Jacob confirmed it would only be applicable to contracts entered into after implementation, not existing pension plan memberships.But Withold Galinat, vice-president of Benefits Policies & Coordination at German chemical group BASF SE, said the directive was “dispensable and unattractive”, offering the wrong incentives for HR policies.“The directive favours those that already have occupational pension benefits and increases hurdles for those that do not have one yet,” he said.He said he feared the new regulation would make it unattractive for employers to set up pension plans and argued it would “not help to promote occupational pensions”.Similar to other pension industry representatives in Germany, he claimed that lowering the vesting period from the current five years to three, as set down in the draft of the Portability Directive, would lead to a flight of human capital and greater fluctuation.“Employers might reconsider setting up a pension plan and rather top up people’s salaries with bonus payments,” Galinat said.But Jacob argued that it was “inacceptable” that people who were changing their jobs more often could not profit from occupational pensions.He pointed out that vesting periods in the Netherlands were shorter than in Germany, and said occupational pension schemes remained attractive for employers because the regulatory framework, as well as the tax environment ensured this attractiveness.Jacob also dismissed arguments that the directive would only profit a very small minority of workers who were actually going cross-border, as “most member states have announced they will not discriminate” between domestic and cross-border migration when implementing the new regulations.Georg Thurnes, board member at Aon Hewitt Germany, stressed that a solution would have to be found to the provision that exempts closed schemes from the directive, as this could lead to companies closing pension schemes, he said. The European Parliament is to vote on the current draft of the Portability Directive in its last plenary before dissolution ahead of parliamentary elections in April, confirmed the Rapporteur in charge of the directive, Ria Oomen Ruijten, in Brussels today.Similarly, Ralf Jacob, head of unit for Active ageing, pensions, healthcare and social services at the European Commission, noted at the Handelsblatt meeting in Berlin yesterday that the vote would take place “at the beginning of April”.“Member states will then have four years after it has been published in the official journal to translate the directive into national law,” he added.Five years after that, they will have to report to the Commission.
At the IPE Awards in Berlin in 2016, Wiesner was presented with the Gold Award for Outstanding Industry Contribution.One judge commented at the time: “An impressive record and outstanding career, creating a pioneering role for the Bosch scheme in Germany and Europe.”Wiesner was the brains behind restructuring the pension plans at the German Bosch Group by making pension payouts more flexible.Following his studies in law, Wiesner started at Bosch in 1985 as an employment lawyer. In 1991 he went on to head the department for company benefit plans. In 2002 Bosch set up the first Pensionsfonds for a German industrial company and Wiesner became its first chief executive.Apart from his roles at Bosch and aba, Wiesner also was the first employer representative on EIOPA’s Occupational Stakeholder Group (OPSG).Wiesner was never shy to discuss his ideas in public. For IPE he was an important partner in understanding German pensions, promoting new concepts and cross-border pensions.In his post-retirement interview with IPE at the end of 2015 he said: “A lot has already been done in Germany to bring occupational pensions up to date but there is still very much to do. I am an optimist and in this role I have contributed my fair share.”IPE expresses deepest sympathies to Wiesner’s family, friends and colleagues. The European pension sector has lost one of its most active participants, an important promoter of cross-border pensions and a pioneer in modernising occupational pension systems: Bernhard Wiesner died last weekend aged 62 in an accident on his motorbike in Mallorca, his chosen retirement refuge.In 2015 Wiesner announced his intention to retire after more than a quarter of a century in pensions.He retained his position on the board of the German occupational pension association (aba), which he had held since 2003.On behalf of aba, chairman Heribert Karch issued a condolence note on the “tragic accident” and expressed “deepest sympathy” to Wiesner’s family.
