Towers Watson, ING Investment Management, PGGM, BNY Mellon, Intermediate Capital Group, JLT Employee Benefits, Financial Reporting Council Towers Watson – Ed Francis has been appointed head of investment for the EMEA region, succeeding Chris Ford, who, after holding the position since 2011, has assumed the role of global head of investment. Francis joined Towers Watson in 2001 from PricewaterhouseCoopers and has held a number of leadership roles during that time, most recently being a member of the EMEA investment leadership team and head of the UK client consulting teams.ING Investment Management – Kornelis Buursma has started as senior institutional business development manager in the Netherlands, focusing on investment strategies and integral client solutions. With the news, Buursma leaves the €153bn asset manager PGGM, where he was responsible for acquisitions and institutional market positioning. Before then, he was sales and relations manager for the Dutch institutional market at ING IM.BNY Mellon – Frank La Salla has been appointed chief executive of the Alternative Investment Services business. He was most recently managing director at Pershing, a BNY Mellon company, where he was responsible for all of Pershing’s business outside of the US. Before BNY Mellon’s acquisition of Pershing in 2003, La Salla was president and COO at BNY Clearing Services. Before then, he served as managing director and COO at Société Générale Securities in the U.S. Intermediate Capital Group – The specialist asset manager has hired an alternative credit team. Sridhar Bearelly will head up the team, initially comprising Jesper Poulsen and Vincent Charles-Gervais, who will all join Simon Peatfield in London. Bearelly, Poulsen and Charles-Gervais were founders of, and join from, Credos Capital, where they established an alternative credit fund platform ICG will acquire.JLT Employee Benefits – John Breedon has been appointed head of investment consulting. He was previously head of corporate consulting. In addition to this, John Finch, director, will take responsibility for the development of JLT’s platform offering, covering the investment consulting and investment management businesses. Julian Brown, director, will be responsible for investment consulting’s local authority offering.Financial Reporting Council – David Styles has been appointed director of corporate governance, joining on 6 May. He joins from the UK Department for Business, Innovation and Skills, where he has worked in the Corporate Law and Governance Directorate and led implementation of departmental policy on directors’ remuneration, shareholders’ rights and corporate governance.
Hermes Fund Managers – Edward Sellick and Chlarles Flather join Hermes Real Estate as senior asset manager and investment surveyor, respectively. Sellick joins from M&G Real Estate and has also worked at Aviva. Flather, meanwhile, worked at Bidwells and sold assets held by a number of the Cambridge University College endowment funds.Invesco PowerShares – Caroline Baron has joined the exchange-traded funds provider as head of UK distribution. She previously worked at BlackRock in a number of roles, having begun her career at the firm in 2006.PIMCO – Paul McCulley has been named chief economist. The new role will see McCulley sitting on the firm’s investment committee and reporting to CIO Bill Gross. Prior to taking up the his new role, he was head of the short-term desk at PIMCO, and has also worked at UBS.AEW Europe – Laurent Dubos has been promoted to head of asset management in France. The new role comes after he spent three years at the real estate investor as its head of asset management for offices. He previously worked at Unibail-Rodamco as head of asset management for the US city of Cleveland. Guillaume Turcas has been promoted to head of asset management for offices. SNPF, BlueBay Asset Management, Carmignac, Hermes, Invesco, PIMCO, AEW EuropeSNPF – The €1.2bn occupational pension fund for notaries in the Netherlands, SNPF, has appointed Eric Greup as chairman. He succeeds Maarten Dijkshoorn, who resigned on 1 April, as he was found to be holding too many board-level positions. Greup – a notary himself – had been a board member since October 2013, Previously, he was chair of the Pensions Council, the scheme’s employer, as well as a member of the SNPF’s accountability body. Dijkshoorn is to stay on as board member until 2014-end.BlueBay Asset Management – Victoria Muir has been named head of investor relations, joining from Royal London Asset Management. At RLAM, Muir was head of client account management. Prior to joining the company more than a decade ago, she worked at Legg Mason.Carmignac – Michael Schütt has joined the company as head of Germany and Austria, following the departure of Kai Volkmann. Schütt has previously worked at BNY Mellon, Invesco Asset Management, Citibank and Morgan Stanley. Additionally, Roland Schmidt has joined as head of wholesale business development for Germany and Austria, having worked at M&G International, Baring Asset Management and Fidelity Investments.
