven years.In other news, a Benelux institutional investor has tendered a global high-yield bond mandate via IPE Quest.The size of the mandate has not yet been decided.According to search QN-2201, the procurement process is not for an immediate investment need, and the client is undecided whether it will fund the mandate.The mandate is for a core investment style, using “enhanced and active” processes.While the maximum level of tracking error will be 5%, the benchmark has yet to be decided.Interested parties should have at least €2bn in high-yield bonds under management, and €3bn of total assets under management.Investment managers should have a track record of at least five years, although 10 is preferred.They should submit performance, gross of fees, to the end of May 2016 by the close of business on 6 July. The IPE 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 jayna.vishram@ipe-quest.com.,WebsitesWe are not responsible for the content of external sitesLink to FRR tender documents (in French) France’s €36.3bn national reserve fund, the Fonds de Réserve pour les Retraites (FRR), has taken a further step in the implementation of a new allocation to illiquid assets, having put out to tender up to €400m in mandates for domestic private equity investment.The reserve fund has already launched a €600m private debt tender and recently secured a rule change to allow it to invest more in investment funds, which it will use to meet its targeted allocations to infrastructure and property.Last week, it launched a procurement process for indirect capital investment in unlisted French companies.It is looking to award up to four mandates for investment managers to establish and manage funds for FRR that are to invest exclusively in investment funds whose objective must be to invest at least 80% of their assets in unlisted French companies’ equity capital.last_img read more

​Insurance Europe criticises IORP II changes to cross-border funding

first_imgThe insurance industry has often called for a level playing field between insurance products and occupational pension providers, pushing for the introduction of capital requirements and for cross-border funds to be fully funded at all times.Its demands were reflected in a European Commission white paper on pensions in 2012, and elements of it were reflected in the European executive’s first draft of IORP II.However, during trialogue negotiations among the European Parliament, member states and the Commission, which concluded last month, a compromise was agreed allowing cross-border IORPs to “immediately draw up appropriate measures” to protect members in the event of underfunding, rather than force them to address deficits straight-away. Consultancy Aon Hewitt struck a more positive note, saying the law “largely succeeds in finding the right balance”.It welcomed that many barriers facing cross-border funds had now been removed.Partner Colin Haines said: “The new directive should make it easier for international organisations to set up pan-European pension plans for their European workforces and to use their European scale to provide employees with better pension provision.” He said it was “right” for the directive to focus on risk management and governance and argued that the new requirements would be nothing new for larger pension funds.Haines acknowledged, however, that some of the new transparency measures could bring about changes in the way pension funds pay employees, as the schemes would now need to disclose remuneration for key staff members.“This could lead to changes in the way pay and bonuses are determined,” he said. The insurance industry has raised concerns about the uneven regulatory environment being created by the revised IORP Directive, after trialogue negotiations agreed to allow under-funding of cross-border schemes.Insurance Europe welcomed the “good level” of transparency being introduced by IORP II, but its head of macroeconomics, Nicolas Jeanmart, was critical of the new arrangement allowing cross-border occupational pension funds to be underfunded when the same was not allowed for insurers providing pension payments.“The trialogue agreement is concerning because it does not ensure a consistent regulatory response to cases of under-funding of IORPs’ cross-border activities, entailing a risk of regulatory arbitrage.“It is therefore of vital importance that member states make the right decisions when implementing the directive to protect EU citizens’ occupational pensions.”last_img read more

​Mats Langensjö unveils new advice partnership with Arkwright

first_img“The strong and long-standing position that Arkwright has will enable us to take on complex challenges and projects. We will be a team with a mix of deep experience and industry insights.” Mats LangensjöIn a post on LinkedIn, Langensjö said that the partnership would enable his new firm to move quickly “with a firm belief that there is much around the corner for an industry and a sector that will need to review its structure, approach, investment strategy and product design”.Martin Tarmet, chairman and chief executive at Arkwright, said the two companies had complementary skills and would use their combined resources, insights, experiences and methodologies to support investors’ aspirations and objectives.Secoria’s management consists of partners Langensjö and Maria Strömqvist, as well as Arkwright partner Claes Green.Langensjö, a key player in the formation of Swedish national pensions policy over many years, published his government-commissioned reform proposals for the default option in the Swedish premium pension system (PPM) earlier this month. Swedish pensions expert Mats Langensjö has partnered with strategy consulting firm Arkwright to advise asset owners and managers on portfolio strategy and implementation.Langensjö has set up a new company, Secoria, to launch the partnership with Arkwright. He has been working with Arkwright for the past 18 months on a number of projects.In a statement, Secoria – which described itself as “an Arkwright partner company” – said the two firms would specialise in advising on portfolio strategy, implementation, product and platform design, and pensions.Langensjö, Secoria’s chief executive, said: “The Secoria/Arkwright partnership will be one of very few places where clients can seek truly independent advice in northern Europe.last_img read more

