Etera restructures after a poor year

first_imgBjörkman is due to take over as managing director of Etera at the beginning of August when the current managing director, Hannu Tarkkonen, retires. He came to the firm at the beginning of February from Aktia Bank, where he was deputy managing director.As part of the restructuring, executive vice president Timo Hietasen will lead the first of Etera’s new business units, increasing his current responsibilities to cover customer relations work as well as insurance.Tuula Kallio, who was Etera’s director of communications, legal affairs and planning, will take charge of the second unit – capacity for work and pensions. Jari Puhakka will continue to serve as leader of investment and corporate finance.Björkman said restructuring consisted of two major elements: ”We have simplified our management structure and are leveraging the new insurance system that is now in operation after a few years of investment and intensive work. Much focus is on retaining our excellent service levels, but with less cost.”He also said there would be no change to the core of the pension insurer’s investment strategy, and Etera still offered a great alternative as a workplace pensions provider.“Our DNA is based on temporary employment and handling varied-job careers. “It’s a good position to build from, especially now that we have the systems to truly support us in this work,” he said.In addition to the three business units, Etera now has four support functions – actuarial services; human resources, communications and legal affairs, information management, and finance and risk control.The management team consists of managing director, three business leaders and chief actuary, it said, with the support unit managers included in the extended management team.Earlier this year, Etera described its investment returns in 2013 of just 0.3% as disappointing and Tarkkonen said the investment strategy had not worked.Etera’s 2013 investment returns were flat, at 0,3%, and its solvency ratio weakened to 15.2% at end-2013 compared with 21.3% the year before. In December, it denied media claims it might merge with another Finnish mutual pension insurance company in 2014. Helsinki-based Etera Mutual Pension Insurance has revamped its organisation with three new business units in a bid to increase efficiency and make the most of its new insurance system.“We are simply looking for efficiencies to the benefit of our customers,” Stefan Björkman, deputy managing director of Etera, told IPE.The company’s three new business units are customer relations and insurance; work capacity and pensions; and investment and corporate finance.The restructuring is part of the company’s Etera 2020 programme which includes savings initiatives as well as investments for the future, Björkman said.last_img read more

Pension funds, actuaries dismiss UK government concern over DB transfers

first_imgWith UK schemes being vast owners of government debt, as well as corporate bonds, any need for trustees to shift assets to maintain appropriate cash levels to match bulk outflows would hamper growth and liability-matching assets.“Given that the stock of defined benefit liabilities and assets exceeds £1.1trn (€1.3trn), even relatively small changes to this stock could have a significant impact on financial markets,” the government said.In response to consultation, the National Association of Pension Funds (NAPF) backed the continued transfer of assets between the two systems.It highlighted a survey among its own members, predominantly UK pension funds, which showed support for continued transfers at 80%, while 54% said they could manage cash transfers without affecting the scheme’s investment strategy.However, the lobby group stipulated that the right should not extend to pensioners.It also argued that any transferring member should be given regulated financial advice, and that trustees must retain the right to set transfer values that reflect the ongoing deficit and investment volatility.The Association of Consulting Actuaries (ACA) backed the NAPF’s stance and said transfers should be allowed for all non-pensioner DB members.“We are not concerned about the potential impact on the corporate debt markets, and the ability of companies to raise capital,” it said.“This is because the demand for bulk annuities from DB schemes will provide ongoing demand for corporate bonds in the same way as for the Gilt markets.”The ACA also said it foresaw severe practical issues if the government imposed a ban and suggested there would be a “huge run” on DB schemes if any ban were not immediate.It also suggested transfers from DB to DC would not materially increase, not until the point of retirement, which would correspond with schemes’ exit from equity markets rather than bond investments.A survey among Mercer clients also strongly backed the continued transfer, as 65% suggested no change should be made to the system.Only 7% said their schemes would sell fixed income assets to fund transfers, while 40% would liquidate equally across all asset classes.Matthew Demwell, partner at Mercer, said: “DB to DC should continue to be permitted. They are a valuable tool to help trustees and sponsors manage DB risk by reducing liabilities and financial uncertainty.”However, while the NAPF called for trustees to continue to set transfer values accounting for scheme deficits, Demwell highlighted the incentive for schemes to be more generous.He said if transfer values were set higher than the minimum statutory requirement but lower than a buyout cost members would be more likely to the consider the option.“It is about finding the sweet spot that does not pay out more than a fair share of the fund, is good enough to make it worthwhile to transfer and does not prejudice the funding position of stayers,” he said. “You could get to a position where everyone wins.”Barnett Waddigham associate Tyron Potts said the firm also did not believe transfers between DB and DC scheme would impact demand for government bonds.“We do not believe demand for transfers will be high, but even so, there will always be demand for government Gilts and corporate bonds as DB schemes enter the de-risking phase,” he said. UK government concerns over the economic impact of allowing continued transfers between defined benefit (DB) and defined contribution (DC) funds have been dismissed by the pensions industry.Concerns were raised after the chancellor George Osborne proposed granting new freedoms to DC savers by allowing the full withdrawal of a pension scheme in cash, and removing the need to annuitise.In its consultation, the government said it feared new freedoms in DC pensions would entice DB savers to move savings across, causing an stir in investment strategies.It already moved to block any transfers from the pay-as-you-go system for public sector workers.last_img read more