“By outsourcing the management of new investments and portfolio administration to eQ Asset Management, we achieve cost-effectiveness, excellent reporting and investment service tailored to our needs,” Sunell said. Staffan Jåfs, head of private equity at eQ Asset Management, said: “The Finnish Cultural Foundation is one of the largest institutional investors in Finland, and we are very pleased to have been appointed as their partner in building the private equity programme.”The Finnish Cultural Foundation is a private trust that gives grants to promote art, science and other intellectual and cultural activities in Finland.Neither party was available to say how much the foundation’s private equity and alternative investments are worth. The Finnish Cultural Foundation, which has assets of around €1.1bn, is outsourcing its private equity and alternatives investment management to Finnish firm eQ Asset Management.The institutional investor has signed a long-term agreement covering outsourcing of both existing and future investments within private equity and other alternative investments.The foundation’s CIO Ralf Sunell said: “We have been pleased with the return of our private equity portfolio, and private equity will continue to play a central role in our asset allocation.”However, managing those investments demand a high level of administrative resources compared with other asset classes, including monitoring and reporting systems.
Subsequently, the company reduced interest exposure by increasing the duration of its holdings in government paper.However, according to the supervisory board, falling interest rates, the combination of actuarial data predicting a further increase in longevity, and the completion of an internal calculation model for liabilities led to another solvency drop.According to its 2014 annual report, De Eendragt concluded that its weakened financial position would preclude any future indexation and therefore put its acquisition activities on hold, while four employers left the company after their contracts expired, leaving it with 37 clients at year-end.The board said it decided against liquidating the company and subsequently placing pension rights within the new APF pensions vehicle, pointing out that this would have changed participants’ guaranteed nominal pensions into ‘soft’ rights.It also warned that De Eendragt, if the regulator were to reject the ASR takeover, might be unable to honour its pension obligations.In this event, De Eendragt may be forced to make a rights cut, the board said. De Eendragt Pensioen has 5,275 active participants, 11,735 deferred members and 5,285 pensioners. Solvency levels at Dutch pensions insurer De Eendragt Pensioen, which is to be acquired by insurer ASR, dropped as low as 80% last year, according to its 2014 annual report.The funding shortfall – caused by a “combination of factors” – was so pronounced De Eendragt’s board concluded that putting in place a recovery plan on its own would have been impossible.Once regulators approve ASR’s acquisition of De Eendragt, for the symbolic amount of €1, the insurer is expected to increase De Eendragt’s solvency to the maximum level of 130%. Over the first quarter of 2014, De Eendragt boosted its solvency to the required level after divesting nearly the whole of its return portfolio, consisting of equities and real estate, in favour of its matching portfolio of German and Dutch government bonds.
Norway’s sovereign wealth fund saw its value decline by NOK53bn (€6bn) over the course of the second quarter, as the kroner strengthened and US equity holdings suffered negative returns.Yngve Slyngstad, chief executive of Norges Bank Investment Management, in charge of the NOK6.9trn Government Pension Fund Global, said fixed income returns were impacted by a rise in yields across its main markets as he announced overall returns of -0.9%, ahead of its benchmark.Fixed income accounted for over a third of assets at the end of June and returned -2.2%, as only securitised debt seeing a positive return.Both euro-denominated bonds and US Treasuries saw negative returns, and the overall basket of government bonds returned -2.9%, on par with the returns from corporate bond holdings. Asian equity holdings boosted the fund’s overall equity returns to -0.2%, despite North American holdings returning -1.4%.The fund singled out Chinese, Japanese and UK equities for praise, as Chinese holdings were the strongest performer over the second quarter, returning 9.2%.Japanese equities returned 2.3%, well above the 1% average achieved by all holdings in Asia, and UK stocks returned 3.3%.Only a small number of equity sectors saw positive returns – among them financial stocks, heathcare and telecoms, latter which the fund said was boosted by the potential for mergers in both the US and Europe.Oil and gas stocks returned 1.1%, boosted by a combination of a recovering oil prices and companies implementing cost-cutting measures.“The return was also boosted by expectations of lower capital expenditure and so stronger cash flow ahead,” the quarterly report noted.The fund’s 2.7% property portfolio saw positive returns, as unlisted holdings worth NOK142bn saw returns of 4.4% compared to losses of 5.5% from its listed real estate portfolio.The sovereign fund grew its real estate holdings over the quarter with two acquisitions.