Mandate roundup: $400m for US equities on offer via IPE Quest

first_imgA Scandinavian investor has tendered out a $400m (€355m) US equities mandate via IPE Quest.According to search QN-2571, the investor is only interested in the mandate being run as a segregated account – the strategy should not be offered as a UCITS product, it said.It has specified that the style should be “value, large or all-cap”, and that an active or fundamental process should be applied.The benchmark should be either the Russell 3000V or the Russell 1000V, with the investor expecting a tracking error of at least 3% but no more than 6%. Managers should have at least $5bn in assets under management as a firm, and at least $1bn in US equities. Their track record should be at least three years, but a minimum of five years is preferred.The deadline for applications is 14 November at 5pm UK time. Applicants should state performance data to 31 October 2019, gross of fees.The IPE news team is unable to answer any further questions about IPE Quest, Discovery, or Innovation 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 jayna.vishram@ipe-quest.com.ERAFP retenders convertible bond mandatesERAFP, France’s €29.6bn additional pension fund for civil servants, has three convertible bond mandates to award afresh as existing ones expire next year.The pension fund is looking to award two active mandates for around €700m in total, and one stand-by mandate.According to ERAFP, the objective for the mandate winners will be “to develop an active, non-benchmarked management of a portfolio of international convertible bonds and to outperform the benchmark index”.They are being asked to ensure that the composition of the international convertible bond portfolio complies with the pension fund’s socially responsible investment framework.ERAFP’s convertible bond portfolio was put in place in 2012 and has been run by Schelcher Prince Gestion and Lombard Odier Gestion. As at 31 December the portfolio amounted to €671m at amortised cost, representing 2.6% of ERAFP’s total assets.German federal state seeks small and mid-cap managerThe finance ministry for the German federal state of Saxony-Anhalt is looking to invest in European small and mid-caps in a bid to increase risk diversification and expected yields.According to a tender notice (in German), it is looking to appoint one asset manager to invest around €90m, with the strategy to form one segment of a German “Spezial AIF”. The ministry said the mandate was for the federal state’s pension fund (€1.2bn as at the end of August), its fund for the sanitation of contaminated sites, endowment assets, and other assets. Italy’s Arco hires Payden & Rygel Arco, the Italian pension fund for workers employed in the wood, furniture, forestry, brick and concrete sectors, has appointed Payden & Rygel Investment Management, to manage a €140m balanced equity and fixed income mandate.The mandate will be run by the asset manager’s multi-asset strategies team.The pension fund detailed planned changes to its strategic asset allocation for its balanced prudent and balanced dynamic sub-funds earlier this year. In an April newsletter, Arco said the changes were being made in light of the changed context of financial markets, and “in order to allow financial managers to seize greater market opportunities”. To improve returns on the balanced prudent and balanced dynamic sub-funds, bonds would be diversified over shorter maturities, with managers directed to follow “global aggregate” indices – which include government bonds and corporate bonds – rather than investment-grade and high-yield bonds specifically – also for emerging markets.In addition, a new 15% strategic allocation was to be created for illiquid alternative investments including private debt, real estate and infrastructure equity, it said.last_img read more