Dutch manager PGGM sets out to improve fiduciary services

first_imgHe said a particular challenge would be to reduce the “current lengthy” decision-making process for new investments.Limbach said PGGM’s fiduciary service would not be available as a standalone product, but would be part of the asset manager’s overall package, in alignment with its goal of playing a “prominent role in the consolidation occurring within the Dutch pensions sector”.He added that PGGM would increase its seven-strong fiduciary team to 10 next year.To make the service more visible, it was given the name Fiduciary Advice at the start of this year.Limbach said PGGM had no plans to offer its fiduciary services abroad.The asset manager has been providing fiduciary services since it became independent from its largest client, the €149bn healthcare scheme PFZW, in 2008.Since then, the service has been developed gradually within its overall service package for all clients.These also include the pension funds for general practitioners (SPH), painters and decorators (Schilders), architects and security, as well as the company scheme of Smurfit Kappa, the packaging material manufacturer. PGGM, the €167bn asset manager and pensions provider, has ramped up its fiduciary services for existing and new clients, according to Chris Limbach, head of the fiduciary advice team.Limbach said the company had shifted its fiduciary offering from a “one-step solution to a process comprising several stages”, with the view to giving clients more control over the implementation of their investment policies.He said PGGM aimed to improve the quality of its decision-making processes in light of the growing regulatory burden on its existing six clients. PGGM’s fiduciary approach now addresses the elements of an asset-liability management study (ALM) separately, matching asset classes with a scheme’s specific requirements and mandates, in addition to monitoring and evaluating asset managers, Limbach said.last_img read more

Norwegian pension fund manager KLP divests from coal industry

first_imgNorway’s largest pension fund manager KLP is divesting from coal companies and committing to investing an extra NOK500m (€60m) in increased renewable energy capacity.It said it was doing this to contribute to the “urgently needed” switch from fossil fuel to renewable energy.KLP defines coal companies as coal mining companies and coal-fired power companies that derive a large proportion of their revenues from coal.At the very least, KLP will exclude those with 50% of revenues from coal-based business activities. The names of the companies to be excluded will be published in an updated KLP list on 1 December.KLP’s divestment from coal companies also applies to the KLP funds.The public service pensions provider said preliminary estimates showed the divestment would lead to the sale of shares and bonds worth just under NOK500m.At present, the divestment does not apply to oil and gas companies.KLP said this was because coal companies were considered to have the largest negative impact, both in terms of carbon emissions per unit of energy produced and local pollution in the vicinity of the coal-based facilities, even though there are significant variations between the different types of oil, gas and coal.But KLP also said a withdrawal of investments in oil and gas companies would probably have a material impact on future returns, unlike the retreat from coal company stocks.At the request of the Norwegian municipality of Eide, one of its customers, KLP carried out an assessment on the feasibility of pulling its investments out of oil, gas and coal companies without affecting future returns, in order to contribute to a better environment.The report found no support for the “stranded assets” hypothesis, which posits that investments in companies with major fossil fuel reserves represent a greater financial risk than is normal for this type of undertaking.It said: “On the contrary, a divestment from all fossil fuel companies would significantly increase KLP’s risk, particularly with respect to Norwegian shares.“However, depending on the definition applied, divestment from coal companies alone would not represent any significant financial risk for KLP.”Sverre Thornes, chief executive at KLP, said: “KLP will continue to be an active and engaged owner of the companies in which we invest, with a clear ambition to influence them to take responsibility for lower greenhouse gas emissions.”The KLP Group, with total assets of NOK470bn, is already a major investor in renewable energy, with NOK19bn invested in Norway alone.Last year, it also established a partnership with Norfund for direct investment in renewable energy and finance.The additional NOK500m will be used for direct investments in increased renewable energy capacity in emerging economies, where KLP considers the need to be greatest.last_img read more

