Long-awaited PNO Media, PGB merger thrown into doubt
PNO and PGB have been in talks over a far-reaching cooperation – including a merger – for several years now.Even at the end of last year, PGB still fully expected PNO to join its ranks, creating a new pensions giant.It considered the end of 2013 as a “logical moment” for the merger, as all pension funds must raise their funding to the government’s minimum of 105% by then.Currently, PGB’s coverage ratio is 103%, whereas funding at PNO was languishing at 99.6% as of the end of August.Earlier this week, Timeos, the exclusive pensions provider for PGB, announced that it changed its status from independent foundation into a PGB-owned company, “in order to fully focus on the scheme for the printing industry”.The provider, which initially had the intention to actively acquire clients for pension provision, said: “This is the best way for creating the necessary scale of PGB.”Theo Flach, a spokesman at PGB, added: “Timeos’s decision fits within our current philosophy that autonomous growth of PGB offers more potential for widening our basis than extension through the provider.”According to Flach, PGB has recently invested in a new and flexible administration system for its pension provision at Timeos.The pension fund for the printing industry is developing into a multi-sector fund, including participants from the cardboard and chemical industry and the rubber sector.After several new pension funds joined PGB recently, it saw the number of participants increase by 15% to more than 98,000 during the past year and a half. The possible merger between the €4.1bn media scheme PNO and the €14bn pension fund for the Dutch printing industry (PGB) has been thrown into doubt after PNO elected to suspend consultations.Ton Tekstra, chairman at PNO, told IPE: “We want to review our strategy. It might be possible the desired benefits could be achieved without joining PGB.”Tekstra declined to elaborate what those benefits might be, but he did say a cooperation with PGB was still an option, “as we operate in the same sector”.He said he expected PNO to clarify its strategy by next spring.
Pensioenfonds Vervoer, Northern Trust, Merchant Navy Officers Pension Fund, Financial Reporting Council, JP Morgan Asset Management, Buck Consultants, Legal & General CapitalPensioenfonds Vervoer – Patrick Groenendijk, CIO of the Dutch transport sector fund, is set to join Northern Trust. His move will see him join the firm’s fiduciary management team. Groenendijk joined Vervoer in 2005 from Barclays Global Investors. He has also worked at metal industry fund PME.Merchant Navy Officers Pension Fund – Bob Hymas has been appointed CFO, with responsibility for leading the financial and risk management operations for the group. He has worked at the MNOPF since April 2011 as risk and internal audit manager. Before then, he was a partner at Baker Tilly, where he worked with trustee boards to develop risk management frameworks and internal processes and controls. He is also chairman of the Pensions Research Accountants Group.Financial Reporting Council – Sir Win Bischoff has been named chairman of the FRC, taking up his position on 1 May. The current chairman, Baroness Hogg, will remain with the regulator until then. Gay Huey Evans, who has been a director of the FRC since April 2012, has been appointed deputy chairman. She will also take up her role on 1 May after the current deputy chairman, Glenn Moreno, steps down. JP Morgan Asset Management – Marion Mulvey has been appointed head of investment management operations for the EMEA region. He will also serve as a member of the global operations and European COO leadership team. She joins from Citigroup, where she was most recently product head for the EMEA alternatives fund administration business. Before then, she worked at Salomon Smith Barney and KPMG.Buck Consultants – Phil Smith, current head of defined contribution, is to leave the company at the end of March. Smith, who joined the firm in 2001, is set to take up a role with accountancy and consultancy firm PwC. Before his role at Buck, Smith was marketing director at the Health Consulting Group. The consultancy said it hoped to announce a successor to Smith shortly.Legal & General Capital – Martin Brookes has been appointed director of investment strategy. He joins from Prudential, where he has worked for 27 years. He has served as Prudential’s director of portfolio management for the last 14 years.
