Dutch hedge funds lose 3.4% over third quarter – DNB
The remaining 2% was invested in derivatives and bonds.The watchdog also pointed out that Dutch hedge funds were currently relatively unleveraged.Local pension funds, with a combined 92% stake in the industry, are by far the largest stakeholders in hedge funds in the Netherlands.‘Other’ investment institutions and insurers own 3.9% and 3.6%, respectively, of the issued participations, the DNB said.The combined assets of hedge funds across the euro-zone came to €157.2bn during the third quarter, according to the European Central Bank.The Dutch hedge-fund market is currently Europe’s second largest, after Ireland’s, which currently boats more than €100bn in assets.Hedge funds in Luxembourg manage just under €20bn in assets. Dutch hedge funds’ assets under management have contracted by nearly 3% to €21.5bn over the third quarter, due mostly to a combined quarterly loss of 3.4% on investments, according to pensions regulator De Nederlandsche Bank (DNB).Over the same period, the number of Dutch hedge funds fell by seven to 97.The DNB, which did not release further details on returns, said local hedge funds invested 77% of their assets in other investment funds – and foreign hedge funds in particular.They invested nearly 15% of their combined assets in equities, while deposits and liquid assets made up 6.1% of invested assets, the DNB said.
CERN Pension Fund, Universities Superannuation Scheme, ROZ Vastgoedindex, State Street Global Advisors, Deutsche Asset & Wealth Management, BlackRock, JP Morgan Asset Management, Lyxor Asset Management, Capital Group, Stanhope CapitalCERN Pension Fund – Théodore Economou, chief executive and CIO at the CHF4bn (€3.3bn) European Organisation for Nuclear Research (CERN) Pension Fund, will not seek re-appointment to his current position, whose tenure ends in August 2015. Economou said he would stay on as chief executive at CERN for the next 14 months and that he expected to be involved in the selection of his successor. He is currently serving his second three-year term as CIO.Universities Superannuation Scheme (USS) – Jeremy Hill will be returning to the trustee company to take up the role of group general counsel later this year. He previously held the position of general counsel for investments at USS between 2009 and 2011. In this newly created position, he will be responsible for legal services for both the trustee company and its wholly owned subsidiary USS Investment Management. He will take up his new role in August.ROZ Vastgoedindex – Rudolf de Soet has been appointed as chairman, succeeding Henk Hilverink, who is to step down after nine years. Until the start of 2014, De Soet was chief executive at A&O Services, the provider for the industry-wide scheme for painters and decorators (Schilders). ROZ Vastgoedindex also appointed George Jautze to the board, succeeding Kees de Boo. Until the end of 2010, Jautze was chief executive at ING Real Estate. State Street Global Advisors (SSgA) – SSgA has made four senior hires in its UK institutional business. Daniel Leuty has been appointed senior relationship manager for platform and defined contribution (DC) clients, joining from Friends Life, where he was head of new business development. Maiyuresh Rajah joins as DC senior relationship manager from Mercer, where he focused on new business strategy and developing the company’s DC offering. Chris Vogtherr joins as a senior client relationship manager from Lazard Asset Management, where he was senior vice-president of institutional sales in London. Mehvish Ayub joins as a senior investment manager from Barings Asset Management, where he was a fund manager in the global multi-asset team.Deutsche Asset & Wealth Management (DeAWM) – JJ Wilczewski has been appointed co-head of the Global Client Group for the Americas to focus on institutional investors, while co-CIO Randy Brown has been appointed to the new role of head of the insurance and pensions solutions business in the UK. Wilczewski joins from Aon Hewitt, while Brown joins from Deutsche Insurance Asset Management. Asoka