Depending on which period is used as a basis for the calculations, 1.25% could be a maximum, or a realistic, rate.This is, however, merely the minimum interest that must be guaranteed on mandatory assets of active members, while Pensionskassen are free to pay out more.In 2014, the actual interest paid out on members’ assets stood at 2.3% on average, up from 2% the year before and just under 2% in 2012, while the legal minimum rate has fallen continually in recent years.A recent study by PPCmetrics (in German) shows that just over half of all Pensionskasse surveyed paid out an interest rate of 1.5-2%. One-quarter had a rate higher than 2.5%, while approximately 7% fell below the 1.5% threshold.The Swiss consultancy based its research on the balance sheets of 260 Pensionskassen, with combined assets of CHF565bn (€461bn), with approximately CHF200bn attributable to public pension funds. The PPCmetrics study, unlike most others on the technical parameters for Swiss Pensionskassen, was based not on surveys but reported figures.The consultancy said this made its figures more comparable.According to the research, the so-called ‘technische Zins’ – the discount rate applied – has decreased by less than the average return from bond holdings, particularly in public pension funds.This means the average risk-adjusted funding ratio, a benchmark figure devised by PPCmetrics, has deteriorated from just over 101% in 2013 to 99.7% last year. Switzerland’s BVG Kommission, responsible for amending technical parameters within the second-pillar pension system, has proposed cutting the minimum interest rate for Pensionskassen from 1.75% to 1.25%.The news means Pensionskassen, from January 2016, look set to employ the 1.25% rate when guaranteeing members’ assets, as the Swiss government has to date followed all of the commission’s recommendations.In a statement, the BVG noted that, in its final vote, the majority of commission members supported the 1.25% rate, as opposed to the more radical 1% rate. The minimum interest rate, which must be applied to all mandatory contributions made to the second pillar, is based on the returns from Swiss government bonds.
Norwegian asset manager Skagen has named Norges Bank Investment Management’s (NBIM) Øyvind Schanke as its next chief executive.Schanke is CIO for asset strategies at NBIM, where he oversees equity and fixed income portfolios for the NOK7.3trn (€802bn) Government Pension Fund Global.He will take on his new role from 1 February 2017.Skagen’s current chief executive, Leif Ola Rød, will step down on 1 March. He has led the asset manager since 2014.Henrik Lisæth, chair of Skagen’s board, said Schanke was “well respected internationally for his results at NBIM”.He added: “Øyvind has the solid relevant experience to implement Skagen’s long-term strategy. The board is convinced Øyvind is the right person to take leadership of Skagen going forward.”Rød joined Skagen in 2012 as head of business support and compliance before his appointment as chief executive two years later.Earlier this year, he served as acting CIO for a short period following the decision by Ole Søeberg to relinquish the role to concentrate on fund management.Alexandra Morris took over as CIO permanently in September.Schanke has worked at NBIM for 15 years, previously as head of trading and global head of equity trading, before becoming one of several CIOs responsible for the sovereign wealth fund’s giant portfolio in 2014 following a management restructure.
