The BVK, in its most recent newsletter, confirmed that it was working “intensively” to increase transparency regarding its so-called commissions rebates.The pension fund confirmed it had so far negotiated 16 statute-of-limitation waivers with “large asset managers, consultants and custodians”.It said it had already disclosed more than CHF2m in commissions, and that it was currently checking further replies from external service providers.The BVK said it would now widen its investigations to include “mandates under foreign law”.The pension fund stressed that all of its current asset managers and consultants had confirmed in writing that they did not receive any commissions in 2013 in their work for the BVK. Switzerland’s BVK has filed “initial” lawsuits against a number of institutions it says failed to pay back ‘commission rebates’ they received when managing mandates for the CHF27bn (€23bn) public pension fund.A BVK spokesman confirmed to IPE that more would follow “if necessary”, but he declined to provide any further information on lawsuits, filed or pending. The pension fund is the first in Switzerland to take legal action with respect to commission rebates – locally known as Retrozessionen – but ASIP, the country’s pension fund association, said other Swiss schemes were thinking to follow suit.Swiss pension funds, following the recent reform of the second-pillar pension system, must be much more transparent when it comes to the fees and commissions they pay.
The announcement comes after the pension fund tendered for several transition managers.It said it was doing this as it reviewed “various aspects of the investment arrangements” within the fund.Lancashire also recently announced an investment fund merger with the London Pension Fund Authority (LPFA).The funds said they were investigating the possibility of creating a merged £10bn investment fund, as well as combining governance and administration arrangements.In other news, bulk annuity provider Pension Insurance Corporation (PIC) has transferred more than £2bn of liabilities to reinsurers Hannover Re and Reinsurance Group of America (RGA).The reinsurance contracts were conducted over the course of 2014 and shifted risk from PIC to its counterparties.Over 2014, PIC signed several deals, including a £1.6bn buy-in with the Total UK Pension Plan.The company said its £2bn figure was the largest amount of reinsured risk conducted over the course of a calendar year and brings the insurer’s total to more than £7bn.Total’s £1.6bn of liabilities has been fully reinsured with Hannover Re, according to the company.Head of longevity risk Khurram Khan said the company would continue to use large and sometimes complex reinsurance deals to manage the differing aspects of the risk taken on.Liabilities transferred to insurers via bulk annuities are expected to exceed £11bn in 2014, as scheme funding levels improve and market forces encourage competitive pricing.PIC dominated the £7.8bn of liabilities written in 2013, accounting for more than 50% of the market.However, 2014 was dominated by Legal & General, which wrote more than £8.3bn in bulk annuities, including a £2.5bn buyout with TRW. The Lancashire County Pension Fund (LCPF) has tendered a consultancy framework agreement as it looks to review various aspects of its investment arrangements.The £5.3bn (€6.7bn) pension fund said it might make changes to its overall investment strategy, and that the framework agreement would cover eight different “lots” of services, including asset classes for public and private equity, real estate, infrastructure and credit.It will conduct a mini-competition between potential consultancies depending on where framework providers are selected for the different services.The framework agreement will last for four years, and the maximum number of participants has been set at 80.