Wöhrmann will now take on the role of sole CIO.BlackRock – The asset manager’s institutional business has created a dedicated Local Authority team to support Local Government Pension Scheme (LGPS) clients in the UK. Christopher Head has been appointed to lead the group.JP Morgan Asset Management – Maria Ryan has been appointed EMEA head of fixed income strategies in the Global Fixed Income business. She joined JPMAM in 2013 as a client adviser with the UK institutional team from Wellington Management, where she was an associate director of fixed income and a relationship manager. Before then, she was a managing director in BlackRock’s Fixed Income team. She was also an investment director with Henderson Global Investors’ fixed income team.Lyxor Asset Management – Olivier Cassin has been appointed head of UK institutional sales, Mattias Gustawsson head of Nordic institutional sales and Joost Wijstma head of Netherlands institutional sales. Cassin joins from Bfinance, where he was co-head of the London office. Gustawsson joins from BBVA, where he worked in fund derivatives sales covering the Nordic region. Wijstma joins from Syntrus Achmea, where he was covering Dutch institutions.Capital Group – Feike Goudsmit has been appointed institutional relationship manager for the Benelux region. He joins from Threadneedle, where he has been Benelux country head since 2006. Goudsmit’s hire comes as Capital Group announced its intention to open its first office in the Netherlands in the first half of 2015.Stanhope Capital – Christophe Karpiel has been appointed head of investment management. He joins from BNP Paribas Asset Management, where he was deputy head of ultra-high-net-worth portfolio management. Before then, he was senior portfolio manager and head of fund picking at IXIS Asset Management.DIAM International – The UK arm of Asian asset manager has appointed Anthony Catachanas to its EMEA Business Development Team to assist in building its institutional business. He joins from Goldman Sachs Asset Management, where he was responsible for global bank relationships, as well as wholesale and institutional business in the UK, Greece, Cyprus, Belgium and Luxembourg.
The €420m pension fund of cement manufacturer ENCI and affiliated companies has decided to liquidate itself and transfer existing pension rights to insurer Nationale Nederlanden (NN). In addition, it has concluded a defined contribution pension plan with NN for further pensions accrual for its active participants.The insurer has guaranteed the transferred pension rights and is likely to top them up with a “limited” one-off indexation, the pension fund added.At November-end, the pension fund’s coverage ratio was 104.7%. According to Arian Verhagen, the scheme’s chairman, NN had come up with the best proposition.“The insurer not only scored well on price but also on administration, communication and implementation,” he said. For the collective value transfer, the Stichting Pensioenfonds ENCI has been supported by consultant Towers Watson.The ENCI pension has 2,200 participants and pensioners.In other news, watchdog De Nederlandsche Bank (DNB) has issued the €669m pension fund for Alcatel Lucent with a €5,000 fine for twice submitting financial statements too late.In August, it missed a deadline for a quarterly statement by four days, after submitting another statement two weeks too late earlier in 2014.Although the basic fine for the violations is €500,000, DNB said it had taken the seriousness of the violation, the degree of culpability and the scheme’s financial position into account.At November-end, its coverage ratio was 99.7%.In its defence, the pension fund said its custodian had submitted the financial figures too late.In addition, it said its investment report had been delayed by an “insufficiently settled staff” and the holiday of an external party.However, in the opinion of DNB, the pensions provider remains responsible for outsourced activities.In recent months, the regulator has fined several pension funds for similar violations, after announcing that it would “get tough” on meeting deadlines.
