Dutch property manager Bouwinvest to add care housing to portfolio

first_imgWith a total return of 8.1%, Bouwinvest’s Retail Fund showed the best result, while its Hotel Fund generated a 7.1% return.While Bouwinvest incurred a 0.3% loss on its offices investments, the return on its €2.6bn Residential Fund was 0%, after direct returns of 3.6% and an equal indirect loss.Last year, the property manager invested €165m in Dutch housing, in particular in apartments and single-family homes.“As most investors are still waiting, we have been able to acquire first-class assets against reasonable prices,” the company said, which also made significant investments in the retail sector.Last year, it committed itself to a total of €677m in new investments.Although Bouwinvest noted that property prices were still under pressure, and its Dutch sector schemes dropped 4% in 2013, it said it expected that the prices for rental housing would bottom out this year.“The first external investor seems to confirm this trend,” it said, referring to the Rabobank Pensioenfonds, which invested €50m in its Residential Fund earlier this year.Bouwinvest also said that Dutch direct property deals, with a volume of €5.6bn last year, were approaching the long-term average of €6bn.The property manager’s €1.9bn global real estate portfolio returned 7% due chiefly to higher valuations of non-listed North American property as well as listed investments.However, Bouwinvest Development still suffered from the downward revaluations of plots and projects last year.Last February, the property manager received an AIFMD licence, and it is now in a better position to attract European investors, it said, adding that it received the ISAE certificate for “all correct control procedures” last year.Dick van Hal, chief executive, is currently also acting as CFO, since Roel de Weerd left the company at the end of last year. Bouwinvest, the €6bn property manager of the pension fund for the Dutch building sector, has said it wants to add facilities for combined care and housing to its portfolio as part of plans to grow to €7.7bn over the next two years.It is also committed to reducing management costs to make itself more attractive to external investors, according to its 2013 annual report.The company, which has €750m available for new investments, reported a total return on its Dutch activities of 0.8%, which almost equals its 2012 result.The company’s overall direct return was 4.2%.last_img read more

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ECB’s larger-than-expected QE programme welcomed by markets

first_imgThe launch of QE became necessary as a result of the recent fall in oil prices, but also due to the decline in headline inflation figures across the euro-zone, which has seen a number of member states – notably Spain – see the onset of deflation.Reaction in the market was subdued. The German 10-year bund yield fell back, after rising during the days leading up to the decision, and the euro weakened against the US dollar, again after strengthening over recent days.Investors also bought gold, sending its back above $1,300/oz during Draghi’s press conference.APG, asset manager to the largest European pension fund ABP, said the announcement had met its expectations.The manager added that it had factored the possible announcement into its scenarios for its investment strategies and that its investment portfolio was constructed in such a way that it could cope with the effects of such a decision.Others welcomed the size of the asset purchase, which was above the €50bn levels leaked to the market in advance.Yoram Lustig, lead fund manager at AXA Investment Managers, questioned whether the leaks had stolen Draghi’s thunder.“I think it was a staged leak to remove the suspense and set the stage,” he said. “Draghi isn’t interested in a thriller – he wants to calm the markets and meet or exceed expectations that he created.”According to Draghi, 20% of the risk would be shared among member states – with 12% of the risk being met by individual member states and a further 8% by the ECB itself.The Italian central banker expressed some surprise during the press conference announcing the move that risk sharing had become almost the most important single issue behind QE, and said it should not be the case.He stressed that the “single-ness” of monetary policy remained in place, despite individual member states’ central banks assuming responsibility for putting in place the policy.In instances where QE developed bubbles in individual markets, Draghi said these would need to be addressed through local instruments, not monetary policy. “What monetary policy can do is create the basis for growth,” he said. “But for growth you need investment.” The ECB has announced the details of a €1.1trn quantitative easing programme, with 20% of the risk of default being shared across the euro-zone member states.Speaking in Frankfurt, ECB president Mario Draghi confirmed the central bank would start a monthly €60bn programme in March, running at least until September 2016.He said the asset purchasing, which would be conducted by the national central banks but coordinated by Frankfurt, was required to ensure the single currency’s inflation would run “below but closer to 2%”.When later asked to clarify the length of the ECB’s intervention, Draghi stressed that the programme would only continue for as long until a “sustained adjustment in the path of inflation” had occurred.last_img read more