DC investors ‘unaware’ of true economic exposure from equities

first_imgSource: Society of Pension ProfessionalsUK defined contribution default fund equity allocationsOld Mutual Asset Management (OMAM) and MSCI partnered the SPP in conducting the study, with the index firm calculating economic exposure from equity indices using company revenue.Olivier Lebleu, head of international business at OMAM, said it was common for DC funds to have significant domestic asset allocation based on the cultural assumption that plan members would prefer this.“The UK case is not abnormal, but what is abnormal is the nature of its stock market – one of the most globally diversified in the world,” he said. “This is where its embedded assumption of DC members slightly breaks down.”Lebleu added that the UK’s defined benefit (DB) sector had used this knowledge for some time, leading to a shift away from UK equity allocation – not just a result of de-risking but a more global mindset.“That thinking has not yet been adopted by DC plans,” he said.Lebleu said it would be difficult to deduce whether the DC plans surveyed could be more efficient by allocating to emerging markets directly, rather than via UK equity-led exposure.“What is clear is that nobody has been able determine whether 20% emerging market exposure from a pure UK portfolio is efficient because the knowledge is not out there,” he said.Steven Kowal, MSCI executive director for indices in EMEA and South Asia, said that, while the UK stock market’s emerging market exposure is not a negative, due to diversification, problems arise from being limited to sector biases for the UK economy.He said DC plans using the UK stock market for global exposure would face consequences from not taking a wider view on allocations, and be limited to larger stocks, missing out on the long-term value added by smaller firms.“This is what happens when you [investors] do not take a global view,” he added.The study also highlighted an impact on allocations based on risk appetite for members, with some DC savers opting for lower-risk default investment funds.Lebleu said the UK stock market had often been seen as cautious due to its relatively lower volatility, over the long term.However, he added: “The UK index has a lot of companies exposed to emerging market revenues, so it may be those past volatility statistics change dramatically. “If that is the case, having a high UK allocation in your cautious portfolio may not be as cautious as it seems.” Members of UK defined contribution (DC) pension funds may be unaware of their equity investments’ global income, as research showed disparity in geographical and economic exposures.The study, published by the UK’s Society of Pension Professionals (SPP), found DC default investment funds invested some £20bn (€25.5bn) in equities, with a 41% allocation to UK-listed stocks.However, this domestic bias is not realised in reality, with the funds’ economic exposure to the UK at just 13.6%.One-quarter of equity value is achieved in North America via an average 19.5% allocation, and 23% from emerging markets despite a 6% allocation. The SPP gathered allocation data from DC default investment funds within its membership and said its report, ‘The Allocation Illusion’, was designed to raise awareness rather than invoke change.Roger Mattingly, former SPP president and initiator of the study, said it was easy for investors to assume geographical allocation would be matched by economic exposure.“This researched is aimed at discovering where the assets are exactly economically exposed,” he said.“If there are problems in Ukraine, [we should know if] that has an impact on member investments, and we just didn’t know the answer.”#*#*Show Fullscreen*#*#last_img read more