According to meeting documents, the decision to select Partners Group and BlackRock was taken at an early February meeting of the Royal Borough of Greenwich’s pension fund investment and administration panel. Investment consultants Hymans Robertson presented a report on manager selection, with the investment managers themselves presenting to the panel in closed session.The pension fund for the Royal Borough of Greenwich has also been searching for a manager for a £100m emerging market portfolio, as well as a manager to run a £100m absolute return mandate. The deadlines for these were early and late February. A spokeperson for the borough told IPE that these mandates had yet to be awarded. Partners Group’s bid for the alternatives mandate was chosen out of 22 offers.In the initial tender information, the pension fund sought to invest in a range of alternative assets, citing real assets such as infrastructure and timberland, as well as alternatives funds that include exposure to active currency management or commodities.BlackRock, meanwhile, has been hired to manage a passive equity mandate that will be split between tracking market-cap-weighted indices such as the FTSE All Share, and a non-market-cap, fundamentally weighted global equity index such as the FTSE RAFI 3000.Greenwich received eight offers to run the new equity mandate.When the scheme tendered the passive equity mandate, State Street and BlackRock were the fund’s global equity managers.The newly awarded mandates and outstanding emerging market tender are part of a new strategic asset allocation the fund agreed in February last year. It decided to allocate 10% of assets to diversified alternatives and a further 10% to a multi-asset strategy, as well as to increase its overall equity allocation slightly. London’s £1bn (€1.3bn) Greenwich local authority pension fund has awarded two of four mandates it has tendered since November last year as part of the implementation of a new strategic asset allocation. It awarded the largest, a £400m passive global equity mandate, to BlackRock, while Partners Group won a £100m diversified alternatives mandate. Both mandates were tendered in November, the equity one shortly after the alternatives mandate, as previously reported. The pension fund had at the time indicated that the diversified alternatives mandate would be for around £100m; the notice announcing Partners Group as the selected manager did not give a final value. 
Following the takeover, LHV intends to merge the two asset managers’ pensions operations, which would shrink the number of Estonian pensions players to four.As of the end of March, according to the Estonian pensions portal Pensionikeskus, LHV Varahaldus’s mandatory second-pillar fund operation was the country’s second-largest pension fund manager in asset terms after Swedbank, with net assets of €576.5m (21.4% of the total) and an active membership of 131,302 (20.4%), while third-pillar assets totalled €7.7m (6.1%).In addition to the pension funds, LHV Varahaldus manages a UCITS fund and provides investment management services for a Luxembourg-established UCITS.Danske’s second-pillar membership totalled 39,140, and its second-pillar assets €240.6m, while the third pillar had assets of €5.2m.The plan is to merge the pension funds by investment strategy.LHV manages five mandatory second-pillar funds and one voluntary third-pillar plan; Danske Capital manages three and two, respectively.Danske’s second-pillar offerings comprise a conservative, balanced and progressive fund apiece, while LHV runs two conservative funds, and one apiece with balanced, progressive and aggressive strategies.Julia Garanža, marketing and communications manager at LHV Varahaldus, told IPE the mergers would commence with the second-pillar funds, shrinking the overall number to five, with the decision on the voluntary funds taken at a later date.“As an outcome of the merger, the fund management fees for the clients of the two biggest Danske mandatory funds will fall by nearly 20% and, for the clients of the LHV pension funds, nearly 10% more than it otherwise would fall,” she said.The asset management company merger will become effective following authorisation from the Estonian Financial Supervision Authority, with consolidation expected to start in the third quarter.The deal has already been cleared by the Competition Authority, Estonia’s anti-monopoly body. The Estonian pensions sector is set for major consolidation following the acquisition by LHV Varahaldus, LHV Group’s asset management subsidiary, of a 100% stake in Danske Capital, the Danish banking group’s Estonian asset management operation.The share purchase agreement was signed on 29 January, followed by LHV Varahaldus’s increasing its share capital, and finalised on 2 May.The preliminary price has been set at €11m.Danske Bank stated on its website that the sale was part of its Baltic strategy to focus on corporate banking.
