UK government bows to internal pressure on DC fees disclosure

first_imgThe UK government will table an amendment to its own pensions reform legislation forcing providers to provide transparency on charges in defined contribution (DC) pension schemes, amid pressure from party hierarchy.An amendment to the Pensions Bill 2013, which is entering its final stages of the parliamentary process, before becoming law, will call for the introduction of measures requiring transparency in transaction charges.The government said this was the latest step in wider plans to ensure savers and consumers received value for money. It added that the extra information provided, as a result of the amendment, would help those running DC schemes see exactly how much they paid for asset management services. The amended Bill moves into the report stage, the penultimate formality of parliamentary processes, this week.It forces the Secretary of State to make regulations that require greater transparency around transaction costs within occupational DC schemes.Current pensions minister and Liberal Democrat Steve Webb will table the amendment.In his written ministerial statement, Webb said the increased transparency enacted by the amendment would ensure fairer charges for those entering workplace DC schemes via auto-enrolment.“We’re taking action to ensure consumers have access to good-quality pension schemes,” Webb added.“A lack of transparency around the true costs of trading can prevent schemes from securing value for money for their members.”The move comes after the Conservative and Liberal Democrat coalition came under a scathing attack from former Conservative heavyweight and chancellor Lord Nigel Lawson.Lawson, who sits in the House of Lords, the UK’s second parliamentary chamber, had called for the government to do more on transparency, suggesting full disclosure was the only way to avoid industry mischief.The amendment has been made to appease Lawson’s calls and ensure the Pensions Bill, which includes legislation on the new single-tier state pension, passes through Parliament on schedule.As the cross-party debate over DC scheme charges, specifically within auto-enrolment schemes, intensifies, this is the second amendment to the Bill in as many weeks.On Thursday, opposition Labour peers tabled an amendment to the Bill, which would force the secretary of state to implement a cap of charges in DC schemes by the end of April 2015.This was in reaction to the UK government’s postponement of plans to cap charges, which were due to be enforced on providers by April this year.The opposition reaction to the cap postponement resulted in accusations that the government was avoiding the cap altogether, as it pushed it too close to the next general election.Reacting to the latest government amendment, opposition and Labour spokesman for pensions, Gregg McClymont, claimed credit for the move, suggesting Webb had given in to Labour pressure.“The government appears to have finally backed down under Labour pressure on transparency over costs and charges,” McClymont said, “but ministers are only implementing half of Labour’s reform agenda. The government’s headlong retreat on bringing in a pensions cap has left savers at real risk of rip-off charges.”last_img read more

Affordability of DB schemes on the up at FTSE 350 companies

first_imgHymans’ figures showed two companies needed more than two years of earnings to cover IAS 19 deficits, including Balfour Beatty – the engineering and construction firm – needing 1,166 days.Some 83% of the FTSE 350 firms could cover deficits with six months of earnings.The security of pension funds, as defined by the size of the IAS 19 deficit in relation to the firm’s market capitalisation, remained stable at 1%, down from 6% in 2009.Hymans said the market capitalisation of the firms with DB outfits stayed around £2.1trn, while earnings increased significantly.“Actual spending on DB pensions has decreased from £16bn (at April 2013) to £15bn (at April 2014),” Hymans Robertson said.In 2014, pension contributions were 25% lower than the firms’ interest payments to service debt and is near 80% lower than dividend payments, Hymans said.Despite the increased affordability of schemes, Hymans Robertson partner Jon Hatchett said companies and schemes should avoid the temptation to storm towards full funding.“It may seem counterintuitive, but racing towards full funding increases risk significantly,” he said.“Slow and steady funding, with limited exposure to investment risk, significantly reduces the possibility of deficits worsening over the next 20 years.“The Pensions Regulator has given the green light to this approach and companies should be strongly considering it,” he added. The affordability of defined benefit (DB) schemes has increased dramatically among the UK’s largest listed companies, with the payoff period for IAS 19 deficits now below 30 days.New research from UK consultancy Hymans Robertson showed the typical FTSE 350 company could now pay off its scheme’s IAS 19 deficit with only 29 days of earnings.This is due to rising earnings with the UK corporate sector, and improved funding levels despite declining bond yields.However, while the average figure for FTSE 350 companies has fallen, the spread among the corporates still raised concern.last_img read more