PensionDanmark, PKA partner for DKK520m hospital PPP

first_img“In this way our investment will ensure a good, stable return for members over many years,” he said.Jan Østergaard, director of investments at Industriens Pension, said his pension fund was in favour of investing in projects such as this that benefited Danes directly.“In a time when yields are on the floor, and there is uncertainty on the financial markets, this type of investment also fits in well with our ambition to expand our alternative investment activity,” he said.The finished building will be owned by the four pension funds, while MT Højgaard — the design and construction contractor — and DEAS will provide facility management services.MT Højgaard said that in the call for tenders, the Region of Zealand and Slagelse Hospital had emphasised project finance, the quality of construction and related services as well as the financial strength of the partners selected.The new three-storey building will have 16,000m2 of space, and comprise a maternity unit on the ground floor, and beds on the first and second floors.It will provide 140 extra hospital beds, and is expected to be ready for use in January 2018.The partnership has applied for permission to add a fourth floor to the building, but is still awaiting approval for this.In March last year, PensionDanmark, PKA and Sampension announced they were investing DKK430m in a PPP deal to build a new psychiatric hospital in the Jutland town of Vejle.Möger Pedersen said he hoped that this PPP project, together with the one in Vejle and those in other places, would signify a real breakthrough in the PPP model in Denmark.PensionDanmark, PKA and Sampension have made big efforts to promote PPPs in Denmark as a financing and investment model for public works.Back in 2012, the three pension funds created a “one-stop shop” to help public authorities plan such projects. Four Danish pension funds have clubbed together to invest DKK520m (€69.7m) in a hospital building project in the Danish town of Slagelse, in a public-private partnership (PPP) deal that will provide income for the investors over at least 20 years.Labour-market pension funds PensionDanmark, Industriens Pension, PKA and Sampension have formed a consortium with contractor MT Højgaard and property administrator DEAS to build, own and run the new building which will form part of Slagelse Hospital in west Zealand.The contract has been awarded by the Region of Zealand (Region Sjælland), and the deal is still awaiting final official approval.Torben Möger Pedersen, chief executive of PensionDanmark said: “The Region of Zealand will provide security for the economy of the hospital over a long period.last_img read more

OECD says Denmark must step up effort to increase working lives

first_imgBut now, Denmark needed to strengthen incentives to carry on working, by enhancing work incentives for people coming up to retirement as well as for those beyond it.The country also had to provide information so that people could make well-informed choices between work and retirement, and make sure transitory bridging welfare benefits were not used as alternative pathways to an early exit from the labour market, the report said.On the other side of the coin, it said Denmark needed to address barriers to longer employment from the employers’ side.It said steps to be taken included moving ahead with abolishing mandatory retirement ages, and focusing wage setting procedures more on performance and skills and less on age and tenure, particularly in the public sector.Even though the mandatory retirement age of 70 for civil servants was abolished in 2008, such limits still exist in the private sector, the organisation said.In considering how work could be made rewarding for older workers in Denmark, the OECD noted that income testing in the Danish public pension system is quite complex and that it could be difficult for people to see what the consequences their work, saving and retirement decisions would have on their future entitlements.“Moreover, there can be disincentives to work through high simplicity marginal taxes on work, related to a loss of benefits when incomes are relatively high,” it said.Industry association Forsikring og Pension (F&P) welcomed the report and especially its focus on the interplay between the effective taxation of retirees and their decisions on whether to continue working.“It is the high effective taxation on pension savings, particularly close to retirement age, which makes it less attractive to continue working and saving for retirement,” the association said.Jan Hansen, deputy director at F&P, said the guidelines given by the OECD in the report on how the problem could be solved were in line with proposals the association had already made to politicians.“The OECD shows all too clearly that the interaction problem can and must be resolved,” he said.He said Denmark faced serious problems in maintaining its welfare society in the future.“It should pay to work and save for retirement, also for older people close to retirement age,” he added. Denmark needs to make more effort to lengthen the time its citizens remain in the workforce by giving people better incentives to carry on working beyond retirement age, as well as tackling barriers from the employers’ side, according to the OECD.In a report on ageing and employment policies in Denmark, the OECD (Organisation for Economic Co-operation and Development) said: “Further efforts are needed to implement a broader strategy to promote longer working lives.”It said incentives and provisions to retire early had previously been too generous in Denmark, and that this was why the country had been so active in reforming the system in recent years.“The 2006 Welfare Agreement and the 2011 Agreement on Later Retirement are important steps taken to reduce the burden of an ageing population,” the OECD said in the report.last_img read more

