NS Stations has announced plans to site branches of the A&P supermarket chain at larger regional stations. The shops would offer products ranging from fresh fruit and vegetables to oven-ready meals.Great North Eastern Railway has introduced a loyalty programme for first class passengers known as Excel Portfolio. Points accumulated at a rate of one per £10 spent on GNER travel can be redeemed against rail and theatre tickets, discounted travel on the Venice Simplon-Orient-Express and other benefits.Shops, cinemas and an hotel have been proposed for a 1·6 ha site over Amtrak lines serving Philadelphia’s 30th Street station. Costing a total of US$115m, the project would require US$50m of federal funding to build a 1000-space car park and widen adjacent streets. Holders of French Railways’ Euraffaires card for business travellers can now change TGV reservations by calling a dedicated phone line before travelling, rather than obtain a new ticket in person. Presented with a first class ticket, the card also affords access to lounges in Bordeaux, Dijon, Lyon, Metz, Nancy, Nantes and Paris. The provincial government of Buenos Aires has called for tenders to build a new combined rail and bus station at Mar del Plata. Costed at 36m pesos and promoted in conjunction with the city council, the project would also involve relocating rail routes through the city centre to avoid level crossings. Anglia Railways has launched its Business Club, with benefits including free seat reservations, discount vouchers for food and drink purchased on board and full refunds in the event of train cancellation or delay exceeding 30min. Membership is free and open to holders of first or standard class open and return tickets and Saver tickets.Den Haag city council is to develop plans for offices, housing and an exhibition hall on a 1 km long deck 7m above the approaches to Centraal station. Capacity would be increased at Centraal for high-speed and light rail services, with a peoplemover built to connect the refurbished station with Den Haag HS.
On the topic of the technical parameters that would help save costs for Swiss pension funds, most respondents cited less regulation.Werner Hertzog, managing director at Aon Hewitt Switzerland, to IPE: “For the first time, they are talking about variable pension payouts or mandatory lump-sum payments upon retirement for parts of the assets.”The data collected by the consultancy showed that the average performance over the last seven years – 2.2% – covered just 80% of the required returns, yet the average pension payout level remained the same.Hertzog said adding a variable pension element to a basic fixed pension was “one possibility to put an end to these transfers” of active members’ assets to retirees.“But it might not be the right solution for all Pensionskassen,” he added.Hertzog said he was convinced that a variable scheme would become “a standard in the above-mandatory segment sooner or later”, especially if pension funds of public organisations such as the SBB were introducing it.”Many Swiss pension experts are sceptical whether the SBB will defy unions and follow through with its proposal to introduce a variable pension element in future contracts. At the energy pension fund PKE, which is introducing a variable element from next year, three-quarters of the active members were in favour of the measure.Ronald Schnurrenberger, managing director at PKE, added: “They are aware it will be themselves who will have to live with this variable pension element of 10% of the payout – we were surprised.”But Brigitte Schmid, managing director of the Swiss Re Pensionskasse, is “completely against” the model, as “you cannot be sure it will really also lead to an increase of the pension payout at times”.“People will feel something is taken from them,” she pointed out, adding that it might be better to lower the technical parameters further.At Swiss Re, she is “rather” looking into a mandatory lump-sum payment on retirement as opposed to a life-long pension payout – “if such a measure is introduced at all”.Markus Hübscher, managing director at SBB Pensionskasse, said the debate always made it sound as if the whole pension payout would be variable in future – “but 90% or even more are fixed”.He argued that Pensionskassen “should not make promises they cannot keep”.According to Hertzog, variable pension payouts can be calibrated in different ways – for example, as an absolute means of last resort if they are combined with an already very low discount rate.“Pensionskassen,” Hertzog said, “should use the flexibilities they still have within the legal framework, and a variable pension element is not about cutting benefits, it’s about risk-sharing of retirees.”For more on Switzerland’s flexible pension payouts, see the December issue of IPE magazine. The topic of variable pension payouts generated a heated debate among delegates at the presentation of this year’s Aon Hewitt pension fund survey in Zurich.This year’s survey, Aon Hewitt’s sixth, canvassed more than 160 Pensionskassen, with more than CHF237bn (€193bn) in combined assets under management.According to Marianne Frei, actuarial expert at the consultancy, the shift from defined benefit (DB) to defined contribution (DC) continues apace.She also highlighted further cuts in technical parameters such as the discount rate ‘technischer Zins’ and the conversion rate ‘Umwandlungssatz’ in those pension funds managing above-mandatory contributions.