The planned European Central Bank (ECB) regulation on statutory reporting requirements for pension schemes could lead to extensive reporting obligations – and considerable additional costs – for pension institutions, according to speakers at a recent roundtable event in Frankfurt.The regulation is to be adopted in the second half of 2017.Speaking at the roundtable held by German think-tank Pensionsakademie, Roberto Cruccolini, adviser on economic policy issues at the German association of local and church pension schemes (AKA), said: “Initial estimates indicate that up to 30% of the annual management costs for investment, or up to 15% of the annual general administrative costs, could be incurred for implementation, depending on the institution, as well as a substantial increase in the running costs, for example for constant maintenance of IT systems, although these are hard to estimate.”According to Cruccolini, IT systems would need to be aligned with the new ECB requirements to provide consistent transaction data on the total inventory of pension portfolios. This would mean additional programming expenses or even the purchase of new IT systems, which would lead to considerable additional costs. Cruccolini suggested that the ECB and national central banks should make sure the additional reporting requirements were relevant in order to keep the additional costs to a minimum.He said: “It would be desirable for the ECB to set the scope, detail, frequency, and deadlines of the future reporting requirements with care and consideration for the future reporters – i.e. the pension institutions – and to respect the proportionality principle by designating thresholds for insignificant positions and small institutions.”Andreas Fritz, chairman of Pensionskasse für die deutsche Wirtschaft, a €1.7bn multi-employer pension provider, also had a critical take on the planned ECB reporting obligations.“From a cost perspective every additional regulatory or reporting obligation that does not serve the operational business is one obligation too many, especially for small companies,” he said. “There is no benefit to be seen for those supplying the data nor is the envisaged merger of asset-liability data based on any internationally recognised standard.”Cruccolini described the requirements currently planned by the ECB as extremely problematic and of doubtful necessity.According to Cruccolini, considerable practical problems would arise when different systems – such as pay-as-you-go or part-funded systems – were grouped together or institutions switched their system of financing. This would cast serious doubt on the value of liability data, he said.He said a sectoral and geographic breakdown, as well as the planned fair value measurement of liabilities, would only be an additional burden since this data was not already collected or prepared in this form for supervisory purposes. Furthermore, many institutions would currently be unable to meet a seven week reporting deadline.Karl-Peter Bertzel, chairman of the Board of Pensionkasse Berolina, the pension fund for Unilever Germany, said it was important to engage early with the future ECB reporting obligations in order to assess the possible costs and to search for efficient ways to implement the ECB’s reporting requirements in dialogue with other reporting parties or in collaboration with the various trade associations.Among other things, one could draw on the insurance industry’s experience with the reporting obligations and gain insights into possible demands on pension institutions, according to Bertzel.Insurers have been required to submit statistics since 2016, after a corresponding EU regulation was adopted in 2014. Holger Bennewiz, chief investment officer at Athene Lebensversicherung, a life insurer, gave an insurer’s perspective on the reporting obligations. In his view, parallels could reasonably be drawn with the planned ECB reporting requirements for pension funds, which could be faced with a similar catalogue of requirements.This article originally appeared on IPE’s sister website, Institutional-Investment.de, and is available here.
Royal London is to convert its existing business in Ireland into a subsidiary to allow the insurer to continue to do business in the Irish market once Britain leaves the EU in a year’s time.The UK’s largest mutual insurer – with funds under management of more than £100bn (€115bn) – said last week it was confident that there would be no “significant impact to the operations or capital strength of the group”.The company said: “We are in the process of establishing a subsidiary in the Republic of Ireland to enable our existing business to trade there after the UK leaves the EU. This mitigates any uncertainty for Royal London from the UK leaving the EU.”The move comes as the countdown to Brexit pushes past the 12-month mark and UK financial services companies increasingly seek ways to remain part of the wider EU market. Ireland has been among many European countries actively seeking to attract UK companies in the wake of the 2016 referendum result. It is already home to €2.4trn in assets, according to the European Fund and Asset Management Association, making it the second biggest fund domicile in the EU after Luxembourg.Earlier this year, Michael D’Arcy, minister of state at Ireland’s Department of Finance, told CNBC, the US news channel: “We’re saying to people, if there are difficulties, Ireland can be part of the solution for passporting.”In the first 12 months following the June 2016 referendum, lobby group Manufacturing Northern Ireland estimated that more than 100,000 UK companies had registered in Ireland.
