BNP Paribas Securities Services, the French bank’s pension scheme custodian business, is to launch a depositary banking service in Switzerland.The move will see the provider focus on depositary services for its asset-owning clients domiciled in Switzerland.This latest expansion follows the launch of a similar service in the UK and the Netherlands.In late 2013, it also confirmed the purchase of Commerzbank’s depositary banking arm, giving it access to the German market. Under the Alternative Investment Fund Managers Directive (AIFMD), which came into force in July last year, investment funds not using a UCITS approach much appoint a depositary bank.This is to ensure the safekeeping, cash monitoring and oversight of assets.As AIFMD funds grow in number, with the regulatory rollout continuing across the EU, the number of pension schemes requiring these services increases, fuelling BNP’s strategy.Garrick Smith, who heads up the bank’s new Switzerland operation, cited growing demand for a consolidated approach for operational services such as depotbank and custody.“We have already won our first depotbank mandate in the market, from one of the biggest independent fund of fund managers in Switzerland,” he said. “With this expansion, we underline our commitment to the Swiss market.”This follows a trend of BNP expanding services on the back of changes to regulation.In October 2012, it announced the launch of a local custody service in the US, providing post-trade services to institutional investors.At the time, the bank said the Dodd Frank Act, which implemented reform in response to the financial crisis, created a “whole range of opportunities”.
Erik Valtonen, former CIO at AP3, shares his views on new risk-based approach
Joanne de Graaff, a professional pension fund trustee, has been forced to resign from all posts in the Dutch pensions sector after failing a ‘reliability check’ – or betrouwbaarheidsformulier – by regulator De Nederlandsche Bank (DNB). The DNB’s test was conducted during her reappointment as a member of the supervisory board at SPT, the €1.6bn occupational pension fund for dentists and dental specialists.De Graaff said she failed the check due to a “technicality”.She said mistakenly failed to mention in her CV that she had been a board member of the Pensioen Coöperatie – an initiative to provide pension funds the benefits of scale through cooperation – which went bust in 2009. Although she conceded this had been a “stupid mistake”, she stressed that there had been no evidence suggesting any wrongdoing.“After the Financial Markets Authority communications watchdog alerted me about this omission, I adjusted my CV,” De Graaff said.“However, it did not cross my mind to submit a new ‘reliability’ form, which led the DNB to conclude I was insufficiently reliable.”De Graaff – who has also served as a board member on Zoetwaren, the €1.8bn pension fund for confectioners – said she felt “hurt” by the regulator’s decision and questioned whether it had anything to do with her being “outspoken” about supervision, particularly as applied by the AFM.De Graaff started her pensions career as director of Perfetti, the pension fund of confectioner Van Melle, and continued as chair at Zoetwaren and Verf, the pension fund for the paint and ink industry, which has merged with the €19.3bn PGB.In 2011, she started her own business, HandsonPension, focusing on interim-management for pension funds.Earlier this week, the DNB announced that, over the last four years, more than 50 applicants had failed reliability checks for various positions at Dutch pension funds.These rulings included the case of Jan van Walsem, who in July 2014 claimed the watchdog forced him to step down as chairman of the €5bn pension fund for painters and decorators (Schilders) for having “the wrong attitude”.At the time, Van Walsem claimed he had not been “sufficiently obliging” with respect to the regulator’s recommendations.The DNB was unavailable for a comment.
A Swiss institutional investor has tendered a CHF80m (€76m) small to mid-cap equities strategy, using IPE-Quest.According to search QN1481, the investor asks that the manager focus on the Swiss equity market, and has set an active management investment style requirement.Managers should benchmark against the SPI Small and Middle Companies and select exclusively from this universe, excluding real estate. Stocks must have been listed for at least 12 months. Interested managers would be expected to outperform the set benchmark by an average of 300 basis points per year, over a four-year cycle, net of fees.Submissions should be made by 12 February, with a decision expected by March 2015.In other news, the European Parliament has awarded a contract to Ernst and Young to conduct an actuarial study on a range of its pension schemes.The schemes, which include the retirement benefits for French and Italian MEPs, and the Supplementary Pension Scheme, will now be actuarially assessed by Ernst and Young’s France office.The consulting firm won the tenders for all the separate schemes, beating seven other proposals.A contract for an actuarial study for the Invalidity and Survivors’ Pension Scheme was secured by Deloitte, in Germany, which also beat seven other proposals.The contracts were awarded in January and are expected to last for four years.