The European pensions industry would do well to not cry foul over incoming financial legislation when it has yet to be impacted by major changes, a senior European legislator has said.Markus Ferber, elected deputy chairman of the influential Economic and Monetary Affairs Committee (ECON) within the European Parliament earlier this week, said recent European regulation and directives had offered a number of exemptions to pension funds – to the point where MEPs were accused of “creating a Swiss cheese” of regulation.The MEP, a member of Germany’s governing CDU party, rejected claims that financial legislation had failed to acknowledge its impact on the pensions sector.“I can’t see that,” he told IPE. “If you go through all the legislation we made in the area, we made a lot of exemptions for, especially, pension funds.” Ferber, now in his fifth term as an MEP, has been a member of ECON since 2009, and from 2010 served as rapporteur for the European Market Infrastructure Regulation (EMIR).EMIR eventually granted pension funds a temporary exemption from the obligation to centrally clear over the counter (OTC) derivatives trades.Referencing the exemptions granted the pensions sector, Ferber added: “Some even accused us of creating a Swiss cheese – so I can’t accept this kind of accusation from the sector.”He added: “You don’t have to cry before you’ve been hit. That is sometimes what I hear, especially from this sector – they start crying, but they’ve never been hit.”He also said the Parliament had now done its job with regard to the financial transaction tax (FTT) and that its introduction was a matter for the European Council, comprising the heads of the 28 member states.However, Ferber stressed that the former Parliament had been “fully supportive” of the FTT and said he – alongside newly elected ECON chairman Roberto Gualtieri of Italy’s left-leaning Democratic Party (PD) – had fought for its introduction.He said he believed Italy’s current presidency of the Council of the European Union could mean renewed momentum for the proposal, despite the fact it is supported by only 11 member states, including Germany and Italy. He noted that, in light of its deficit, Italy could be interested in “more internal revenues on the side of tax, and this could be one”.
Vontobel Asset Management – Mondher Bettaieb has been appointed as the Swiss asset manager’s new head of corporate bonds. Bettaieb joined the manager in 2010 and was responsible for its corporate bond mid-yield fund. Previous experience has seen him manage money at AXA Investment Management and Winterthur Asset Management, in addition to working in credit research.Zurich UK Life – Aileen Mathieson has been appointed as linked funds CIO. This is one of two CIO roles in the UK office, with the balance sheet CIO position held by Stuart Tyler. She joins from Nucleus Financial Group, where she was CFO for the last four years. She will move over to the Swiss insurer in November. Cardono Risk Management, NAPF, ALFI, Vontobel Asset Management, Zurich UK LifeCardano – Bart Oldenkamp has stepped down as chief executive after seven years in the role. He will be replaced by ING Bank director of market risk Harold Naus. Oldenkamp is stepping down at the end of September and has said he will take some time before deciding on his next move. Naus leaves ING after 17 years in various risk-management roles.UK National Association of Pension Funds (NAPF) – John Dembitz has been appointed as a non-executive director to the board for the UK industry organisation. Dembitz adds to his portfolio of seven corporate board representations, of which he chairs three. He joins the board as a member from outside the pensions industry, which the NAPF said would complement other board members elected via the membership. He joins a board of 12.ALFI – Marc-André Bechet has joined the Association of the Luxembourg Fund Industry as its new director of legal and tax. He starts at the association next week. Bechet was previously head of investment fund services at Banque Degroof Luxembourg, where he managed fund administration and custody. Before this, he spent 18 years at RBC Dexia.