Dutch pension funds’ coverage ratios plummeted in January, pushing many schemes into funding shortfalls, consultancies have warned. Average funding, according to estimates by Aon Hewitt and Mercer, fell by 5 percentage points over the period, due to persistently low interest rates, the criterion for discounting liabilities.Aon Hewitt concluded that average funding at the end of January came to approximately 103%, while Mercer, drawing on slightly different figures, placed the ratio closer to 104%.The consultancies also attributed the sudden drop in funding to a new accounting method for calculating coverage ratios. Since 1 January, when the Netherlands introduced its new financial assessment framework (FTK), schemes’ funding has been based on actual interest rates while applying the ultimate forward rate (UFR), rather than the three-month average of interest rates plus UFR.In addition, the new FTK came with a ‘policy funding ratio’ – meant as a criterion for rights cuts and indexation – consisting of the average coverage of the previous 12 months.According to Aon Hewitt, policy funding stood at 109% at January-end, while Mercer placed the figure at 109.6%.Explaining the difference between actual coverage and policy coverage, Edward Krijgsman, monitoring team leader at Mercer, pointed out that policy funding still contained an entire year of the three-month average.Krijgsman – together with Frank Driessen, chief commercial officer for retirement and financial management at Aon Hewitt – predicted that the policy funding ratio would fall if the actual coverage failed to improve.Pension funds with less than 110% in policy funding are currently prohibited from granting indexation.Driessen said the ECB’s recently announced quantitative-easing programme had led to a further slide of interest rates and predicted that rates would remain low for “a long time”.Aon Hewitt also noted that the value of Dutch pension funds’ fixed income allocations increased by 5.2% in January, while equity increased by 5.7%.European equity increased by 7.2% over the period.Mercer’s Krijgsman said investors from the euro-zone invested outside the area also benefited from currencies appreciating last month.The US dollar, the British pound and the Japanese yen rose by 7%, 3% and 9%, respectively, against the euro he said.However, the 5.6% increase in the average Dutch portfolio in January was offset by an increase in liabilities of more than 10%, Aon Hewitt said.
European Commission pensions unit, Dutch Financial Markets Authority (AFM), Goldman Sachs Asset Management, BlackRock, Amundi, Credit Suisse, Insight Investment, Aon Hewitt, BMO Global Asset Management, AEW Europe, GE Capital Real Estate, Allianz Real Estate, Macquarie Investment Management, Invesco Asset Management, Xafinity, MercerEuropean Commission pensions unit – Jung-Duk Lichtenberger, co-author of the White Paper on Pensions, is to leave the European Commission’s insurance and pensions unit after seven years. He will remain within the Directorate-General for Financial Stability, Financial Services and Capital Markets Union, overseen by commissioner Jonathan Hill, but take over the currently vacant post of deputy head of the Capital Markets Union unit. Lichtenberger will move to the unit responsible for the development of the CMU next week.Dutch Financial Markets Authority (AFM) – Paul Rosenmöller has been appointed chairman of the RvT, or supervisory board, at communications watchdog AFM. He succeeds George Möller, former chief executive at asset manager Robeco, who stepped down at the end of last year. Rosenmöller is chairman of the VO Council, the lobbying organisation for higher education. He has also been an MP for the GroenLinks party for 13 years and has chaired several parliamentary select committees. Annemarie van Gaal, Rob Becker and Bart Koolstra have also been appointed RvT members, following nominations “based on diversity in knowledge and experience” in financial, legal and social fields. The new members replace Joop Feilzer, Maarten Schönfeld and Henriëtte Prast. Acting chair Diana van Everdingen is to remain as vice-chair.Goldman Sachs Asset Management – Rutger Maenen has been appointed as an executive director on the Benelux institutional team. Van Maenen has been a director at BlackRock for seven years, covering Dutch pension funds and insurance companies. He is a certified European financial analyst. At GSAM, he will be working with Benelux institutional clients. He has also been tasked with business development and client-servicing efforts. Amundi – Tove Bångstad has been appointed head of Nordic clients, responsible for growing business and client relationships in Denmark, Sweden, Finland and Norway. She joins from Credit Suisse, where she was responsible for asset management distribution in the Nordics. Before then, she was head of Aviva Investors Nordics and head of mutual funds and institutions at SEB.Insight Investment – John Rushen has been appointed head of institutional for the EMEA. Based in London, he joins from Aon Hewitt, where he was head of EMEA investment services. Before then, the held senior positions at BlackRock and Mercer.BMO Global Asset Management – David Sloper has been appointed head of product management for the EMEA asset management business. Sloper has 30 years’ investment and fixed income experience, over half of which has been at the Bank of Montreal. Most recently, he was responsible for managing the integration of F&C Investments and BMO Global Asset Management.AEW Europe – The company has expanded its European asset management team with two senior hires. Jean-Philippe Gaudin, based in Paris, has been appointed head of asset management. He joins from GE Capital Real Estate France, where he held a similar position. Thomas Leinberger has been appointed director of asset management at AEW Europe’s new Frankfurt office. He joins from Allianz Real Estate, where he was investment manager of indirect investments for the global CIO team.Macquarie Investment Management – Peter Douvos has been appointed head of EMEA consultant relations. He joins from Invesco Asset Management, where he was responsible for consultant relations. Before then, he held sales roles at UBS Global Asset Management (UK), Standard Bank (South Africa) and Fedsure Life (South Africa).Xafinity – Jonathan Bernstein has been appointed to the senior management team. He joins from Mercer, where he was a senior partner, serving as chief actuary.