The Dutch scheme has almost 5,000 active participants and pensioners.Its coverage ratio at year-end was 131.6%.The pension fund reported a total return on investments of 25.5% for 2014.At the start of 2015, it replaced its final salary plan with average salary arrangements with full indexation.A number of Dutch pension funds are currently considering the possibility of joining or establishing a pan-European pensions vehicle in Belgium due to increasing regulatory pressure in the Netherlands, cheaper supervision and VAT exemption.Pharmaceutical company Johnson & Johnson recently completed the transfer of its Dutch pension fund to Belgium after a three-year long process.Last year, 200 employees and pensioners of the Dutch branch of financial services provider Euroclear joined the Brussels-based company scheme Euroclear Pension Fund OFP. The €2.5bn Dutch pension fund of energy giant ExxonMobil has said it is considering to join its Belgian sister scheme in setting up a cross-border pension fund. It said an initial study had shown that placing its pension arrangements in a joint scheme could cut implementation costs considerably, without any change in the plan or pension obligation.Since 2012, ExxonMobil has maintained two pension funds in the Benelux region: the Stichting Pensioenfonds Protector in the Netherlands and the ExxonMobil OFP in Belgium.Protector said it intended to establish a cross-border scheme in Belgium by extending the current ExxonMobil OFP into an IORP.
Nearly 145,000 had monthly pensionable earnings of less than €1,000, while some 60% were aged 41 years or more.However, Richter expressed surprise that more than 4,000 people with no tax or assessment base had opted in, despite the government’s advising against it.The opt-outs have reduced the number of second-pillar members to around 1.4m.Meanwhile, the six second-pillar fund management companies will have to transfer €541.7m, out of accumulated assets of around €6.4bn at the end of the opt-out window, to the Social Insurance Agency (SIA), which runs Slovakia’s first pillar.The monies will be used to offset the SIA’s deficit.Miroslav Kotov, head of the investment department at Allianz-Slovenska DSS, said: “The opt-out window came as a government reaction to the levels of the first annuities offered in January 2015.”“The combined pensions from the first and second pillars were in most cases lower compared with the potential pension from only the first pillar. This was probably the main driver.”Kotov added that the clients who left were not persuaded otherwise by issues such as the first pillar’s requiring constant subsidies from the state budget, or Slovakia’s highly unfavourable demographic prospects.According to the European Commission’s 2015 Ageing Report, Slovakia’s economic old-age dependency ratio, the inactive population aged 65 and over as a percentage of 15 to 64-year-old employed workers, is projected to rise from 32% in 2015 to 93% by 2060.This is the highest ratio in the EU.Over this period, the population is projected to fall from 5.4m to 4.6m, and the working age population from 3.8m to 2.4m, while the share of over 65 year olds rises from 14.2% to 35.2%.The SIA itself actively promoted opt-outs.Its communications recommended that the second pillar was only beneficial for those who would accumulate at least 25 years of savings, and who earned more than 1.25 times the average wage.It advised the less well paid, those with irregular income and those aged 45 years and over to leave.The Association of Pension Funds Management Companies (ADSS), the trade body for the companies managing second-pillar funds, disputed some of the SIA materials, including the claim real average returns between early 2005 and 2015 were negative.Unlike Poland, where new membership of its reformed second pillar is now restricted, until the next window in 2016, to new labour market entrants, anyone under age 35 in Slovakia can sign up at any time.This includes former fund members, although they would have to start their savings from scratch.According to the National Bank of Slovakia, the sector’s regulator, second-pillar membership increased by more than 17,000 in 2014. Slovakia’s beleaguered second-pillar pension system has undergone yet another sizeable shrinkage following the latest reopening, the fourth since 2008, between 15 March and 15 June.According to labour minister Ján Richter, the number of people opting out totalled 158,310, while 19,288 opted in.This is significantly higher than the 90,000-odd who left in the previous reopening, in 2013.Of those leaving, 32% had not been paying in, for reasons such as unemployment, disability or working abroad.