However, John Hattersley, director at the £5.9bn (€8.2bn) South Yorkshire Pension Fund, said in a meeting late last year that, if pressed, LGPS funds with internal investment capabilities would launch a judicial review were they forced into passive strategies.He told IPE that, while the South Yorkshire fund has not formally raised it internally, he has heard it casually mentioned by a number of LGPS.The South Yorkshire scheme, alongside other Northern English funds such as West Yorkshire, Derbyshire, Greater Manchester, Lancashire and Tyne and Wear, have a long history of internal asset management.Hattersley suggested the South Yorkshire fund would also examine the possibility of becoming a CIV should government legislation go against its wishes.Like many of its peers, the scheme, responding to the government consultation, argued that a mandatory shift to passive would lower standards within the LGPS rather than improve under-performing funds with high costs.Many of the 33 LGPS in London are currently setting up a CIV to pool investments outside of government legislation.Hattersley said funds with internal capabilities should be considered to manage CIVs in order to share experience and protect these capabilities.This could also be utilised if the UK government does force through listed assets and alternatives CIVs.“We are aware some of our peer group are thinking along similar lines, and, if it were an option, it would be one we would want to explore,” Hattersley said.He added that the central government’s delay in making a decision had forced the fund to put its expansion plans to one side.“There is a blight across all LGPS funds,” he said.“In our instance, we have put certain developments on hold, as we want to make sure we know and can see our future, as, like everybody, we are under financial constraints.“We don’t want to do something we would have to unwind fairly quickly if political decisions were taken causing us to do that.”South Yorkshire’s internal team orchestrated an 8.3% investment return over 2014 after strong returns in index-linked Gilts, private equity, property and North American equities.The fund’s £79m absolute return strategy returned 7.9% and made new investments into healthcare, distressed debt and illiquid credit. Local Government Pension Schemes (LGPS) in the UK are considering legal action against the government should it force through a mandatory shift to passive listed investments via collective vehicles.The proposals, first seen last year, have yet to be finalised, with no formal decision expected until after May’s general election due to friction within government departments.As LGPS funds await a formal decision from the government, schemes with in-house investment management teams have been weighing their options, including legal action.Original proposals from the Department for Communities and Local Government (DCLG) recommended the creation of two collective investment vehicles (CIVs) for the 89 LGPS in England and Wales, one for all listed equities and bonds and one for alternatives.
The manager of Norway’s sovereign wealth fund, the Government Pension Fund Global (GPFG), says the fragmentation and increased competition in the stock exchange sector has led to “worrying developments”, and that exchanges must adapt to new circumstances.In a research note on the role of exchanges in well-functioning markets, Norges Bank Investment Management (NBIM), which manages the NOK7.2trn (€793bn) fund, said it wanted exchanges to consider changes, such as a return to local exchanges.NBIM said: “We view exchanges as critical to well-functioning markets, both in their function as listing venues, and as the final arbiter of the price discovery process. “However, if they are to re-assert their central role, they must adapt and innovate to enhance their attractiveness to institutional investors who have supplanted the many small retail investors that exchanges were originally designed to serve,” it said. Its main concerns were that stiffer competition between exchanges and alternative trading systems could lead to poorer regulation and governance and that the efforts by exchanges and dealers to keep up with the speed race could end up harming all market participants.“For-profit exchanges are now challenged to maintain their regulatory and corporate governance duties in this competitive landscape,” it said.As an example of how the push to increase speed of communications could be detrimental, NBIM cited the current speed race amongst providers of network infrastructure, so-called microwave data-link providers.These providers were able to earn increasingly “super-normal” profits, it believed, to the detriment of all financial market participants. “We support efforts to remove complexity that leads to this form of over-investment,” the manager said.”We view the current latency race as ultimately a dead-end,” it said.Efforts by exchanges to increase availability of liquidity in size would be welcome, it said.“Supporting the development of batch auctions and experimenting with size versus time priority models are all initiatives in the right direction, in our view,” it said.NBIM also said it was worried about the fall in the number of listings in the US and Europe in recent years.“We do not believe economies benefit when going public simply means cashing in, rather than raising capital,” it said.It added: “We encourage exchanges to develop new solutions in this area, be they in the form of new listing classes, or potentially even a return to local exchanges.”,WebsitesWe are not responsible for the content of external sitesLink to NBIM research note