“Continued growth in the longevity risk transfer market is inevitable.”Kessler said innovation was behind the growth, with larger transactions becoming easier to structure and pension schemes reducing costs by accessing reinsurance markets directly.Reinsurers transact only with other insurance companies or banks, which means longevity swaps from defined benefit (DB) schemes are intermediated.This changed in the Europe in 2014, with two UK deals that saw direct transactions with reinsurers, either via sponsor insurance companies or insurance cells.Earlier this year, Kessler told IPE that Prudential expected the use of insurance cells instead of transitional mediation to become the new norm for longevity swaps.At the time, Kessler said Prudential had not seen any deals come through using the traditional process – and warned that UK schemes were continuing to flood the global reinsurance market.This allows pension funds to save on costs and benefit from better pricing by avoiding price averaging, which occurs when intermediary insurers or banks engage with several reinsurers to spread credit and counterparty risks, as well as exposure limits.Four of the five deals in 2014 used this process. The spread of longevity risk transfers outward from the UK and North America across other European markets is inevitable, according to a US reinsurance provider.Prudential Financial, a US reinsurance firm, said it expected the nearly $250bn (€224bn) longevity reinsurance market to almost double in five years, fuelled by the spread of the market over the continent.Speaking at the International Longevity Risk and Capital Markets Solutions conference in Lyon, Amy Kessler, head of longevity reinsurance at Prudential, said the market was expanding.“Globalisation is just beginning, with activity spreading quickly from the US, the UK, Canada and the Netherlands to France, Germany, Switzerland, the Nordics, Australia and beyond,” she said.
On the same panel, Hubertus Theile-Ochel, managing partner at Munich-based alternatives boutique Golding Capital Partners, urged investors to make alternatives part of their strategic asset allocation, “even if it is just a small allocation to start their learning process”.He urged a change in the way fees were charged when investing in alternatives, suggesting fees based on actual invested capital rather than on committed capital were the solution.However, Marcus Klug, CIO at Austria’s Bundespensionskasse, the pension fund for civil servants, pointed out he was “looking at alternatives much more opportunistically”, rather than allocating a fixed sum annually.“We are waiting for the right investment to [come along]”, he noted, adding that alternatives were a “very broad area which cannot be thrown into one basket”.Currently, the €700m Bundespensionskasse, mandatory for most civil servants who started work after 1999, has a 12% share of alternatives.Dietmar Lehmann, CIO at Germany’s €3bn VolkswagenStiftung, which is run independently of the carmaker, told delegates he was “rather sobered and disillusioned by active management”.He explained his dissatisfaction by saying: “There is always one excuse or another why the strategies did not work in the end.”He added that a renewed attempt by the foundation employing active management in the small-caps segment was failing, even after a change of manager.Lehmann said: “We have swapped the manager after three years, but the new one is also not living up to expectations a year after hiring.” Pension investors must accept that risks within the alternatives space are no longer being adequately compensated, but should nevertheless continue to invest in such asset classes, according to the chairman of the board at Germany NSN Pension Trust.Speaking at an event for institutional investors in Vienna last week, Thomas Friese said the “bitter pill” of lower returns needed to be swallowed.“Also, in the alternatives space, the best times are behind us,” Friese added, but nevertheless stressing it remained “important to be invested in this segment”, even where investors were not being adequately compensated for the associated risks.At the end of 2015, NSN Pension Trust, the former pension fund for Nokia-Siemens Networks and now responsible for pensions for Nokia’s German staff, had allocated approximately 20% of its €1bn in assets to alternative investments.