The proposal is “unprecedented”, said Richard Farr, managing director at Lincoln Pensions, a pensions advisory business.“It is another reality check of the real pressure faced by companies trying to stay afloat and at the same time honour previous benefit promises,” he said.At the moment, it would be illegal for the BSPS trustees to make the change.As noted by the government in its consultation, under existing law, a scheme’s trustees or sponsoring employer cannot reduce accrued pension rights without member consent, and unilateral changes to benefits are not allowed if they are detrimental to members’ rights.“To make the proposed changes,” the consultation document reads, “the government would therefore need to make regulations allowing the scheme to step outside the normal regulatory framework by making the changes without individual member consent.”CPI has been the index for statutory pension increases since 2011.A move from RPI to CPI would reduce Tata Steel’s pension liabilities by £1.5bn, noted Hymans Robertson, the pensions and benefits consultancy. The proposal has triggered warnings that going down that route would set a “dangerous precedent” – the wording used by Angela Eagle, a Labour member of Parliament and former pensions minister, in a parliamentary debate today. Clive Fortes, partner at Hymans Robertson, also described it as such, calling for clarity from the government with respect to its reported intention for any such move to happen only in an emergency.The Pensions and Lifetime Savings Association (PLSA), meanwhile, has urged caution. Commenting before details of the government’s consultation had been revealed, Joanne Segars, chief executive at the PLSA, said: “The government must think this over most carefully, and we will be glad to work with them on this issue.”Whilst acknowledging the BSPS had a role to play in efforts to rescue Tata Steel’s UK business, Segars said the government needed “to be alert to the fact their actions in this issue could affect not only the members of the British Steel pension scheme but also the millions of other UK savers in defined benefit pension schemes”.“Trustees,” she added, “play a crucial role in safeguarding the interests of scheme members, and that protocol must be maintained in any reform.”The government noted that other companies with DB schemes were concerned about the size of their liabilities and the possible impact on their sustainability as a business, but it emphasised that there were “very specific circumstances” surrounding Tata Steel’s UK business and the BSPS.“We are not, therefore, considering extending the proposal beyond the BSPS as a specific scheme,” it said.Speaking in the House of Commons earlier today, the business secretary Sajid Javid emphasised that the proposal came at the behest of BSPS trustees – “a product of the scheme trustees approaching us directly”.Allan Johnston, chairman of the BSPS board of trustees, welcomed the government’s decision to consult on changes to the law applying to the scheme.“The trustee will be writing to members over the coming days to make clear its belief that, with government support, it should be possible to modify benefits so as to allow the scheme to remain outside the Pension Protection Fund indefinitely and on a low-risk basis,” he said.“Although this would entail future pension increases being cut back from their current levels, benefits would be more generous than those provided by the PPF for the vast majority of scheme members.”One of the other three options the government is consulting on would also involve legal changes, this time aimed at allowing the government to introduce regulations that would in certain cases allow liabilities to be transferred to a new scheme with reduced benefits without individual consent. The UK government may legislate to allow the defined benefit (DB) scheme of Tata Steel’s UK business to change its indexation rate, a move that has triggered warnings of setting a “dangerous precedent” given concerns about the funding situation of many other DB occupational pension schemes.The work and pensions secretary Stephen Crabb today launched a consultation on four options on how the £13.3bn (€18bn) British Steel Pension Scheme (BSPS) could be separated from its sponsor, Tata Steel, to facilitate a sale of the latter’s UK assets and thereby avoid its closure.The BSPS has a technical deficit of some £700m, and a funding deficit of around £1.5bn on a section 179 basis – the amount of money that would need to be paid to an insurer to take on the compensation the Pension Protection Fund (PPF) would make if it took over the scheme. One of the options put forward by the government was for it to amend the law to allow the BSPS trustees to change how pensioners’ benefits are indexed – from the retail prices index (RPI) to the generally lower consumer prices index (CPI) – as a means of cutting the scheme’s long-term liabilities.