French pension reserve fund appoints private debt managers

first_imgFrance’s Fonds de Réserve pour les Retraites (FRR) has awarded private debt mandates to Idinvest Partners and Lyxor International Asset Management, marking another step in the €37.2bn pension reserve fund’s rollout of a new allocation to domestic illiquid assets.The mandates awarded to Idinvest and Lyxor were for investment in acquisition-related debt to SMEs or “medium-sized” companies, an additional size category of companies used in France (going by the acronym of “ETI”).Up to €300m could be deployed under the mandates, which are initially for 12 years.The intention is for this money to finance or refinance an acquisition, or an “external growth operation”. FRR intends to announce the outcome of a related tender soon, for private placements.This will also target the financing of domestic SMEs or medium-sized companies.The mandates were put out to tender in May last year.FRR is also looking to award venture capital and private equity mandates as part of its move to build up a portfolio of French illiquid assets following government approval in late 2014/early 2015.Another large French pension investor, civil service pension fund ERAFP, earlier this week announced the outcome of a tender of infrastructure and private equity mandates as it, too, follows up on investment leeway granted by the government.last_img read more

ExxonMobil to enact Church Commissioners’ climate resolution

first_imgEdward Mason, head of responsible investment for the Church Commissioners, said: “We welcome ExxonMobil’s commitment to implement the resolution passed earlier this year and disclose the impact of measures to combat climate change on its portfolio.“Climate change is one of the most significant long-term risks investors face, and it is essential that companies confront the challenge that it poses. We look forward to continuing to work with Exxon and others on this issue.”However, Alice Garton, lawyer with environmental campaign group ClientEarth, said: “Exxon is being sued and investigated across the US for disinformation campaigns that have delayed action on climate change for 30 years, and we continue to see Exxon obstruct strong climate policy across the world.” Garton continued: “Agreeing to publish a ‘plan for a plan’ on climate disclosure this late in the day is not going to cut it. We need to see rigorous reporting, transformational internal climate policy and an end to the lobbying that throttles international climate progress. Let’s face it – fossil fuel intensive business models do not exist in a 2º world. Will the plan say that?” Oil giant ExxonMobil will implement a shareholder resolution on climate change disclosure filed last May by the Church Commissioners for England and the New York State Common Retirement Fund.In a letter to the Securities and Exchange Commission, ExxonMobil committed to provide information to shareholders on “energy demand sensitivities, implications of 2ºC scenarios, and positioning for a lower-carbon future”.The resolution – which called on the company to report on how its portfolio of reserves and resources would be affected by efforts to limit the average rise in global temperatures – was passed by shareholders in defiance of the ExxonMobil board’s recommendation to vote against. A similar resolution had been defeated the previous year.The 2017 resolution was backed by a coalition of institutional investors with a collective $12trn (€10trn) of assets under management, including Dutch pension managers APG and MN. ExxonMobil’s Ringhorne oil riglast_img read more