Länsförsäkringar, Trygg-Hansa, Assenagon, Quoniam Asset Management, S&P Dow Jones Indices, StoxxLänsförsäkringar – Johan Agerman has been chosen to succeed Sten Dunér, Länsförsäkringar’s chief executive, who is retiring in the course of this year, as already announced. Agerman is currently chief executive at non-life insurer Trygg-Hansa and is a member of the senior management of its parent, non-life insurance company RSA. He will take up his position at Länsförsäkringar next year. Agerman has had a number of roles within the RSA group over the last 14 years, including CIO, head of the private business division and senior positions in IT, telecom and media.Assenagon – Thomas Kramer has been hired to provide sales and institutional-client support for the Benelux and Nordic countries and Switzerland. He joins from Quoniam Asset Management, where he was responsible for institutional business development for German corporates and in other European countries. Before then, he worked within institutional sales at ratings agency S&P.S&P Dow Jones Indices – Eric Zwickel has joined the index provider as director of EMEA asset owners and consultants. Based in the London office, he joins S&P after nine months at Stoxx, where he was director and global head of asset owner and consultant relations. Prior to this, he spent four years as senior investment consultant at Towers Watson, and spent more than a decade working for KBL and its subsidiaries.
The Financial Conduct Authority (FCA) wants to place requirements on asset managers to demonstrate value for money to investors.Oversight boards for investment funds currently “do not robustly consider value for money,” the FCA said in its interim report into its asset management market study.It has proposed an overhaul of internal governance standards for such boards, as well as third-party authorised corporate director (ACD) firms, to ensure they consider value for money issues.Boards should be comparing equivalent retail and institutional share class prices and considering how to pass on economies of scale to investors – using sliding-scale fee arrangements, for example – the FCA said. “There are inherent conflicts of interest limiting the ability of boards and ACD boards to act independently and in the best interest of the fund’s investors,” the regulator stated.New requirements could include “as a minimum”:Consideration of all fees incurred by investors, including transaction costs and ‘box profits’Performing annual reassessments of investment management agreements and renegotiating these where necessaryConsideration of potential alternative fee structuresPublication of an annual report detailing how boards are ensuring value for money, including assessments and negotiationsAmanda Rowland, asset management regulation partner at PwC, said: “This will considerably change the way the market operates and will be an enhancement to existing best practice.“The industry will need to work hard to demonstrate how it already best serves investors and how they intend to meet the concerns expressed.”The FCA has also proposed the introduction of an “all-in fee” for investment funds, taking in all costs, to improve transparency and competition among asset managers.It has invited comments on four different models, including a proposal for asset managers to be forced to pay any costs incurred above the explicit fee charged to investors.The FCA said: “We would welcome feedback on the extent to which competition will provide enough pressure to prevent a single charge resulting in an increase in charges paid by investors or other unintended consequences such as sub-optimal levels of trading or changes to market practices.”Will Goodhart, chief executive at the CFA Society of the UK, said: “There are advantages and disadvantages to each of the four different approaches that are suggested. Rather than regulating a single approach, it might be best here to set a principle and to let consumers decide which approach they prefer. “If different managers and different clients prefer different approaches, it might be better to allow them to settle on these, rather than regulating them into a format that will certainly work well for some but not necessarily for all.”The all-in fee proposal follows a failed attempt by the asset management sector to produce a similar all-in-one cost template.Last year, Daniel Godfrey – then-chief executive of the Investment Association – was forced out of the asset management trade body as some members opposed efforts to develop a single cost figure for retail funds.The FCA later hired Godfrey on a short-term consultancy contract to feed in to its asset management market study.The proposals emerged from the FCA’s asset management market study, designed to assess the competitiveness of the country’s investment industry.The interim report found that price competition between active managers was “weak”.While the majority of the investment fund proposals were aimed at the retail sector, the FCA’s Chris Woolard, director of strategy and competition, likened small pension funds to retail investors in terms of sophistication and understanding of complex structures and products.