The UK’s pension regulator (TPR) has released a revised code of practice, and supporting guides, for trustees of defined contribution (DC) pension schemes, with its guidance on the consideration of environmental, social and governance (ESG) factors one of the aspects welcomed.The new code is effective as of today and is aimed at trustees of occupational trust-based schemes that offer some form of money purchase benefits. There were around 36,000 in the UK as at March 2016, including hybrid schemes, TPR noted.Andrew Warwick-Thompson, executive director for regulatory policy at the regulator, said: “Millions of people are being auto-enrolled into DC pensions, so it’s essential that schemes are being managed to a high standard. “In revising the code, we have responded to calls from the pensions industry to shorten and simplify it, with an increased focus on legislative requirements.” The release of the code comes after the regulator launched a wide-ranging consultation on trustee standards and governance, and suggested “sub-standard” pension funds should be forced to merge with others.The code sets out the standards TPR expects trustees to meet when complying with the law, with accompanying guides providing information on how these can be met in practice.The new code was put before Parliament in May after a consultation.It updates the code from 2013 to reflect recent legislation, including 2015 regulations on charges and governance for occupational pension schemes, TPR’s experience in regulating DC schemes, and evolved market practice.The code is set out in six sections, addressing areas such as scheme management skills, investment governance and “value for members”.Responsible investment organisations welcomed TPR’s comments on how ESG factors should be taken into account as part of investment governance.ESG campaign organisation ShareAction said the code and supporting guides improved guidance for trustees on ESG, while the UK Sustainable Investment and Finance Association (UKSIF) said TPR’s important clarification was a “huge boost for responsible investment in the UK”. In the code itself, TPR states that, “when setting investment strategies, we expect trustee boards to take account of risks affecting the long-term financial sustainability of the investments”.The accompanying guide elaborates on this and other aspects of investment governance, such as fiduciary management.It summarises the Law Commission’s guidance on how trustees should consider financial and non-financial factors, and gives examples of risks that could affect DC schemes’ investments over the long term, such as those relating to climate change or “unsustainable” business practices.In this guide, TPR states: “You should bear in mind that most investments in DC schemes are long term and are therefore exposed to the longer-term financial risks.”UKSIF said the regulator’s guidance “represents the first time the Law Commission’s review has been reflected in regulation or legislation since it was published in 2014”.In November last year, the UK government decided against changing the law on trustees’ fiduciary duties following the Law Commission’s suggestions the year before.Rachel Howarth, policy officer at ShareAction, said TPR’s decision to include the guidance was “extremely encouraging”.“The guidance for pension trustees is clear,” she added. “They have a mandate to consider all risks that could affect the financial performance of their funds, and this includes ESG risks.”Care urged on fiduciary managementOther industry experts highlighted the importance the updated code places on investment governance and administration, or seeking legal advice, particularly in investment matters.Rona Train, partner at Hyman Robertson, drew attention to the regulator’s guidance on fiduciary management, saying it suggested it was “keen to head off similar issues in the DC world to those we have seen in DB”, where many trustees have appointed their existing investment consultant as the fiduciary manager without considering other providers.In its guide supporting the section in the code on investment governance, the regulator said: “Note that the skills a successful investment consultant needs are not exactly the same as those a successful fiduciary manager needs.”It also flagged the potential for conflicts of interest of the various parties involved in choosing a fiduciary manager, including the existing investment consultant and third-party advisers.Hymans Robertson commented on the regulator’s guidance on trustees’ legal requirement to assess “value for members”, arguing that wider industry comparisons were needed to help them do this effectively.Train noted that TPR had called on large schemes to “use information-sharing through their consultants and professional trustees as one way of assessing value”.,WebsitesWe are not responsible for the content of external sitesLink to TPR 2015 code of practice for occupational trust-based DC schemes
Roy reports to Lori Heinel, SSGA’s deputy global chief investment officer.Writing about his new role on LinkedIn, Roy said he was “looking forward to contributing to a better world of pensions and investments”. In a statement, SSGA said Roy’s responsibilities would include “leading research and thought leadership efforts around global demographics and related implications for economic, policy, retirement, and investment trends”. Amlan Roy, former managing director of global demographics and pensions research at Credit Suisse, has joined State Street Global Advisors (SSGA) as global chief retirement strategist.Roy, a renowned pensions academic and researcher, left Credit Suisse last year after nearly 20 years at the firm. During his time there, he established the company’s European Pensions Advisory & Structuring Group, and led its fixed income research and “global demographics project”.Prior to joining Credit Suisse, he lectured at several universities in the UK and US, covering subjects such as investments, macroeconomics, financial and managerial economics, international finance, and statistics.He is also a senior research associate at the London School of Economics’ Financial Markets Group, and is a regular speaker at IPE events and contributor to the magazine. He is a guest finance professor at London Business School.