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Nordic roundup: Oslo Pensjonsforsikring, Finnish returns, TELA, pension reform

first_imgNorwegian public sector pension fund Oslo Pensjonsforsikring (OPF) posted a 7.6% return on investments for 2014, down from 8.8% in 2013, but warned that low interest rates would be a challenge for future performance as well as spelling high costs for the fund.OPF’s chief executive Åmund Lunde said: “The low level of interest rates challenges returns in the immediate future and contributes to high pension costs for customers.”The pension fund’s customers are the municipality of Oslo, enterprises and companies owned by the municipality as well as five health trusts.“It is becoming more and more difficult to find investments that give a satisfactory return,” Lunde said. The fund — incorporated as an insurance company — posted a pre-tax profit of NOK608m (€71m) for 2014, up from NOK586m the year before.OPF described its financial position as good, with solvency coverage under the new rules coming in from 2016 at 144%.Assets under management grew to NOK73.5bn at the end of last year, up from NOK63.5bn in December 2013.Meanwhile, Finnish public sector pension funds have outperformed their private-sector counterparts in 2014, according to pensions alliance TELA, because they are not subject to capital adequacy requirements.In an analysis, the organisation representing the country’s earnings-related pension providers, said provisional results posted by funds for 2014 show the overall total return in both private and public sectors will be around 7.5%, which it described as good.So far, the information available pointed to pension insurance companies as having returned between 6.2% and 7.1% for the year, while public sector pension insurers had generated between 7.8% and 8.7%, TELA said.The higher returns for public sector providers were explained by the fact that these insurers were not subject to capital adequacy retirements, unlike the private sector, it said.Maria Rissanen, analyst at the alliance, said: “Returns were good in 2014, especially in equities, which produced about 10%.“Public-sector pension insurers have a higher weighting of these in their portfolio, and because of this they had better total returns,” she said.After equities, real estate was the next highest-performing asset class for the pension funds, she said, generating around 5%, with fixed income producing about 4%.In other news, the Finnish Centre for Pensions (ETK) said the country’s earnings-related pensions reform would meet many of its goals, but warned contributions would need to be increased by two percentage points if the economy remained in its current doldrums.In an analysis of the 2017 pensions reform, the centre said that according to its projections the reform would extend working lives, defer retirement and raise the average pension of future age cohorts on all educational levels. At the same time, it would also reduce the pressure to raise earnings-related pension contributions, it said.If the economic outlook was reasonable, contributions could be stabilised at the 24.4% level agreed on until the latter half of the 2060s, it said.Mikko Kautto, director of the centre, said: “The goals set by the labour market organisations and the government will be reached.”“The reform will extend working lives and improve the sustainability of public economy,” he said. But Kautto also said that the effects of the pension reform would not be realised by themselves.If the economic outlook continued to be as poor in the future as it had been in recent years, the contribution level would have to be raised by as much as two percentage points, he said.last_img read more

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Dutch pension funds dubious of cost benchmarks’ benefits – survey

first_imgMore than 40% said they “dreaded” taking part in benchmarks due to time constraints.Thirty-seven percent of respondents said they had difficulties picking the right provider and preferred to wait until a clear market leader emerged, while 20% said providers of costs benchmarks were too expensive.KAS Bank’s survey covered 15 company pension funds, six industry-wide schemes and three consultants.Last year, PDN, the €7.2bn pension fund for chemicals giant DSM, decided to withdraw from CEM Benchmarking for cost reasons, as well as the fact its costs had not deviated much from the previous year.It also said it would compare its costs with similar schemes by checking their annual reports. Nearly two-thirds of Dutch pension funds think cost benchmarks have limited added value, according to a survey by KAS Bank. The custodian and administrator, which canvassed 24 Dutch schemes and consultants, said most respondents felt participating in a benchmark was too time-consuming, and that there were too many benchmark providers.More than 60% said they saw limited added value and underlined the importance of being compared with similar schemes.By contrast, one-third of respondents said they appreciated cost benchmarking, while 4% said such comparisons were useless.last_img read more