Pædagogernes Pension (PBU), the Danish pension fund for education practitioners, has brought in a “zero-tolerance” policy on its staff accepting any kind of gift from current or potential external capital interests – i.e. banks or asset managers – and said it was the first pension fund in the country to do so.PBU, which manages DKK60bn (€8bn) of pension assets, sharpened up its ethical business code from October and included in it a complete ban on free lunches from parties such as banks or asset managers that are investing on behalf of PBU via a contract.Sune Schackenfeldt, chief executive at PBU, said: “Our education practitioners are to have confidence their pension fund unambiguously represents them and acts as their trusted adviser, when it comes to – or could come to – capital interests between us and third parties.” Schackenfeldt is relatively new to the pension fund, having taken over the top role on 1 August from Leif Brask-Rasmussen, who was retiring. He came to PBU from PFA Pension, where he was director.PBU said its zero-tolerance policy meant it would, in future, say a clear no to gifts or external payment for travel, accommodation, lunches or entertainment.It said gifts were extended by these external capital interests – which PBU said were typically banks or other asset managers – when they wanted to be hired to invest on the pension fund’s behalf.With its new ethical code regarding external interests, PBU said it was the first in the pensions sector to tackle a widespread problem in the industry.“The level of presents and invitations from external capital interests – particularly directed at management and investment staff – is a challenge for the whole pensions sector,” Schackenfeldt said.“It is important for our education practitioners to know their interests are the only thing we think about – from the time we get up to the time we go to bed.”When supplier and cooperation agreements are entered into, as well as investment contracts, PBU said it would ensure, as a natural part of risk management, that there had been a compliance check to make sure the zero-tolerance policy had been adhered to.In the UK, the Financial Conduct Authority (FCA) criticised the practice of consultants accepting gifts and hospitality from asset managers in its interim asset-management market study released earlier this month.It said this behaviour was still happening despite previous warnings from the FCA.The supervisor has said it will look further into the matter between now and its final asset-management report.
In 2015, the asset manager shut down its hedge funds programme, following PFZW’s decision to divest completely from the asset class.Bos joined PGGM in 2002 and was appointed chief investment officer two years later.Prior to this, Bos worked at ABN Amro and NIB Capital Management.Wim Kuiken, supervisory chairman at DNB, said he was delighted about Bos’s appointment.“She has a very impressive track record in the financial sector, in particuar at the executive level during the past twelve years,” he said. “She is an authoritative personality with a broad and international network.”DNB said Bos is to start on 1 May 2018 in order to settle in the new job. An econometrist, Bos has been CEO of PGGM since 2012.At the time, she took over from Martin van Rijn, who became the Netherlands’ state secretary for health, welfare and sports.During her period in charge of PGGM, Bos has overseen an expansion of its fiduciary offering as well as a major restructuring of its wider business in 2014. Else Bos, outgoing chief executive of the €207bn asset manager and pensions provider PGGM, has been appointed to the executive board of supervisor De Nederlandsche Bank (DNB) with responsibility for pension fund supervision.She has been appointed for a seven-year period as of 1 July 2018, succeeding Jan Sijbrand, who has held the position since 2011.In her new role, Bos will be tasked with supervisory policy as well as supervision of pension funds and insurers.In May PGGM, the provider for the €187bn healthcare scheme PFZW and the €10bn doctors scheme SPH, announced that Bos would be leaving the company in November to take up “a new position elsewhere”.