According to the pension fund, its investments in emerging markets delivered “by far” the worst results last year. With a return of 17.7%, the scheme’s 39% equity portfolio was the best performing asset class. SPH added that the average return was 25%, with Japanese equity generating more than 50%.It said that it replaced an American small caps manager last year, and that it made an allocation to PGGM’s Developed Market Alternatives Equity PF Fund, at the expense of existing allocations to developed markets.In 2013, pensions provider and asset manager PGGM took over SPH’s provider DPFS, after first taking a stake in the company in 2011. PGGM has been carrying out ICT tasks for SPH since the end of 2012.SPH further made clear that it incurred a 1.8% loss on its 36.4% fixed income holdings of Dutch, German, Australian and Canadian government bonds, thanks to rising interest rates. It indicated that it nevertheless outperformed its benchmark by 1.5 percentage points.The pension fund explained that the steep rise of interest rates in Australia and Canada came at the expense of 0.5 percentage points of its total return, and said that it made its first allocation to the Emerging Market Debt Local Currency Fund of PGGM.SPH noted a “clearly positive trend” for its 9.7% property investments, with listed real estate delivering 5%, “largely thanks to emerging markets”.Hedge funds (5.3%), yielded 8.9%, outperforming their benchmark by 5.9 percentage points.Infrastructure returned 7.1%, the report said, adding that it wanted to expand its current 1.7% allocation to 5%.The pension fund attributed the 4.2% loss on its 5% commodities portfolio to dropping gold prices and badly performing agricultural markets.Private equity generated a loss of 38.4% and the fund remains invested in its two private equity funds. However, as SPH is in the process of divesting its private equity holdings, the allocation only stood at 0.1%.The pension fund further said that it lost 6.3% on its 3% inflation-linked bonds portfolio as a consequence of rising interest rates in the UK and the US. The €8.5bn occupational pension fund for general practitioners (SPH) said it would reduce the number of asset classes and managers, in order to drive down performance-related fees. Its total asset management costs were 0.67% of its assets, an increase of 11 basis points, it said in its annual report for 2013. The fund added that administration costs amounted to €461 per participant last year.The GPs’ scheme – one of the best-performing pension funds in the Netherlands – reported a 5% return from investments, outperforming its benchmark by 1.3 percentage points.As a result, it saw its funding rise to 139.3% – exceeding the required level by 15.5 percentage points – enabling it to grant its 17,705 participants an indexation of 3.4%.
In its report on the draft law, the committee said abuse – distinct from honest mistakes and persistent mismanagement – is rare in the charity sector.But it said, when such abuse does occur, the financial costs and reputational damage to the charity sector can be considerable.The committee supports the proposal to introduce a power for the Charity Commission to issue a statutory warning to a charity where there are regulatory concerns, as a useful tool that falls in between issuing guidance and the opening of an inquiry.It also supports extending the list of offences for which conviction would automatically disqualify a person from acting as a charity trustee, to include terrorism, money laundering and perjury.But it called for an extra provision to prevent individuals disqualified from trusteeship from assuming another position of power within a charity, and a power allowing the Charity Commission to prevent or restrict trustees from taking certain action.In addition, the committee expressed concern over the desire by both government and Charity Commission to include a power to disqualify someone who has been found not “fit and proper” by HM Revenue & Customs (HMRC) in relation to a charity.It said there were significant misgivings over the move to apply tax law, and recommended that, before finalising any provision on a “fit and proper person” test, there should be further discussions between the Charity Commission, HMRC and the Cabinet Office, which published the Bill.William Shawcross, chairman of the Charity Commission, said: “I am delighted the joint committee has given the draft Bill its vote of confidence and has supported our calls for additional powers to be added to the legislation.“The Bill will help us deal more effectively with charities that are at risk of deliberate abuse or the negligent action of trustees.”Shawcross added: “The committee noted the unusual consensus behind these proposals – its endorsement underlines the importance of the draft Bill becoming law swiftly.”A Cabinet Office spokesman said it would be for the new government elected in May to decide whether and when to introduce the legislation to Parliament. The Charity Commission – the regulator for foundations and charities in the UK – needs more powers to ensure effective regulation of the sector, an influential committee of MPs has said.But the joint committee on the Draft Protection of Charities Bill – draft legislation published in October 2014 – said effective safeguards must be in place to ensure charities and their trustees are treated fairly by the Commission.Lord Hope, chair of the committee, said: “Much of what is proposed, including extending the scope of offences that would disqualify someone from being a charity trustee to include money laundering and terrorism offences, is designed simply to close loopholes.“But there are areas where it can be improved further before the government introduces a Bill in the new Parliament.”