“I would like to have a price on carbon at some point,” Andersson told IPE. “It’s not ‘if’, it’s ‘when’, and the sooner the better.”His view was shared by Edward Mason, head of responsible investment for the UK’s Church Commissioners, responsible for the Church of England’s endowments and pension funds.Mason said carbon pricing was “here to stay” but was less certain about how universal its application would be.“It will be patchy, uneven and potentially quite unpredictable,” he said.“There is tremendous value in investors engaging about [carbon pricing].”Andersson argued that a carbon price would alter investors’ behaviour immediately.“Once we have the carbon price, you will immediately see a flow of capital being re-allocated from the fossil industry or the fossil-dependent industry into other sectors – and you will get the companies to address this in an even more serious way.”He cited the success of the “substantial” carbon tax in place in Sweden as evidence that growth and a carbon price were not incompatible.Andersson and Mason were nevertheless positive about the conference’s achievements in Paris.“All of us ignore the collective aspiration of governments at our peril,” Mason said.He praised the inclusion of a ‘ratchet’ mechanism in the final agreement, which will see national reduction targets revisited every five years to scale up the level of reduction – the only way the current carbon-reduction targets, estimated to result in warming of 2.7°C above pre-industrial levels, will be able to meet the 1.5°C target envisaged.Andersson said institutions should also begin “chasing” companies failing to pay enough attention to their carbon footprint.AP4 is a founding member of the Portfolio Decarbonization Coalition, which has attracted support of asset owners worth $3.2trn (€2.9trn), willing to decarbonise $600bn in holdings.Mason agreed with the importance of continued action, citing the need for investors to be “future-makers” and engaging with companies to ensure the new targets are being taken seriously.“If [companies] are not thinking about business plans that are not consistent with a low-carbon economy,” he said, “then there is real risk attached to that.” Asset owners must keep up pressure on governments and regulators to introduce a price for carbon emissions, after the Paris climate agreement failed to commit to concrete action.Mats Andersson, managing director of Sweden’s AP4, said the UN Climate Change Conference was undoubtedly a “great success”.But he argued that the most important matter was not the conference itself but what occurs in the wake of the agreement reached by nearly 200 governments last week.He said a price on carbon was inevitable despite the agreement’s only including wording that recognises the “important role” of reducing carbon emissions through policies such as carbon taxes and emissions trading schemes.
Passively managed pension funds with the lowest costs produced the best outperformance last year, a survey by a Dutch pension research bureau has suggested.The Pensions Rating Agency (TPRA), an independent research group, ran a cost monitor based on 213 of the approximately 235 Dutch schemes last year. The group also found that active management hadn’t resulted in a consistent outperformance.TPRA said asset management costs of the examined pension funds ranged from 0.06% at the Dutch pension fund of ExxonMobil to 1.69% at the Mars scheme.According to the research bureau, the €3.1bn Delta Lloyd Pensioenfonds – which reported costs of 0.12% – outperformed by 1.5 percentage points. The €253m scheme of PepsiCo Netherlands – with costs of 0.17 – exceeded its benchmark by 1.8 percentage points. The €1.4bn Mars Pensioenfonds, which incurred the highest recorded level of costs at 1.69%, still outperformed but only by 1.3 percentage points, TPRA said.The research group reported that the average cost of asset management had dropped two basis points to 0.55% last year.The research bureau found that pension funds had experienced only limited success in driving down their costs of pensions administration: the average cost per participant fell by just €0.13 compared to a year earlier.TPRA’s methodology involved adding costs paid by the sponsor as well as those reported by the pension funds, which it said made the figures more representative.According to TPRA, 93 pension funds had managed to reduce costs by 11% on average, while 99 schemes saw their costs increase by 17% on average.Of the five largest Dutch pension funds, only the €389bn civil service scheme ABP and the €186bn healthcare scheme PFZW – with administration costs of €79.42 and €67.57 per participants respectively – were among the 10 pension funds with the lowest costs.With €133.28, €101.31 and €100.92 per participant respectively, the large metal schemes PME (€45bn in assets) and PMT (€67bn) as well as building sector scheme BpfBOUW (€54bn) incurred costs that were too high for their scale, in the opinion of TPRA.The pension research bureau reported that the causes of rising costs included a drop in the number of participants as well as the introduction of new pension arrangements. However, it also reported that significant savings could be achieved through switching to a new pensions provider.With €1,941.35 per participant, the pension fund of polymer and fibre producer Invista had the highest costs of pensions provision.In contrast, costs at the industry-wide scheme Personeelsdiensten were €42.63 per participant.The group’s survey covering 2015 showed that costs had risen by 5.5% in the wake of the introduction of the new financial assessment framework (nFTK) and the adjustment of the tax-facilitated pensions accrual.