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Optimistic return expectations putting pensioners at risk, ASR warns

first_imgParticipants in Dutch pension funds are at risk following too low contributions due to overly optimistic return expectations, pensions insurer ASR has warned.ASR director Fleur Rieter and vice-director Arthur Arbouw said pension funds were failing to recognise the combined impact of low funding, indexation targets and smoothing premiums.Participants are “very unlikely” to receive promised indexation under these conditions, Rieter argued, and could even face a rights discount. “Pensions funds must better inform their participants about the effect and the risk of low contributions,” she said. According to Rieter, last year, more than three-quarters of pension funds applied a smoothed premium, and a large proportion based their policy on the maximum allowed assumptions for returns.“These highest assumptions, such as 7% for equity, are too ambitious,” Arbouw said.He said the return parameters used for setting contributions should reflect real market expectations.“In the case of the civil service scheme ABP, for example, it is clear there is pressure from employers to keep contributions low, and I can imagine that the same goes for other sectors,” he said. “However, it is the participants who must deal with the consequences.”last_img read more

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Schroders: World on course for 4°C warming (for now)

first_imgThe asset manager’s view was based on an assessment of 12 indicators – which it called the Climate Progress Dashboard – that it identified as the key reasons for and controls of climate change, spanning politics, business, technological progress, and energy.Andy Howard, head of sustainable research at Schroders, said the dashboard “provides an objective and transparent view of change and should help investors base decisions on the outcomes we are likely to see, rather than those we would like to see”.The asset manager said investors’ focus “on what should happen, rather than what is happening, has become increasingly untenable as momentum builds and potential risks crystallise in the form of real financial impacts”.It described investors as having relied more on “anecdotes and headlines” than objective analysis to gauge progress on limiting global warming. Investors have been faced with “a confusing, changeable and often contradictory range of climate signals”, Schroders said.The dashboard was intended to help them cut through these signals to develop an all-round view of where things stand and how they may change. Having such a view was becoming more important “as activity picks up and rhetoric becomes action”, the asset manager said.The 12 indicators that Schroders identified are: political ambition, public concern, political action, corporate planning, climate finance, carbon prices, electric vehicles, renewable capacity, carbon capture and storage, oil and gas investment, coal production, and oil and gas production.Developments in each of the areas captured by the indicators pointed to temperatures rising above 2°C, although the implied outcomes vary across the indicators.Global political action, for example, pointed to a 3.6°C temperature rise, while current oil and gas production levels are consistent with a temperature rise of 5.8°C, according to Schroders’ analysis.The outlook was brightest for political ambition, although this would also fall short of the 2°C target, according to Schroders.Looking at individual countries’ targets to contain greenhouse gas emissions, the manager said these suggested a temperature rise of 2.8°C.The dashboard can be found here. The world is on course for a long-term temperature rise of 4°C, rather than the 2°C maximum target set by the Paris agreement on climate change, according to analysis from Schroders.However, it said the gap between action and rhetoric on fighting climate change is closing and that investors need to be prepared for changes to investment valuations as a result of this.“At some point, we expect markets to recognise this new momentum and to reassess valuations for a much more aggressive pace of decarbonisation in the future,” it said.“Investors who are unprepared or who have relied on overly simplistic analysis risk losses and missed opportunities.”last_img read more

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KLP to divest oil sands companies, plough proceeds into renewables

first_imgNorway’s main municipal pensions provider KLP has decided to exclude companies from its investments that have more than 30% of their revenue stemming from oil sands activities, and use the proceeds of these asset sales for new renewable energy investments in the developing world.The NOK641bn (€64.9bn) pension provider made the decision after commissioning research that showed the consequences of oil sands production — also known as tar sands — were just as harmful to the environment as those of coal.KLP excluded coal businesses from its investments in 2014.Anne Kvam, head of responsible investments at KLP Kapitalforvaltning (KLP Asset Management), told IPE: “We wanted to look at all unconventional sources of oil and gas, in terms of the greenhouse gases (GHG) emitted and also how the land was used in production and other environmental challenges linked to these activities. Oil sand is a mixture of bitumen (a thick, sticky form of crude oil), sand, water and clay.KLP’s work into the climate and environmental consequences linked to unconventional oil and gas production centred on a recent report it commissioned from consultancy EY on the subject.KLP will also exclude companies where oil sands and coal activities together amounted to 30% or more of their revenue.At the same time, it said it has decided to increase its exposure to new renewable energy in developing countries by using the proceeds from asset sales as it withdraws from oil sands companies.Kvam said KLP had not yet calculated how large this investment shift will be in financial terms.But the pension provider said it would publish a list of those companies to be divested by 1 June 2018.Kvam said the oil sands exclusion decision is a first step in response to the large amount of information generated in the 58-page EY report.“We will now see how we can make further use of the report, and other organisations might also benefit from it,” she said. The report says unconventional oil and gas — such as oil sand extraction and hydraulic fracturing, or fracking — has risen quickly over the last decade as new technologies have been developed.It said that of all the unconventional methods reviewed, oil sands posed the overall highest environmental risks, comparable only to coal mining.The open mining method could be particularly damaging, it said, making large incisions into natural landscapes that could be irreversible and severely impact surrounding wildlife.A week ago, AXA announced it would divest producers of coal and oil sands, and also phase out insurance coverage for new coal construction projects and oil sands businesses.In October, BNP Paribas Group announced it would no longer do business with companies whose main business involved oil and gas from shale and/or oil from tar sands, and that it would stop financing such projects. “What we found was that in terms of climate change and GHG emissions, oil sands is just as bad as coal, so having excluded coal, it made no sense for us to remain involved in this,” she said.last_img read more