The assumptions it was proposing would require an increase in the proportion of pay that employers and members contribute for the current package of benefits offered, it added.Currently, active members and employers pay a combined contribution rate of 26% of pay, with the former paying 8% and the latter 18%. Under the proposals being consulted on, the combined required contribution rate would have to increase to 32%-33% of pay, a spokesperson for the scheme confirmed.In a statement, the USS trustee said: “The increase proposed is a significant challenge for our stakeholders, [Universities UK] and University and College Union to address.”The £5bn deficit identified by the USS trustee is considerably lower than the £12.6bn deficit figure the scheme reported in its annual accounts, based on what it calls a monitoring approach. Its annual report and accounts had also revealed a £17.5bn deficit, based on accounting rules. In a follow-up to the publication of the annual report, USS chief execuitive Bill Galvin had said this was not the figure driving benefit and contribution decisions for the scheme. According to the trustee’s consultation statement, USS was expected to grow by £30bn in assets over the over next 20 years. During this time the scheme would continue to reduce its equity allocation proportionate to the growth in the scheme “to ensure that the risks inherent in funding the scheme remain within affordable limits of all the employers”.USS’ investments are currently broadly half in equities, one third in bonds and the balance in infrastructure, property and other assets, the trustee noted. Expectations for future returns were significantly lower than at the time of the valuation, it said.Based on the assets USS plans to hold over the next 20 years and beyond, the trustee is assuming an average annual rate of return to value future pension benefit payments of inflation (Consumer Prices Index) plus 0.9%.This was the main reason why the required contribution rate had increased, it said.The consultation, which is with Universities UK (UUK), the representative body for USS employers, runs until 29 September. The trustee has proposed to keep employer contributions towards the deficit at the current 2.1% of pay.Decisions on any changes to future benefits or contributions will follow later in the valuation process. Any changes would have to be subject to a full consultation with all affected employees by their employers.Once decisions on future benefits have been made the length of the recovery period will be consulted upon.The consultation comes as the parliamentary Work and Pensions Committee, a cross-party group of politicians from the UK’s lower house, has written to the USS trustee board to inquire about its plans to plug the deficit.The committee has also written to The Pensions Regulator and UUK. Its involvement comes as some commentators have raised concerns that tuition fees may need to be raised to fund the deficit. A spokeperson for UUK said: “It is inconceivable that one of the options would be for the tuition fee cap for undergraduate students in England to be increased to address the USS deficit.”“Over the coming months, USS will work with employers (through Universities UK) and employees (through the University and College Union) to understand the options that are available for dealing with both the deficit and the wider increase in pension costs outlined at the 2017 valuation,” she said. Funding future pensions promised by the UK’s universities pension scheme could require an increase of contributions of six to seven percentage points, according to the trustee of the £60bn (€67.1bn) Universities Superannuation Scheme (USS).The information was revealed as the trustee launched a consultation on its proposed assumptions for the latest triennial valuation.These put the USS deficit at just over £5bn, which the trustee said was similar to the figure from March 2014.However, the cost of funding future pension benefits had increased by 35%, it said.
Otto ThoresenThoresen said: “Looking after the long term interests of over 290,000 scheme members, and their dependants, is a very important duty”.Jan du Plessis, chairman of the FTSE 100 company, said Thoresen brought “a wealth of pensions, business and financial experience to the role, alongside his considerable board chairmanship skills”.Du Plessis also thanked the outgoing chairman, saying Spencer had “presided over a strong investment performance and reduced risk during a period of considerable economic and regulatory change”.Thoresen’s appointment comes shortly after Morten Nilsson, formerly of Denmark’s ATP and UK master trust NOW: Pensions, was named chief executive officer of BTPS.Earlier this year the corporate scheme agreed a £13bn funding plan with its sponsor as part of a 13-year plan to plug its funding shortfall. It has also decided to close its (DB) sections and create a hybrid pension plan.NEST confirmed there would be no changes to Thoresen’s chairmanship role at the auto-enrolment provider. He was also the independent reviewer of the Treasury Review of Generic Financial Advice, which led to the creation of the Money Advice Service. The UK’s largest company pension scheme has appointed Otto Thoresen as its new chairman, with effect from mid-February.The £50.7bn (€57.2bn) BT Pension Scheme (BTPS) yesterday announced that Thoresen would succeed Paul Spencer, who was chairman of the telecom company’s defined benefit (DB) scheme for more than seven years.Thoresen is a veteran of the insurance industry, with a particular focus on life and pensions. He is currently chairman of NEST, the multi-employer master trust set up by the government to support auto-enrolment, and also chairs Aberdeen Asset Management Life and Aviva International Insurance. Before starting his portfolio career he was director general of the Association of British Insurers (ABI) from 2011 to 2015, and chief executive of Aegon UK from 2005 to 2011.