Wednesday people roundup

first_imgNewton Investment Management – Matt Pumo has been appointed as head of UK consultant relations as a new addition to the international business development team. Pumo will work alongside Ross Byron-Scott and report to Julian Lyne, recently appointed global head of distribution. He joins Newton from Neuberger Berman and has previously worked at Gartmore Investment Management and Liontrust Asset Management.PGIM Fixed Income – Bas NieuweWeme has joined PGIM Fixed Income as managing director, leading the global client service, consultant relations, distribution, liability-driven investing and marketing teams. He will report to Michael Lillard, head of PGIM Fixed Income. Meanwhile, Peter Cordrey, global head of product management and distribution, will retire in the fourth quarter after 20 years with the company. Veritas – Samuel von Martens has been voted in as a member of the supervisory board of Finnish pension insurance company Veritas, replacing Tony Karlström, who has resigned. Von Martens will continue in the role until the end of 2017, as Karlström resigned in the middle of the term. Franklin Templeton Investments – Charukie Dharmaratne has taken on a new role at Franklin Templeton Investments as senior PR executive, responsible for communications in Europe, the Middle East and Africa. She previously worked at CNC Communications & Network Consulting. BMO Global Asset Management – Otto Donner has been hired by BMO Global Asset Management as sales director for the Nordic Region. Donner joins from East Capital Asset Management, where he was head of sales for the Nordics, and responsible for institutional, wholesale and retail clients across the Nordic countries, Baltics and the UK. In his new job, he reports to Robert Elfström. Columbia Threadneedle Investments – Kath Cates has joined the board of Threadneedle Asset Management Holdings, from 10 May, as well as the board of Threadneedle Investment Services, from 29 March – in both cases becoming a non-executive director. Her most recent executive role was global COO at Standard Chartered Bank, based in Singapore. Cates is also a non-executive director of RSA Insurance Group, where she chairs the board’s risk committee, and a member of the group audit and remuneration committees. In addition to this, she is a non-executive director of Brewin Dolphin. Univest Company (Unilever) – Rogier van Aart has joined Rotterdam-based Univest Company – part of Unilever – where he will advise the Unilever pension funds on strategic and tactical asset allocation. He was previously employed by Aegon Asset Management in The Hague for nearly 11 years, where he had the same role as he is now taking on at Univest.  Martin Currie – Mark Whitehead, head of income at Martin Currie, has joined Alan Porter as co-manager of the Legg Mason IF Martin Currie Global Equity Income Fund. He has also been appointed lead manager of the global equity income investment trust, Securities Trust of Scotland. Whitehead joined Martin Currie last November from Sarasin and Partners, where he was head of the equity income team and lead portfolio manager for the global equity income range.UNEP FI – Eric Usher has been appointed head of the United Nations Environment Programme (UNEP) Finance Initiative (FI), which he has been leading in an interim capacity since 2015. Before becoming head of the UNEP FI Secretariat, Usher was responsible for a programme portfolio advancing new public/private instruments for financing cleaner energy infrastructure and improving energy access. He was seconded to the UN Framework Convention on Climate Change for development of the Green Climate Fund. Before joining UNEP, Usher was general manager of a solar rural-electrification company based in Marrakesh. SPF Beheer, Manulife Asset Management, AXA Investment Management, Lyxor, Unigestion, Newton Investment Management, Neuberger Berman, PGIM Fixed Income, Veritas, Franklin Templeton Investments, BMO Global Asset Management, East Capital Asset Management, Columbia Threadneedle Investments, Univest Company (Unilever), Aegon Asset Management, Duet Group, Martin Currie, UNEP FISPF Beheer – Garry Meulendijks has started as head of actuarial management at SPF Beheer, the €18bn asset manager and pensions provider for railways pension fund SPF and public transport scheme SPOV. He had been working at the actuarial department of SPF Beheer for the past 12 years, most recently as senior actuary. Meulendijks has succeeded Ben de Groot, who has taken early retirement after almost 11 years in the job.Manulife Asset Management – Martin Powis and Alan Burnett have been appointed to distribution roles at Manulife Asset Management for the UK and Ireland, based in the London office. Powis has become head of institutional sales and relationship management, while Burnett is now head of wholesale sales and relationship management. Powis was most recently director of UK institutional sales at AXA Investment Management, covering corporate pension plans and third-party insurance relationships. He has also worked at DB Advisors, Ignis Asset Management and Gartmore Investment. Burnett, meanwhile, previously worked at Lyxor, developing its alternatives and absolute return multi-asset business in the UK wholesale market. Before that, he worked at Martin Currie Investment, Liontrust Asset Management, AXA Asset Management and Deutsche Morgan Grenfell Unit Trust Management.Unigestion – David Chesner has been appointed as a director on the institutional clients alternatives team at Unigestion and will lead the sales strategy for the asset manager’s alternative investment products and services. He joins from international alternative asset manager Duet Group, where was was responsible for client relationships and business development across Europe and Asia. Carlos Stelin is also joining the alternatives team as a director, and he, too, worked at Duet Group previously, having been part of its investor relations team, liaising with European institutional clients. Leila Haddioui has been hired as senior vice-president in the alternatives team, joining the company from Abbeville Partners, where she was responsible for business development. Janice Cheung is another new hire on the alternatives team, becoming sales assistant joining from AXA Investment Managers, where she was part of the UK wholesale sales team. The new alternatives staff will join Caroline Bradshaw, director, who has been with the institutional sales team since 2014.last_img read more