The Netherlands has leapfrogged Australia in the 2015 Melbourne Mercer Global Pensions Index, coming second only to Denmark in the global ranking of pension systems.Both the Dutch and Danish systems were highlighted as “first class” in the seventh edition of the survey, while Sweden rose from sixth place to tie for fifth with Switzerland, and Finland fell to sixth.Finland, despite slipping in the ranking, retained the highest overall sustainability ranking of 92.4 – an increase over the 91.1 calculated in 2014, which at the time was the highest score awarded in the sub-index.The 25 countries’ scores were calculated by assessing a pension system’s adequacy, sustainability and integrity, with each of the three categories given a weighting of 40%, 35% and 25%. Finland (4)73.0 Country (2014 ranking)Score The UK, which ended mandatory annuitisation, narrowly retained its ninth-place ranking, nearly dropping out of the group of six countries deemed to have a sound system.Unlike 2014, which saw Ireland and Germany tied for 12th place, Ireland pulled ahead to claim 11th, increasing its score by less than 1 point, while Germany’s score dropped 0.2 points to 62.France came 13th, improving on its 2014 ranking, while Poland remained 15th.Austria, meanwhile, slipped one spot to 18th, ahead of Italy, the last-ranking European country at 20th.Top 10 countries within 2015 Melbourne Mercer Global Pensions IndexTop 10 countries within index Denmark (1)81.7 Australia (2)79.6 Chile (8)69.1 Canada (7)70.0 Netherlands (3)80.5 UK (9)65.0 Italy saw its ranking decline by one, despite its score increasing to 50.9.The report once again urged the country to increase participation in occupational schemes and the level of contributions among participants.Top-ranking Denmark was also presented with a number of reform suggestions, with the report proposing changes that would better protect accrued benefits in the event of fraud at a pension provider.The report, which has added two countries to its index in recent years, is likely to resume the practice next year, author David Knox told IPE.Knox, a senior partner at Mercer in Australia, cited Spain as one of next year’s potential European entrants.He added that Latin American countries could join as well in the coming years.For the first time, the report examined data gathered over the past seven years, investigating how the systems improved key areas, including time spent in retirement, since the first report was published in 2009.“During this six-year period, five countries – namely Australia, Germany, Japan, Singapore and the UK – have increased their current pension age, which acted to offset the increase that would have otherwise occurred from increasing life expectancies,” the report said. “Despite these increases, life expectancy has increased at a faster rate, thereby lengthening the period of retirement.”The report also examined the level of government debt built up by all participating countries, noting that a number of countries had sought to cut expenditure.“Such developments may improve the sustainability of the pension system,” the report said, “but, inevitably, some of these changes also affect the adequacy of the pension itself.“This highlights the natural tension in all retirement income arrangements between adequacy and sustainability.” Singapore (10)64.7 Sweden/Switzerland (6/5)74.2
Hymans Robertson – Beenesh Googoolye has been appointed as a senior investment consultant, while Ritchie Thomson has been appointed as an associate consultant. Both join from Lane Clark & Peacock. Pensions and Lifetime Savings Association, Pension Insurance Corporation, Goldman Sachs, Local Government Association, Department for Communities and Local Government, Hymans Robertson, Lane Clark & PeacockPensions and Lifetime Savings Association (PLSA) – Nigel Peaple has been appointed deputy director for Defined Contribution, Lifetime Savings and Research. He will lead the PLSA’s policy work on defined contribution and lifetime savings, as well as have responsibility for its research function and EU engagement. Meanwhile, Mel Duffield has been appointed to the Defined Contribution Council, while Nicola Mark and Colin Richardson will be joining the Defined Benefit Council. All three will assume their responsibilities after the PLSA’s AGM on 21 October. Carol Young, vice-chair, and Andy Cheseldine have been re-elected to the Defined Contribution Council.Pension Insurance Corporation – Jon Aisbitt has been appointed chairman of the board, succeeding Sir Mark Weinberg, one of the founders of the business and chairman since 2006, who is retiring. Aisbitt has spent 16 years in the investment banking division at Goldman Sachs, serving as chairman of the company’s Australia business for the last three years. Before then, he was chairman at Man Group.Local Government Association – Bob Holloway has joined the LGA as pensions secretary to the scheme advisory board for the local government pension scheme (LGPS), having been a civil servant for more than 40 years. He spent the majority of his career working on local government, and the bulk of that on the LGPS, implementing the investment strategy and LGPS reforms. His last posting was with the Department for Communities and Local Government (DCLG), which he left last week. Holloway told IPE he saw his new role as “benefiting both camps”. He said: “The LGA gets my experience and knowledge over the last 30 years, and the DCLG will still be able to benefit from my remaining within the LGPS community.”