Danish pensions lobby group Insurance and Pensions Denmark (IPD) has responded to a new proposal by the government on road traffic emissions reductions by saying the pension industry is ready to invest in the energy infrastructure needed to make it happen.Yesterday, the Ministry of Taxation published a proposal to cut CO2 emissions by one million tonnes in the road transport sector by 2030, employing measures such as changing the way cars are taxed, greener fuel and tolls for lorries.The ministry said the initiative, which it said would mean having 500,000 green cars on Danish roads in 2030 rising to more than a million in 2035, was a step on the way to realising Denmark’s 70% target.At the end of last year, Denmark’s parliament passed a new climate law committing to cut emissions by 70% from 1990 levels by 2030. Kent Damsgaard, IPD chief executive officer, said: “We need to promote far more environmentally-friendly cars, and this requires massive investments in energy infrastructure. The Danish pension industry is ready to look at these investments.”But he said large-scale investments required the establishment of a stable framework.He said his group saw public-private partnership (PPP) investment models as “the way forward,” with private investors contributing capital and execution, and the ownership of the critical infrastructure remaining public.Regardless of the specific goal, IPD said there would be a need for huge investments in the Danish electricity grid to support so many more electric cars.The association also said that better regulation of the electricity grid was one of the recommendations made in the report from the financial sector’s climate partnership.IPD said the government proposal would now go through an intensive round of negotiations with the parliamentary parties.“Whether the goal of the government agreement will be 500,000, 750,000 or even more electric cars is difficult to predict,” Damsgaard said.“One thing is for sure, the energy infrastructure will need massive investments to be able to support the increase, and those investments are interesting for the Danish pension industry,” he said.Looking for IPE’s latest magazine? Read the digital edition here.
AFL player Gary Ablett’s Gold Coast home has gone under contract. Image: AAP/Julian Smith.AFL star Gary Ablett has finally had a win in the property game, with his Gold Coast riverfront estate going under contract.The four-bedroom, four-bathroom house at Ashmore was last advertised for $1.795 million through Danny Stanley of Kollosche Prestige Agents.GET THE LATEST REAL ESTATE NEWS DIRECT TO YOUR INBOX HEREGary Ablett’s house on the Nerang River at Ashmore is under contract.It has been on the market since January last year.It’s expected to have sold at a loss, with records showing the Geelong Cats midfielder paid $1.8 million for the property in 2011.HUGE DROP IN BRISBANE LAND PRICESThe view from Gary Ablett’s Gold Coast riverfront home.More from newsParks and wildlife the new lust-haves post coronavirus18 hours agoNoosa’s best beachfront penthouse is about to hit the market18 hours agoThe home is just six kilometres from the AFL stadium where he signed for the Gold Coast Suns in 2010.Ablett recently left the Suns to return to his boyhood club Geelong, where he began his career in 2002.SECRET DEAL LANDS RECORD PRICE FOR NOOSA BEACH SHACKGary Ablett’s Gold Coast mansion has gone under contract.Set on 3342 sqm of landscaped grounds, it features Bali-style huts, lagoon style pool, cascading water features, full size floodlit tennis court and a self-contained pool house.One of the bathrooms inside Gary Ablett’s Gold Coast home.The home offers 65 metres of river frontage with a floating pontoon on the Nerang River.It comes at the same time as a Geelong home once belonging to his father, Gary Ablett Sr, has also sold.The three-bedroom home at 35 Meadowvale Dr, Grovedale, reportedly fetched $1.07 million.A Balinese style hut beside the pool in Gary Ablett’s Gold Coast property.