Switzerland’s Profond creates CIO role for more in-house control

first_img“We are active in more areas and investing more ourselves,” he added.  “For all these reasons, we decided we need internal co-ordination, which we feel will give us more control.“We felt the progress and changes we want to make can be achieved more easily with our own CIO.”As of the end of December 2015, Profond had around CHF6bn (€5.4bn) in assets under management, compared with less than CHF1.5bn some 10 years ago. The scheme has around 1,800 companies as members.When asked what changes Profond had in mind, Meyer said “there is no master plan as such” but that part of the point of hiring a CIO was to have someone inside the foundation to develop the scheme’s thinking on investment strategy.“The CIO will be the main motor behind this,” he said, adding that a core responsibility would be to oversee the investment process and the related organisational structure.Whether there will be other personnel or organisational changes remains to be seen, Meyer said.“Our focus,” he added, “is to think about substance.” Swiss multi-employer pension scheme Profond has created the position of CIO, with Christina Böck of AXA Investment Managers appointed to the new role.Böck has been at AXA for more than 15 years, most recently as head of solution strategists for Central Europe, and CIO Switzerland at AXA in Zurich.She will join Profond in mid-August, reporting to the board of trustees.Olaf Meyer, head of the board of trustees at Profond, told IPE the decision to hire a CIO was a reflection of the scheme’s growth and its increasingly complex investments.last_img read more

Danica harvests 15% YTD return from direct investment strategy

first_imgOn top of this, it made further investment commitments to several private equity funds.“Direct investments yielded returns in excess of 15% for the first nine months,” it reported.Alternative investments such as these directly held assets, excluding properties, now account for 14% of the total portfolio underlying unit-linked products, Danica said.Including real estate, that percentage is 21%.Klitgård said Danica had taken a very dedicated approach to alternative investments and that he was pleased to see the strong performance of this sector. “It is a difficult market that requires a wide range of very specific competencies, which we possess at Danica Pension,” he said.Klitgård said the subsidiary’s continuing improvements in its product and the new online services it was devising had contributed to the increased premiums.In Denmark, total premiums for January to September were up by 15% year on year at DKK16.6bn, while total premiums for the Danica Group amounted to DKK24.6bn for the nine-month period, 12% higher year on year.Pre-tax profit was little changed from the previous year at DKK1.46bn, down from the DKK1.49bn profit in the corresponding period in 2015.Danica’s total assets grew to DKK436bn by the end of September from DKK355bn at the end of December 2015. Danske Bank subsidiary Danica Pension said business made good headway in the first nine months of this year, while investments in its new strategy of investment directly in companies generated more than 15% in returns in the period.Per Klitgård, Danica’s group chief executive, said: “We are presenting a satisfactory performance for the first nine months – despite the financial market turmoil experienced during the period.”Reporting interim financial figures, Danica Pension, Denmark’s second-biggest commercial pension provider after PFA, said it registered a 12% increase in its total premiums in the nine-month period compared with the same period last year.Danica said that, year to date, it had invested almost DKK2bn (€269m) directly in Nordic companies in the direct-investment strategy it first announced in the summer of 2014.last_img read more