EC sustainable finance action plan ‘is important’ for pension funds

first_imgSource: Source: EC – Audiovisual Service. Photo: Thierry MonasseCommission vice presidents Valdis Dombrovskis (l) and Jyrki Katainen present the sustainable finance action plan at a press conferenceFollowing recommendations made by the High Level Expert Group (HLEG), the Commission has said it would table a legislative proposal to “clarify” investors’ duties with regard to sustainability. This is subject to the outcome of an impact assessment by the Commission, however.It is not clear if the impact assessment is still ongoing, although it closed for feedback in December. In connection with the assessment, the Commission last year carried out a public consultation on investors’ duties with regard to sustainability. This closed at the end of January.PensionsEurope said the Commission’s action plan foresaw a revision to the IORP II Directive to amend investor duty. The HLEG had suggested the Commission could propose “omnibus” legislation, which would amend various existing EU laws in one go.Matthies Verstegen, policy adviser at PensionsEurope, told IPE that the association had to adapt to the fact that Commission action on investor duties’ with regard to sustainability was now a reality.“We still would prefer to see the ESG measures in IORP II transposed and implemented first, but as the Commission is going ahead we have to look at the details and make it work,” he said.IORP II is the EU’s revised pension fund legislation, which EU member states have to turn into national law by January next year. It contains provisions related to pension funds’ consideration of ESG factors.About the Commission’s action plan, PensionsEurope’s Leppälä said: “The Commission… wants pension funds to incorporate ESG factors in investment decision-making as part of a review of the fiduciary duty, so pension fund board members should expect to give even more consideration to the topic in the future.“At the same time, the EU proposals should remain sufficiently flexible not to upset the role of trustees or social partners. Pension funds’ main purpose will continue to be serving the best interests of their members and to delivering adequate pensions at low costs.”European pension funds employed a wide variety of responsible investment strategies already employed by pension funds, depending on national traditions, the type and size of the fund, the position of the sponsoring company and the role of the social partners, noted PensionsEurope.Verstegen suggested the association would pay close attention to any proposals about pension funds incorporating beneficiaries’ views on ESG matters into their investment decision-making.“There should be sufficient flexibility in finding out members’ preferences, for example through representative bodies or directly,” he told IPE. “It is also not yet clear how pension funds should weigh these preferences against the traditional duty to act in the member’s best interest.”The Commission’s action plan did not speak about pension funds needing to consult members on sustainability and take these views into account. The HLEG, upon whose recommendations the Commission’s action plan is built, did, however, and linked this with its recommendation for investors’ duties with regard to sustainability to be made clear.PRI: Action Plan ‘an opportunity’The Principles for Responsible Investment (PRI) welcomed the Commission’s action plan. Nathan Fabian, director of policy and research at the PRI, said: “From the PRI’s perspective, ESG integration and supportive policy environments must go hand in hand.“It is time for a comprehensive and far-sighted response from policy makers and that is what the Commission appears to be delivering.”Fabian encouraged all PRI signatories to see the Action Plan as an opportunity to improve the functioning and performance of the financial system in the sustainable service of its beneficiaries and savers.“We see sustainability as a financial system imperative,” said Fabian.Fabian was a member of the HLEG that advised the Commission on its sustainable finance strategy.The PRI previously carried out a study of global regulation, concluding that it sent weak signals about ESG and gave the impression stewardship and ESG integration were optional.The language around ESG in the IORP II legislation has been described as inconsistent. In some cases provisions are voluntary or only imposed where ESG factors are already considered, but in several instances ESG-related provisions are mandatory.Francois Barker, partner at law firm Eversheds, has previously said that the law amounted to an “upping of the ante that we haven’t seen before” on ESG. The association – an umbrella organisation for national pension fund associations in Europe – would have preferred a different outcome on the topic of investor duties, however. The European Commission’s sustainable finance action plan “is important” for pension funds, setting forth helpful but also potentially problematic measures, according to PensionsEurope.The association said many of the measures would be beneficial for institutional investors.They would improve the scope of sustainable investments and expand the amount of information available to institutional investors on environmental, social and governance (ESG) aspects of investments, it noted.Matti Leppälä, secretary general of PensionsEurope, said: “[The] Action Plan signals political commitment to an ambitious agenda for a more sustainable financial system. As its end-users, pension funds look forward to those actions that will bolster their responsible investments.”last_img read more

PPF to implement EU ruling on compensation increase

first_imgLast month the PPF said the ruling was likely to increase its liabilities by 1% at most. At the end of March it had a surplus of more than £6bn.In a statement yesterday the compensation fund said it had begun writing to members to confirm its data, but had also put in place an “interim process” in an attempt to address shortfalls in compensation as soon as possible.“Where we find the PPF compensation is less than 50%, we will increase the headline level of our compensation payments until the total value is at least equal to 50% of their expected pension,” the fund said.“Existing PPF indexation and revaluation rules will apply to this increased headline amount. We anticipate that this will be a one-off change needing no further adjustment.” The UK’s Pension Protection Fund (PPF) has begun work on implementing an EU court judgement that will increase benefits for people affected by its annual benefit cap.Last month the Court of Justice of the European Union ruled that the PPF – which compensates members of defined benefit schemes when their company goes bankrupt – must pay its members at least half of their original benefits.The PPF’s rules impose an annual cap on payments – currently £39,000 (€44,500) for a 65-year-old – which in a small number of cases meant members received less than 50% compensation.The lifeboat scheme said it had begun writing to members expected to be affected by the ruling, but admitted it did not know what the overall cost impact would be.last_img read more