“Simply selling shares alone will not eliminate the problems for the world”Eloy Lindeijer, PGGM“However, we are often unable to accommodate their wishes, as the sum of all wishes does not relate to our central task, which is generating a financial return for a sufficient pension,” said Lindeijer.“As a pensions investor, we want to comply with the Paris Climate Agreement, but via a different route than the one demanded by the environmental organisation.”He added that the exposures were “due to PFZW’s choice to be a passive investor with a globally diversified portfolio in all economic sectors, to keep risks to a minimum”.PGGM’s CIO pointed out that the total carbon footprint of PFZW’s listed equity portfolio had been reduced by 28% during the past two years and that the healthcare scheme’s aim was to achieve a total reduction of 50% in 2020. Earlier this month the asset manager reported that it was halfway towards this goal.Lindeijer added that shareholder engagement was central to PGGM’s investment policy, and that the three firms involved were “each in their own way engaged in the energy transition, and determining what role they see for themselves”.“Simply selling shares alone will not eliminate the problems for the world,” he said, “as there are more than enough buyers for these shares who have neither the experience of conducting a proper sustainability dialogue nor the intention of doing so.”The CIO added that, at 2017-end, PGGM had €6.4bn invested in companies and projects offering climate-related solutions, including sustainable real estate.Greenpeace has also recently protested against Swedish pension funds’ fossil fuel investments. Protesters broke into the offices of AP3 in Stockholm on 13 June and hung a banner outside the building with the slogans “lyd lagen” (obey the law), and ”flytta pengarna” (move the money).A spokeswoman for AP3 said: “Greenpeace haven’t had an honest intent and therefore the prerequisites for a dialogue do not exist.” Lindeijer said that PGGM was often approached about similar cases and had always entered into a dialogue. The €197bn Dutch healthcare scheme PFZW is to retain its stake in three Canadian tar sands companies amid pressure from campaign group Greenpeace.Eloy Lindeijer, chief investment officer at PGGM – PFZW’s asset manager – was quoted in Responsible Investor magazine explaining that the investments would be kept, but “with due regard for sustainability”.Greenpeace had targeted PFZW, the €408bn Dutch civil service scheme ABP, and insurers Aegon and Nationale Nederlanden over their investments, calling them “the Dirty Four”.It chided PGGM for its stakes in Enbridge, Energy Transfer Partners and TransCanada, totalling €66m.
The £16bn (€18.7bn) West Midlands Pension Fund (WMPF) has appointed a panel of investment managers to run a global sustainable equity mandate that is expected to reach £1bn in the first year.WMPF worked on the “sustainable equity framework” and the manager procurement with the help of three other local government pension schemes (LGPS) in the LGPS Central asset pool.AGF, Baillie Gifford, Impax Asset Management, RBC Global Asset Management and WHEB Asset Management have been appointed under the framework, which is accessible to all nine schemes in LGPS Central.According to a statement from WMPF, total awards of £1bn across LGPS Central participating schemes are expected in the first year. WMPF plans to allocate £750m, according to a spokesperson. The mandate is to invest in companies “who demonstrate a forward-thinking approach to long term sustainable business”.The selected managers had shown “a blend of approaches to meet the investment requirements of the framework”, according to WMPF.Ian Brookfield, chair of WMPF, said: “We have a long history of engaging companies to protect and enhance fund assets; now we will actively target those who are alert to the changes on the horizon and align with our requirement for long term sustainable returns.“It’s great that we’ve been able to share this development across our investment pool, capturing the benefits more widely.”Michael Marshall, director of responsible investment and engagement at LGPS Central, claimed it was the largest allocation to actively managed sustainable equities in the UK.“This shows tremendous leadership by our partner funds, who continue to demonstrate that responsible investment is truly integrated into their investment strategies,” he said.Redington supported WMPF in the manager search along with LGPS Central.All of the appointed managers have committed to the LGPS cost transparency code.