The IASB is currently examining a staff proposal to require businesses to report an EBIT (earnings before finance income/expenses and tax) subtotal on income statements.The issue forms part of the IASB’s “Better Communication” initiative to improve clarity in financial reporting.The project could also mean that companies would have to separate out financing-related interest income from other types of interest income.Any move would have an impact on pensions accounting. Since 2011, DB sponsors have been required to report a net-interest cost on income statements.Meanwhile, it has emerged that the IASB will issue a discussion paper rather than a full exposure draft on its Primary Financial Statements Project.IASB chairman Hans Hoogervorst said a discussion paper was “more likely”. Any such move would allow it to present alternative views and a wider ranger of options for public comment.Speaking before the IASB chairman, Francoise Flores, former chair of the European Financial Reporting Advisory Group, said: “If we go to a [discussion paper], we can consider alternatives. If we go [out with] an exposure draft, we may want to have some outreach first on possible alternatives.”Flores also urged the board to put in further work on alternative approaches to the thorny question of defining EBIT.At the moment, the board is still assessing how it could structure an EBIT line item rather than deciding whether it would be productive to include it in the income statement.At the board’s March meeting, the staff proposed defining EBIT as profit before finance income/expenses and tax. They defined finance income or expense as the income or expense flowing from an entity’s capital structure. Staff also proposed an entity’s capital structure would include cash held, as well as short-term investments of excess cash.The board has asked the staff to refine this thinking, including the definition of capital structure.The aims of the project are twofold. First, the board believes the inclusion of an EBIT subtotal will give users a comparable measure of pre-tax profit performance.Second, they think it will allow users to compare entities with different capital structures.The term ‘capital structure’ is not defined in International Financial Reporting Standards at present. Staff have adopted it as a working term for the purposes of this project.The staff have recommended a principles-based definition of capital structure, although the board has yet to voice its preference. The board will resume its discussions on the project later this month. The International Accounting Standards Board (IASB) looks set to impact pensions accounting under International Accounting Standard 19 (IAS 19), it has emerged.Under the IASB’s Primary Financial Statements Project, one proposed change could see defined benefit (DB) plan sponsors no longer given a choice as to how they display net interest costs.Speaking during a 21 June board meeting, project manager Rachel Knubley said: “In respect of the IAS 19 issue, what we are proposing to do would indeed result in a consequential amendment to remove the classification choice that people have at the moment.”IAS 19 currently permits DB sponsors to choose how they present net-interest cost on the face of the company’s income statement.
Swedish pension providers want more time to adapt to new rules resulting from the EU’s IORP II directive, according to responses to a government proposal.Insurance Sweden (Svensk Försäkring), which counts the country’s main pension providers as its members, said the transitional rules that are to apply following the 1 May deadline for implementation next year should remain applicable for three years, not just the two months envisaged in the draft.“In order for insurance companies to be able to make decisions and gain knowledge of more detailed business conditions, Swedish insurance requires the transitional rules to be extended for occupational pension providers up to and including 2022,” the association said.As well as this, it said the government could consider putting the new rules into effect slightly later than 1 May “in order to ensure that the regulation is appropriate”. The Swedish occupational pension fund association, Tjänstepensionsförbundet, also called for the transitional rules to remain in force until the end of 2022.“The time pressure risks leading to less rational solutions as well as unnecessarily high adjustment costs,” the association said.Insurers split on definitions, solvency rulesHowever, there were differences of opinion on the draft regulation among the members of Insurance Sweden. The association said it did not have a unified position to put forward relating to some basic questions to do with the draft law.“It concerns whether or not the activity of the occupational pension companies is considered to be an insurance business, and some proposals go beyond what is required to implement IORP II,” Insurance Sweden said, referring to this as “gold-plating”.Separate responses to the consultation were presented by Insurance Sweden members AMF, Alecta, and others.The new draft rules go beyond the IORP II directive to include a tougher set of solvency rules. These include a risk-sensitive capital requirement, in line with the requirement in the Swedish Financial Supervisory Authority’s ‘traffic light’ funding model.The new rules also stated that providers of occupational pensions in Sweden should be able to change their pensions business into a new type of company.Providers – including insurance companies, workplace pension savings institutions or friendly societies (tjänstepensionskassor) – could be converted into a new type of entity, known as an occupational pension company, or tjänstepensionsföretag, under certain conditions.Sweden’s government closed its consultation on local implementation of the IORP II directive on Friday.