Swedish parliament approves buffer fund investment freedoms bill

first_imgThe legislation allows the four funds to put more capital into illiquid or alternative investments than they were previously permitted, and reduced the minimum portfolio allocation they must have to interest-bearing securities to 20% from 30%.It also removed the current requirement for the funds to use external managers for a proportion of their assets.In addition, the law introduces the objective for the funds to manage pensions assets in a way that contributes to sustainable development.The plan to liberalise the funds’ investment rules has been under discussion for several years in various shapes, also forming part of the proposals aired in the wide-ranging buffer fund reform that was ultimately shelved three years ago.The new rules will take effect on 1 January 2019, according to information from the Swedish parliament.Members of the Riksdag from nearly all of Sweden’s many elected political parties voted in favour of the bill; the socialist Left Party (Vänsterpartiet) did not. Sweden’s main buffer funds for the state pension system have obtained legislative approval for their revised mandate, which will open the gate for them to invest more in illiquid and alternative assets.The Swedish parliament (Riksdagen) on Wednesday voted overwhelmingly to pass the bill placed before them, which changes the investment rules for AP1, AP2, AP3 and AP4.Ossian Ekdahl, acting head of communication at AP1, said the Stockholm-based pension fund was pleased that the AP-funds Act had now been changed.“It is good for both current and future Swedish pensioners,” he said, but declined to comment on how, and if, this would change AP1’s portfolio.last_img read more

Kanimbla tops socio-economic index among Cairns suburbs

first_img135 McFarlane Drive, Kanimbla.LEAFY, hilly and accessible – Kanimbla has all the attributes of the popular and friendly Far North Queensland suburb it has proven to be for almost three decades. The area was made its own suburb in 1989, excised from neighbouring Manoora and Mooroobool.Named after MV Kanimbla, a passenger liner which had serviced Cairns before going into military service during World War II, the mostly residential area is close to the CBD, being less than 6km to the west, as well as amenities such as parks, shops, medical centres, in the neighbouring suburbs.The population of more than 2600 residents consists mainly of families and the housing stock is dominated by detached dwellings, many of which are part of new estates in the area.Over the next 10 months, Cairns Regional Council is set to invest more in the suburb with a dog park to be built on Robson St in Drainage Reserve.Earlier this year, the Australian Bureau of Statistics socio-economic index, ranked Kanimbla number one among Cairns suburbs, before Redlynch, Brinsmead, Goldsborough, Wrights Creek and Stratford.More from newsCairns home ticks popular internet search terms2 days agoTen auction results from ‘active’ weekend in Cairns2 days agoThe mountainside suburb provides quick and  convenient access to the brilliant views, and brutal cycling or running workouts from Lake Morris Rd.The relatively new suburb is one of only a few in Cairns to have a median house price in excess of $500,000.The Kanimbla Heights residential estate, started in the early 2000s, has to a large extent underpinned the suburb’s growth.Slightly older homes exist for first-home buyers to get their foot in the market but there is also options all the way up to million-dollar homes that command prestigious locations in the hills, with views and bigger blocks of land.Future development is constrained by hill slopes in the northeast and southwest.The green space in the area is mostly allocated to small neighbourhood parks.The population of Kanimbla is mainly second and third-home buyers.last_img read more