Hitchen has led the £25bn industry-wide scheme for UK railway companies for 13 years, having first joined the group nearly 20 years ago.He is an influential figure in the UK pensions sector. He chaired the National Association of Pension Funds – now the Pensions and Lifetime Savings Association – from 2007 to 2009, as part of a decade-long tenure with the trade body.During that time he helped establish the Pensions Quality Mark, a kitemark standard for UK defined contribution (DC) funds.In addition, Hitchen was a trustee of NEST, the government’s DC master trust, from 2010 to 2015, and chaired its investment committee for three years.John Weighell, chair of the North Yorkshire Pension Fund, one of BCPP’s founding members, said: “Chris is highly respected within the industry and has a wealth of experience and accomplishments, including having transformed Railpen… into a very successful asset management company. His knowledge, enthusiasm and vision will be invaluable to BCPP.”BCPP’s members include the Bedfordshire, Cumbria, Durham, East Riding, Lincolnshire, Northumberland, North Yorkshire, Surrey, South Yorkshire, Teesside, Tyne and Wear and Warwickshire LGPS funds. RPMI Railpen chief executive Chris Hitchen is the new non-executive chair of Border to Coast Pensions Partnership (BCPP), one of the UK’s emerging public pension asset pools.The pool is set to combine the assets of 12 local government pension schemes (LGPS) across England, totalling roughly £43bn (€48bn).Hitchen, who is due to leave RPMI Railpen in the next 12 months, will lead BCPP’s board and take responsibility for appointing a senior management team and non-executive directors.“Together we will create an investing institution of genuine scale with the capacity to deliver over the long term to its sponsoring authorities, employers, members and taxpayers,” Hitchen said. “That’s what we have been doing at RPMI on behalf of railway employers and members for many years, and so I welcome the creation of all the local authority pooling arrangements, of which Border to Coast will be one of the biggest.”
The number of UK pension schemes in surplus against their agreed funding target has risen significantly, according to a survey.Nearly two out of five pension schemes (37%) were in surplus on funding assumptions, according to a valuation survey carried out by Mercer. In the consultancy’s 2015 version of the survey, the figure stood at 27%.“One of the striking findings from the 2018 survey is the step-change in the number of schemes in surplus on funding assumptions,” said Simon Turner, director at Mercer.However, he cautioned against complacency, adding: “Trustees and sponsors need to set and agree longer-term objectives to improve the chances of paying members’ pensions as they fall due.” Source: Mercer (FTSE 350), PPF The consultancy’s 2018 valuation survey, which covered 180 schemes, showed that 38% had not agreed a long-term target.Those schemes that had agreed long-term investment strategies were split between those looking towards buy-in or buyout with an insurance company (38%), and those looking towards cashflow-driven strategies (41%).Mercer’s research also showed that integrated risk management had become a key part of trustees’ decision-making processes. This involves a combined assessment of investment risk, covenant risk and the funding position, and has been advocated by the Pensions Regulator for the past few years. Three-quarters of schemes were reviewing investment strategy alongside the valuation process, two in three sought external covenant analysis and twice as many received daily updates of their funding position compared with 2015, Mercer found.“However,” Turner said, “less than 20% of pension schemes have formally documented their approach to risk management which begs the question: are trustees really using the integrated risk management framework to make practical decisions? “It is clear that there is considerable room for development in this area to aid robust and timely decision making.”Mercer said this year’s valuation survey also showed that pension schemes had changed their life expectancy assumptions in reaction to more up-to-date information.More than half of schemes had carried out scheme specific analysis on life expectancy in the 2018 survey, compared with less than a third in 2015.UK corporate defined benefit scheme funding since 2015