Distressed debt among targets of new IPE Quest searches

first_imgPension funds have launched three new mandate searches on IPE Quest in recent days.An unnamed pension fund based in central Europe has tendered a €50m-80m distressed debt mandate, Argauische Pensionskasse (APK) in Switzerland is interested in corporate private placement expertise, and an unnamed Swiss pension fund has a CHF1.5bn (€1.4bn) core bond mandate up for grabs.Distressed debt searchAccording to search QN-2607, the central European pension fund is looking to invest in European and/or US distressed debt. Asset managers should have at least €500m in assets under management for the asset class. No minimum track record is specified.The deadline for applications is 15 May at 5pm UK time.APK’s PP huntArgauische Pensionskasse (APK) has a $100m (€90.6m) corporate private placement mandate to award.According to search QN-2606, the Swiss pension fund is searching for a single manager solution “with the idea of building up a strong and long-term partnership”.The focus within private placements should be on corporates, investment grade or equivalent, a long-term investment horizon, and preferably co-investment solutions. The strategy would be for US investments or global.APK said it would not consider any other kind of private debt solutions. It is after a segregated account with an evergreen structure.Interested parties should have at least $200m in assets under management for the asset class, and $10bn as a firm. They should have a track record of at least 10 years.The strategy should be US or global. The benchmark for pure US solutions, for example, would be the Bank of America Merrill Lynch AAA-A US corporates gross US dollar index plus 50bp.Managers should have originated at least 25 transactions, and should already have at least one segregated account with a Swiss or other European client.Applicants should state performance gross of fees to 31 March 2020. The deadline is 5 May at 5pm UK time.CHF1.5bn core bond mandateIn search QN-2608, an unnamed Swiss pension fund is looking for a manager for a Swiss-franc denominated global “core bond” strategy.Managers should have at least CHF3bn in assets under management for the asset class, and CHF10bn as a firm.As much as possible, the pension fund would prefer to have applicants answer in German.It said the strategy should be close to the benchmark, and that the final mandate will have about a 10% limit for off-benchmark positions. Derivatives are allowed mainly for duration management.The closing date is 8 May 2020.The IPE news team is unable to answer any further questions about IPE Quest, Discovery, or Innovation 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 jayna.vishram@ipe-quest.com.last_img read more

Top 17 suburbs forecasted for a price increase this year

first_imgREAL ESTATE: 118 Bells Lane, Bellmere is listed for sale for offers over $599,000.Mr Ryder said the best predictor of future price growth was a steady lift in transaction numbers. The generally reflected growing demand and a lift in demand could result in price growth.“Sales volumes are a better way to chart market growth than median prices and a sustained rise in sales volumes will be followed by a rise in prices. ‘’While Mr Ryder would not provide comment as to how much the suburbs were expected to increase by, he said those with consistent sales number were likely to have steady price growth over time.This Bellmere property at 118 Bells Lane, is listed for sale for $599,000. REAL ESTATE: 118 Bells Lane, Bellmere is listed for sale for offers over $599,000.More from newsParks and wildlife the new lust-haves post coronavirus17 hours agoNoosa’s best beachfront penthouse is about to hit the market17 hours agoMr Ryder said some individual precincts have had short spurts of good growth, but the forecast boom has not eventuated — yet.“There have been recent signs of promise, with the population data improving and the latest State Budget allocating almost $50 billion to infrastructure spending over the next four years,” he said.“But, given the false dawns in the Brisbane market in the past four years, we’ll believe it when we see it.”Mr Ryder said while the outlook for Moreton Bay LGA was promising, the second ranked precinct, Logan City, only had three growth suburbs.“Jimboomba, Mt Warren Park and Shailer Park remain growth suburbs, but this LGA now has 15 Plateau markets, which means it’s well past its peak,” he said.“Elsewhere, Ipswich City, Redland City and Brisbane West each have two growth suburbs.“Ipswich City, on the other hand, has yet to have a significant run of growth and has the potential to be more prominent in this report in 2018/2019, given recent announcements of infrastructure and business expansions in the area.” GET-IN-QUICK: Bellmere is expected to see an increase in values by the end of the year, this property at 118 Bells Lane is listed for sale for offers over $599,000.SEVENTEEN Brisbane suburbs are earmarked for price growth by the end of this year.That is according to Hotspotting property analyst Terry Ryder, who said big things were forecast for the Brisbane market, particularly the Moreton Bay region.The information comes off the back of Hotspotting’s latest report The Price Predictor Index Winter 2018 report, which revealed the areas within greater Brisbane where values were expected to increase by the end of the year.“The Moreton Bay region has maintained its position as the number one market in the greater Brisbane area but with a smaller number of growth markets,” Mr Ryder said.“Growth locations include Bellara, Bellmere, Burpengary, Burpengary East, Caboolture, Caboolture South, Eatons Hill and Kippa-Ring.”RE/MAX Living Burpengary sales associate Mark Cheney said acreage in Burpengary was extremely sought after.“It (acreage property) pretty much goes out the door,” Mr Cheney said.“So there demand for it, but it’s not a boom.”last_img read more