Outer west Brisbane address proves to be hot property

first_imgThe house has a resort-style pool.Video Player is loading.Play VideoPlayNext playlist itemMuteCurrent Time 0:00/Duration 0:37Loaded: 0%Stream Type LIVESeek to live, currently playing liveLIVERemaining Time -0:37 Playback Rate1xChaptersChaptersDescriptionsdescriptions off, selectedCaptionscaptions settings, opens captions settings dialogcaptions off, selectedQuality Levels720p720pHD432p432p270p270p180p180pAutoA, selectedAudio Tracken (Main), selectedFullscreenThis is a modal window.Beginning of dialog window. Escape will cancel and close the window.TextColorWhiteBlackRedGreenBlueYellowMagentaCyanTransparencyOpaqueSemi-TransparentBackgroundColorBlackWhiteRedGreenBlueYellowMagentaCyanTransparencyOpaqueSemi-TransparentTransparentWindowColorBlackWhiteRedGreenBlueYellowMagentaCyanTransparencyTransparentSemi-TransparentOpaqueFont Size50%75%100%125%150%175%200%300%400%Text Edge StyleNoneRaisedDepressedUniformDropshadowFont FamilyProportional Sans-SerifMonospace Sans-SerifProportional SerifMonospace SerifCasualScriptSmall CapsReset restore all settings to the default valuesDoneClose Modal DialogEnd of dialog window.This is a modal window. This modal can be closed by pressing the Escape key or activating the close button.Close Modal DialogThis is a modal window. This modal can be closed by pressing the Escape key or activating the close button.PlayMuteCurrent Time 0:00/Duration 0:00Loaded: 0%Stream Type LIVESeek to live, currently playing liveLIVERemaining Time -0:00 Playback Rate1xFullscreenWhy moving to a ‘sister suburb’ can save you money00:37 The house at 151 Banksia Drive, Mount Crosby, sold for $841,250.BUYERS are getting more bang for their buck at Mount Crosby — and they are starting to realise it.Property is in hot demand in the outer-west suburb, with Place Graceville’s Karen Simons saying those on the house hunt have realised just how good value for money the area is. The kitchen at 151 Banksia Drive, Mount Crosby.“I think it’s a fairly undervalued area,” Ms Simons said.“You get a lot of home for a little price.”More from newsDigital inspection tool proves a property boon for REA website3 Apr 2020The Camira homestead where kids roamed free28 May 2019The recent sale of 151 Banksia Drive reflected that trend, with four written offers after the first open home, and 40 groups through at inspections over two weeks.“We had incredible interest,” Ms Simons said.“Out there, if you get half a dozen through at inspections you’re pretty happy, so that was a huge number of inspections.”center_img Inside 151 Banksia Drive, Mount Crosby.The property, which is on a 6524sq m block, sold for $841,250.Ms Simons said the demand was so high for the property that they were currently negotiating an off market deal with another vendor in the area.“We had so many buyers left over who were really disappointed.“It just goes to show when people see a good product in a good location, they’re prepared to step up and pay what it’s worth.”last_img read more

Southerners head north

first_imgCorey, Wil, Cooper and Teresa Hope. TOWNSVILLE builder Martin Locke says the Far North’s laid back lifestyle is drawing many families here.The Martin Locke Homes boss said he had noticed an influx in clients moving their families to Townsville, with five recent “lifestyle change” builds in Eden Park Estate alone.Two of those builds, were in the same street with both families moving here from Sydney, an occurrence not experienced in the company’s eight-year history.“It’s an interesting situation to be building for two families at the same time, in the same estate, in the same street, with the same idea of completing a lifestyle change from Sydney to Townsville,” Mr Locke said.More from news01:21Buyer demand explodes in Townsville’s 2019 flood-affected suburbs12 Sep 202001:21‘Giant surge’ in new home sales lifts Townsville property market10 Sep 2020“Such was the commitment and level of trust between our team and both families, that we were able to complete the majority of their designs, colour choices and constructions while the clients still lived interstate.“We’re currently also building another home just around the corner for a couple who has relocated from Brisbane. We have just handed over the keys to a couple who have moved from Mackay and we have recently signed a new client moving from Ingham too – all in Eden Park Estate.”The Hope family are making the move north from interstate for the slower-paced lifestyle.The Hopes lived interstate for the duration of their build and mum Teresa even attended handover day via a FaceTime call. They will move in permanently just in time to spend their first Christmas in Townsville.“For us the timing was right with the ages of our children and where they are at school and also for where we are in our careers,” Mrs Hope said. “It was really the change of pace and lifestyle that attracted us to Townsville.“It’s just beautiful up here and we now have a house that will function for us going forward. Because MLH builds their homes to cater for generational change, whether it’s older parents that live with us one day or it’s just us becoming old and needing to get around easier, we know this home will allow for what life brings.”last_img read more

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