The changes will be fully implemented by the end of the first quarter of 2020. The Pathway Funds are designed to create what are referred to as investment “glidepaths” taking pension scheme members up to retirement and beyond.A spokeswoman told IPE that there are currently £900m of assets under management in the Pathway Funds, “with a strong pipeline”.Alpha FMC launchAsset management consultancy Alpha FMC has launched a dedicated pensions and retail investments practice in response to “convergence accelerating betwen asset and wealth management and the traditional pensions and retail investments sectors”.The launch has led to two new hires as directors – Bruce Davies and Dan Mahony, both from Ernst & Young (EY).Davies previously built and led EY’s life, pensions and investments transformation capability. Mahony started his career with Prudential, helping to launch the UK’s first fixed-term annuity by founding the start-up business, Living Time. He has since led EY’s relationships with a number of prominent clients in the industry.The aim of the new practice, according to Alpha FMC, is to help asset managers transform their business models “and respond to ever-changing client demands and technical innovations”.Davies said: “We aim to provide a different and distinctive set of services, focused on where the market is going and not how it is traditionally structured.”AXA IM’s Rossi steps down as CEOGérald Harlin has been appointed executive chairman of AXA Investment Managers (AXA IM), taking over from CEO Andrea Rossi. Harlin, who is currently group deputy CEO and group CFO, will take up his new role on 1 December, continuing to report to Thomas Buberl, CEO of AXA. He has also assumed the role of chairman of the board at AXA IM, succeeding Christof Kutscher, who had held this role since 2014.Rossi, who had led the asset manager since 2013, will become a strategic advisor to Harlin on December 1. Legal & General Investment Management (LGIM) has made changes to its range of target date funds for defined contribution (DC) schemes, including integrating a multi-asset fund with explicit environmental, social and corporate governance (ESG) criteria.It will also be increasing the allocation to growth assets in the earliest retirement savings phase of the Pathway Funds and de-risking at a more gradual pace in a bid to help deliver an improved level of income in retirement.The ESG-related change involves LGIM adopting the multi-asset fund in its Future World range as a core diversified growth component of the Pathway Funds. The fund excludes companies that fail to meet certain business practice standards and also follows LGIM’s targeted engagement process to invest in companies most committed to keeping global warming to 2°C above pre-industrial levels.In a statement, LGIM said the changes were partly a response to direct feedback from its DC members, who had shown greater interest in sustainable investments, as well as wider demographic research conducted as part of the Pathway Funds’ governance process.
The manager of Norway’s sovereign wealth fund has taken the Principles for Responsible Investment (PRI) to task over some aspects of its work in a letter relating to the organisation’s 2019 signatory survey, the consultation on which ends today.Explaining some of its responses to the online survey, Norges Bank Investment Management wrote that it had reservations about PRI’s focus in its 2017 long-term strategy document on “real world impact” and “outcome-based reporting on the SDGs”, as shared in response to previous consultations. “We consider the Blueprint’s chapter on ‘enabling real-world impact aligned with the SDGs’ as a departure from the Six Principles and PRI’s mission, which do not provide direction for the PRI to work on how investors should advance global development and support international political commitments,” wrote NBIM’s chief corporate governance officer Carine Smith Ihenacho and head of sustainability Wilhelm Mohn.Furthermore, they said, the chapter could be interpreted as an expectation that financial investors should have dual or multiple objectives. Carine Smith Ihenacho, chief corporate governance officer at NBIMFrom that perspective, they said, NBIM saw the benefits of PRI supporting research and knowledge on such issues and how they could affect financial markets and investors in general.On the topic of policy and research, NBIM said that given PRI’s growing signatory base, it was important that as far as possible, messages conveyed by the PRI to policy makers represented broadly-held views among signatories and outcomes permissible under their respective mandates.“With a signatory base representing different interests, the PRI may need to introduce more rigorous processes to gather views of signatories and ensure that its policy work remains balanced when engaging on public policy issues,” wrote Ihenacho and Mohn.Impact ‘de facto a new principle’On the issue of governance, NBIM said it felt certain key points relating to this – including the governance and processes in place at PRI for taking important decisions – were not covered in the signatory survey, which had only one question on the PRI’s governance.Noting that safeguards in the PRI’s articles of association give signatories reassurance that the PRI’s activities match the declaration approved when joining, NBIM singled out the right for signatories to vote on any amendment to the Six Principles.“We believe it is important that any substantial strategic development which may represent de facto a new principle is treated as such, and therefore subject to a signatory vote,” argued Ihenacho and Mohn.Although they said the Blueprint’s new chapter on “real-world impact aligned with the SDGs” was not linked to an existing principle, NBIM believed it represented a substantial strategic development, which can be seen as de facto a new principle.On top of this, the pair called for more transparency in consultation processes, saying questions should be unambiguous and focus on specific points and proposals. They said the PRI should make sure that a majority in each signatories’ category supported a proposal, and that ‘don’t know’ answers should also be taken into account.“When a proposal does not get the clear support of signatories, the PRI should amend it to reflect signatories’ feedback,” they wrote. “However, as a long-term and global asset owner, we have a general interest in understanding how issues related to sustainability, as well as the achievement of the SDGs, may impact the economy and the companies we invest in, and thus long-term risk and return,” the pair said.