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UK government relaxes debt rules for multi-employer schemes

first_imgThe UK government has altered rules for multi-employer schemes to help sponsoring employers avoid crippling payments when they no longer have any staff participating in the arrangement.Employer debt regulations for multi-employer defined benefit (DB) schemes will change from 6 April 2018. After a consultation last year the Department for Work and Pensions (DWP) has decided to allow employers exiting multi-employer schemes more time in which to pay off liabilities under a deferred debt arrangement (DDA), provided certain conditions are met.Under the Occupational Pension Schemes (Employer Debt and Miscellaneous Amendments) Regulations 2018, employers whose only change is to stop employing active members in a scheme will be allowed to retain an ongoing commitment to the scheme, making contributions on an ongoing basis rather than be forced into a one-off cessation payment, known as Section 75 debt. The current rules were introduced in 2005 to prevent companies walking away from the pension liabilities of subsidiaries that had become insolvent.However, cessation payments are often unaffordable and have led to a number of insolvencies. In some cases, organisations have remained trapped in a scheme, forced to fund liabilities which are continually rising.Multi-employer schemes are used by many small businesses and other organisations too small to run their own DB scheme, and are dominated by the charity sector. They also include some of the UK’s biggest pension funds, such as the Universities Superannuation Scheme and RPMI Railpen.From April and within the DDA, employers would continue to bear all the same funding and administration obligations to the scheme as was the case before making the agreement, in order to protect member benefits and other employers.David Davison, head of charity practice at actuaries Spence & Partners, said: “This is a huge step forward, offering companies, charities and other entities significant additional flexibility in controlling risk in an affordable way, while focusing resources on paying down liabilities already built up, rather than building further amounts.“My only minor concern is whether pension schemes will embrace these proposals and find ways to make them workable.”The plight of small companies was raised in the UK parliament’s lower chamber (House of Commons) last year, when Scottish MP Kirstene Hair warned that some company owners in the Plumbing and Mechanical Services Industry Pension Scheme were unable to retire because this would trigger the debt payment, forcing them to close their business.Davison expects the Scottish government to bring similar legislation for the LGPS – which is governed by different rules – into effect in Scotland by June this year, with England and Wales following later.last_img read more

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AP1 re-tenders $4bn worth of emerging market equity mandates

first_imgSweden’s AP1 is re-tendering its entire allocation to emerging market equities in a process that will see around $4bn (€3.3bn) of capital entrusted to a range of external managers. The SEK333bn (€32.3bn) pension fund – the first of Sweden’s main four buffer funds backing the state pension – published the details on the EU’s tendering website, TED, last week.Majdi Chammas, head of external asset management at AP1, told IPE: “This is a tender of an existing mandate – we are re-tendering the entire allocation.“It is part of our process to challenge all the mandates we have every five to seven years, and this asset class was last tendered in 2012.” The tender comes after a year in which AP1 bumped up its allocation to emerging market equities to just over 14% of the total portfolio, having begun 2017 with an 8% allocation.AP1 said it will evaluate both active and passive strategies as well as different investment styles, such as fundamental and quantitative.However, strategies solely investing in emerging market small cap or frontier markets were not part of the tender process and would not be evaluated, it said in the tender notice.Global emerging market equities were currently managed by six external managers, Chammas said, but this could be changed depending the number of strong bids. “It could be one or it could be seven,” he added.The fund pointed out in the notice that its sustainability policy applied to the entire fund, including externally-managed mandates, and that ESG would be a focus when selecting managers.“In the evaluation process special attention will be paid to how the manager considers and integrates ESG factors in the investment process,” the pension fund said.Managers responding to the tender must be able to document experience in management of institutional accounts for the specified mandate.They must be able to show a live track record for the product offered of at least 12 months, and must also reserve capacity in the submitted strategy of at least $300m, it said.The deadline for receipt of tenders or requests to participate is 29 June.AP1’s chief executive Johan Magnusson said in the pension fund’s 2017 annual report that the fund had extended its EM investments during the year, as it deemed opportunities for returns to be better in these markets than in developed foreign markets, which it said were currently characterised by high valuations.last_img read more