Source: UK parliamentAmber Rudd, UK secretary of state for work and pensionsRudd added that the dashboard project would eventually “enable people to access their pension information in a single place online, in a clear and simple form”.“Putting individuals in control of their data, pensions dashboards will bring together all pensions information from multiple sources, which can then be accessed at a time of their choosing,” she said. “Our priority is to ensure that information is presented securely, in a clear and simple format to support consumers with their retirement planning.”In its report, the DWP said it expected multiple dashboards to become available from commercial and non-commercial providers, but emphasised that all models would be based on the same “digital architecture” and would display “the same basic information from the same number of schemes”.The department also outlined its expectations for data security, user testing, system design and how each party in the system would be held accountable for providing data.How the industry reacted“After years of talk about the pension dashboard we need to ensure that what is delivered meets people’s expectations from the start. If done properly the dashboard will give people a full understanding of what they have saved. If it is rushed, or we don’t have all interested parties on board from the beginning, there is a risk that we will not be able to deliver something meaningful or credible and the opportunity to engage people will be lost.“In addition, the government’s plan to provide a link to state pension is simply not good enough – pressure needs to be put on HM Revenue & Customs to get the state pension data integrated from day one if the dashboard is to work. The opportunity presented by the dashboard is too important to be lost – we must get it right first time.”– Helen Morrissey, pension specialist, Royal London “This response from the government marks the beginning of the next phase of the pensions dashboard. But let’s not dwell for too long, because we now need to get our collective heads down and crack on if we’re to develop something that really delivers for pension savers.“As always there is a balance to be struck between innovation and consumer protection, but we think the proposal to permit multiple dashboards is a positive step and dovetails nicely with the modern way in which people manage their finances.”– Darren Philp, director of policy and communication, Smart Pension“The pension dashboard is a real game-changer for customers and their engagement with pensions. The dashboard is essential for those who are actively saving into a pension, and for those who have pensions they are no longer contributing to. People will be able to view all of their pension saving information instantly in one place which will make it easier for them to keep track and plan for their future. In time, this could even see the end of the industry-wide issue of lost pension pots.”– David Woollett, head of customer strategy and oversight, Phoenix“We need the pensions dashboard because we need to bring pensions out of the digital stone age. By doing so, the potential for savers is enormous… It won’t be easy, but the achievement of great things never is. With the government now fully committed, and with a sensible route map to success, all must now move forward with confidence, purpose and ambition.”– Alistair McQueen, head of savings and retirement, Aviva “The pensions dashboard has the potential to fundamentally change the way people think, feel and interact with their pension savings. But simply providing a window to view savings isn’t enough. To tackle the growing challenge of small pension pots, the dashboard needs to be built with the functionality to allow savers to easily consolidate their smallest pots with a simple ‘drag and drop.’“The dashboard will only work if it provides a genuinely holistic view of the entirety of an individual’s pension entitlements, including the state pension. We strongly believe that the dashboard should be compulsory and hope the government can navigate this legislation speedily through the current choppy waters in parliament.”– Adrian Boulding, director of policy, NOW: Pensions UK pension schemes will be legally obliged to provide data to new “pension dashboards” under a proposed government framework published today.The Department for Work and Pensions (DWP) said it was “committed to compelling schemes to provide information” through dashboards, and urged pension schemes and providers to begin getting data ready for the first models to be tested this year.A dashboard delivery group will be set up this year under the supervision of the Money and Pensions Service, a government-backed consumer guidance body. This group will then oversee the development of the dashboard project.Legislation would be put to parliament “at the earliest opportunity” to allow for compulsion, the DWP said. Amber Rudd, secretary of state for work and pensions, said in a written statement to parliament this morning that the government expected to see the first workable models developed and tested this year, although pension schemes would be given three or four years to prepare their data for inclusion. The pension dashboard: a roller-coaster journeyThe dashboard concept has had a volatile early-stage development. Last summer, a UK newspaper reported that the previous work and pensions secretary, Esther McVey, was considering ditching the project in favour of other welfare reforms.However, in a remarkable show of support, the pensions sector rallied behind the idea and nearly 90,000 people signed an online petition calling for the government to reconsider. It subsequently backed the dashboard concept but put the emphasis on the industry to develop the models.In a feasibility study published in December, the government made it clear that the pension industry would foot the bill – although chancellor Philip Hammond pledged £5m of government funds to help development work.The Association of British Insurers – which has been leading work on the dashboard concept since 2015, along with technology firm Origo – said in its response to the government’s consultation that dashboards were “seen by the industry as a cost to be incurred for the benefit of consumers”.Nick Reeve