Source: Warwick University UCU branchUCU members striking at Warwick University in 2018 over proposals to shut USS’ DB sectionWriting in response to the interview on USS’ website, Sir David Eastwood, chairman of the USS trustee board, refuted some of Hutton’s claims and said the board was “hugely saddened” by Hutton’s statements.He wrote: “It is important for you to know the board is clear in its view that Professor Hutton’s concerns have no material impact on the decisions that have been made in relation to recent valuations.“Professor Hutton recently decided to recuse herself from the board pending the outcome of an entirely separate and independent investigation into her conduct over an extended period of time. The board commissioned this independent investigation to determine the facts.”Sir David said he wanted to “set the record straight by clarifying that the issues which led to this ongoing investigation are entirely separate from other investigative work examining ‘whistle-blowing’ allegations Professor Hutton has made about the valuation process and outcomes”. Source: UK ParliamentFrank Field, chair of the Work and Pensions Select CommitteeField’s letter came as former trustee Jane Hutton spoke out about her concerns on national radio, prompting a strong rebuttal from USS’ trustee board.In an interview with BBC Radio 4’s Today programme on 26 June, Hutton – a professor of statistics at the University of Warwick – claimed she had been suspended from the board of the defined benefit (DB) scheme after she raised concerns about the way in which USS calculated its deficit.She said: “I’m an internationally recognised statistician. That’s why I was appointed to the [trustee] board, and I’ve simply not been able to get the information I require in order to satisfy myself of the quality of the work. What I have seen is not of a quality I’m happy with.”The £64.4bn (€71.9bn) USS reported a funding deficit of £7.5bn in November 2017, but this shortfall was later lowered to £3.6bn following the panel’s report. While initial plans to shut the defined benefit section of the scheme have been shelved, employers and employees have been asked to accept higher contributions in a bit to plug the shortfall.Hutton has been suspended from the trustee board pending an investigation into what the pension fund claims is an unrelated matter.She told the BBC: “My lawyer in fact asked on 5 June in a letter for precise details of why I’d been suspended. We haven’t received those at all yet. There are simply allegations of misconduct, but those allegations have not been given in detail.” TPR has yet to respond to Mr Field’s letter.In a report published in September last year, the panel criticised TPR for not recognising the collective strength of the 350 higher education establishments that sponsor USS. This had also encouraged an overly cautious approach as USS’ trustee board worked to keep the scheme in line with changing regulations, the panel said. An influential politician has written to the UK’s Pensions Regulator (TPR) to flag concerns about its oversight of the country’s largest pension fund, the Universities Superannuation Scheme (USS).Work and Pensions Select Committee chairman Frank Field wrote to TPR’s new chief executive Charles Counsell this week to question the watchdog’s delayed response to concerns raised by a former trustee about how the scheme’s funding deficit was calculated.In his letter, Field said: “The concerns were first raised with TPR on 20 March 2018. Might you please tell us why TPR did not then write to USS until 3 April 2019?”He added: “The USS Joint Expert Panel said that TPR appeared to have a disproportionate influence on the valuation and may have steered the employer. How does TPR intend to respond to these findings please?”
Sweden’s largest pension fund Alecta has declared its formal opposition to investment in the gambling and tobacco sectors, saying it wants to clarify its position on the issues – despite the fact it has not invested in such companies for years.The SEK960bn (€91bn) pension fund said it would be publishing three statements this month, explaining its investment decisions on commercial gambling, tobacco and human rights, having already done this for other controversial issues of coal, weapons, remuneration within listed companies and government bonds.Because the fund’s investment strategy had to be long-term, the Stockholm-based fund said it had to centre around well-managed sustainable businesses: “But there is also a moral dimension to Alecta’s statements,” it said.Peter Lööw, sustainability manager at Alecta, said: “We have considered that business models involving an increased risk of gambling addiction are not compatible with a broader view of long-term value creation due to high risks of costly losses for both individuals and society.” He said the fund no longer saw coal, for example, as a viable investment option, because it had “passed its best-before date” as an energy source due to its large carbon footprint.However, he said commercial gambling was something Alecta was choosing not to invest in for other reasons.“We have assessed that business models involving an increased risk of gambling addiction are not compatible with a broader view of long-term value creation due to high risks of costly losses for both individuals and society,” Lööw said, adding that there were also regulatory risks in the business model itself.Earlier this month, Norwegian municipal pensions giant KLP announced it was divesting from more companies on the grounds of gambling business, including Hong Kong-listed Landing International Development and Japanese arcade game firm Universal Entertainment Corporation.In March, Swedish pensions and insurance group Folksam said it was blacklisting gambling firms, with its head of responsible investment describing the sector as “a breeding ground for developing gambling addiction”.Looking for IPE’s latest magazine? Read the digital edition here.