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Pension dashboard requires compulsion, UK providers say

first_imgThe UK’s proposed pension dashboard framework will only succeed if providers are compelled to provide data to the online portals, according to a new report.In response to the government’s consultation on pension dashboards – which aim to collate individuals’ pension data in one place – defined contribution master trust The People’s Pension called for a legal duty to be placed on all commercial providers of dashboards to “put savers’ interests first”.A report, commissioned by The People’s Pension and written by independent consultant Dominic Lindley, argued that compulsion was “a necessity” as previous voluntary initiatives in other areas of financial services had been “found wanting”. “The global evidence confirms that introducing a pensions dashboard effectively within a reasonable timeframe demands compulsion,” Lindley wrote. He studied pension dashboard models from Australia, Denmark, Finland, Israel, the Netherlands and Sweden. “The experience of overseas pensions dashboards has shown that, while voluntary initiatives can eventually lead to comprehensive coverage, it can take many years to achieve this goal,” the report said.“Denmark and Sweden used a voluntary approach and, while they have now achieved full coverage, this took between 10 and 13 years.“Countries which have taken the voluntary route tended to have a simpler and less fragmented pensions landscape than that in the UK, with fewer pension schemes.”The Netherlands, Israel and Australia all established dashboard models in roughly three or four years, Lindley said, achieving “comprehensive coverage” by using legislation – although in all three countries, Lindley said the pension systems were “much more cohesive, with many fewer schemes” than the UK. Dominic LindleyIn the Netherlands, Israel and Australia providers are legally required to provide data to dashboards, Lindley said, while in Denmark and Israel the portals include information on charges. The latter aspect was not included in the UK’s proposal.The report also called for legislation to establish an implementation authority to oversee governance standards, with a steering group made up of consumer and industry representatives.CybersecurityIn its response to the government consultation, which closed yesterday, the Association of Consulting Actuaries (ACA) expressed support for the dashboard initiative but warned the government not to rush implementation.The association said the security of financial data would “require material upfront investment”, and expressed concern that this cost could hit defined benefit (DB) schemes that “are not necessarily set up at the current time to communicate individual benefit information to members electronically”. The ACA says the government has not paid sufficient attention to cybersecurity risksACA chair Jenny Condron said: “If [the dashboard system] is breached by hackers they will presumably be able to access extensive personal and financial information about millions of people and potentially go on to try to hack their way into individual pension schemes where certain malicious actions, such as changing investment choices in DC schemes and changing death benefit nominations in any scheme, might be open to them.“We feel it essential that there are protections for trustees and sponsors from prosecution should members’ personal data be illegally obtained from dashboards. “The issue of data security does not seem to have been addressed in any detail in the consultation paper.”Scott Finnie, solutions architect at consultancy firm Hymans Robertson, echoed concerns about the cost of rolling out dashboards effectively.“The potential cost of implementation is a major concern and there must be understanding that a ‘reasonable timeframe’ will be needed to take account of the specific pressures on those running and administering public sector arrangements,” he said. The Pensions and Lifetime Savings Association (PLSA) – the trade body for UK pension funds and providers – welcomed the consultation and the inclusion of state pension data.Nigel Peaple, director of policy and research at the PLSA, added that the association’s “retirement income targets” – launched last year to help savers understand how much they needed to contribute to their pensions – should also be included within dashboards.“Strong project governance is required to protect the interests of savers and give them confidence that dashboards are a force for good in the pensions industry,” he said.Next stepsThe Single Financial Guidance Body – an amalgamation of several government-backed consumer groups that launched this year – will be tasked with overseeing the delivery of the first dashboard before any commercial providers are permitted, the government said in its consultation.The outline of the government’s plan is available here.last_img read more

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