Source: CEM Benchmarking #*#*Show Fullscreen*#*# Hedge funds underperformed a simple equity/debt index over the last 17 years by 1.27% once their hefty fees were taken into account, according to an assessment of major international investors.CEM Benchmarking analysed the realised hedge fund portfolio returns from 382 large global investors in the 17 years up to 2016, and found that only 36% of portfolios examined beat the company’s equity/debt optimised index over the period after taking account of fees.Before fees, the average outperformance over the period was 1.45%, but this was wiped out by costs of 2.72%, CEM said.The figures came from its Hedge Fund Reality Check survey, as well as results of a one-off survey of 27 leading pension funds. The investors in the study typically paid 2.2% in direct hedge fund fees in 2016, and 3.26% for those using fund-of-funds structures. Funds-of-funds underperformed by 2.11% after costs over the 17-year period, CEM said.Alexander Beath, senior research analyst at CEM and lead author of the study, said: “Although some investors have invested in hedge funds because they are supposedly uncorrelated, our research suggests that most hedge funds, at the total portfolio level, behave remarkably like simple equity/debt blends.”Many pension funds could buy a passive alternative at a low cost with very similar risk and return characteristics, he said.Back in 2000, CEM Benchmarking said only around 2% of large institutional investors had money invested in hedge funds but this had grown to 50% by 2016.Of the 36% of hedge funds that did beat CEM’s benchmark after costs, the company said these investors “generally had long histories with hedge funds, portfolios with lower correlation to equity/debt blends, and lower-cost direct hedge funds”. Source: CEM Benchmarkingn
Listed companies paid a record $497.4bn (€435.1bn) in dividends in the second quarter of this year, according to Janus Henderson Investors.The asset manager’s Global Dividend Index reported record dividend totals in 12 countries in the period, including for France, Japan and the US. European companies outside the UK paid a record $176.5bn.Year-on-year growth was 12.9% in dollar terms, the company said. Although currency “exaggerated the headline performance”, Janus Henderson reported underlying growth of 9.5% – the index’s fastest increase in three years. Ben Lofthouse, head of global equity income at Janus Henderson, said the growth was mostly due to “ongoing economic and earnings growth”. He added that, despite trade tensions between governments and regions, “we are still optimistic that in aggregate corporate earnings can continue to grow next year, and payout ratios in key parts of the world like Japan have scope to rise further too”.“Dividends in any case are less volatile than profits, and we are confident that 2019 will see the global total continue to rise in underlying terms,” Lofthouse said. “The trajectory of the dollar may affect the headline growth rate next year, but exchange-rate fluctuations have little impact over the longer term.”Within Europe, total dividend payouts hit record levels in France, Germany, Switzerland, the Netherlands, Belgium, Denmark and Ireland, Janus Henderson said.The company said it expected underlying total dividend payments to increase by 7.4% in 2018, compared with 2017’s total. In dollar terms the company did not change its forecast for the year, however, as the strengthening dollar was expected to offset this improvement.Janus Henderson estimated that $1.36trn would be paid out in 2018.According to consultancy group Mercer’s latest European Asset Allocation Survey, European defined benefit pension schemes allocated an average 28% of their portfolios to equities. This ranged from 10% in Denmark to 45% in Belgium. Source: Janus Henderson Investors
MITT, the €3.2bn Dutch pension fund for the textile sector, said it wanted to temporarily reduce annual pensions accrual from 1.6% to 1.5% in order to minimise the chance of rights cuts in 2021.It explained that the measure would set the scheme on a course to a funding of 100% at 2020-end.The pension fund had to come up with a new contribution proposal after it had charged a premium of 24% of the pensionable salary in the past five years.“Continuing the current arrangements is likely to lead to a coverage ratio of 99% at the end of next year, which would mean a 1% cut if the minimum required funding were to be 100%,” explained Gaby Lammers, the pension fund’s chair. “Preventing this is very important. As we need to raise our contribution to a costs-covering level, and also must factor in lower future returns on investments, we already expected a significant premium rise for 2021,” he pointed out.The contribution increase must enable annual pensions accrual to return to 1.6%.Recently, social affairs’ minister Wouter Koolmees decided to temporarily reduce the minimum required funding to 90% in order to avoid a reduction of pension rights and pensions pending the elaboration of the pensions agreement set in June.In the direct wake of the accord, the minister had already decided to decrease the minimum required coverage from 104.3% to 100% for the same reason.Aegon to switch to IDC plan for its staffDutch insurer Aegon has confirmed that it wants to switch pensions accrual for its 3,800 staff from an insured plan to individual defined contribution (IDC) arrangements.It said continuing the current insured pension plan – carried out by the sponsor – was no longer affordable.The trade unions as well as the central works council (COR) have approved the plan.The unions said the employer had declined to discuss the alternatives suggested by them, including joining a consolidation vehicle (APF) or an industry-wide pension fund.Aegon, which has a low-cost defined contribution vehicle – Aegon Cappital – said it hadn’t yet completed the selection process for a new provider.The recent negotiations between Aegon and the unions in particular focussed on the compensation of workers for the shift of risks to staff.Although Aegon insisted that it would come up with a compensation deal, it declined to provide details.Trade union De Unie, in turn, said its members weren’t very satisfied with the compensation proposal, but they had agreed because it was the best result achievable.The new IDC plan is to come with an age-dependent contribution.
The council saw several signs that competition for pensions in Denmark could be improved, he said, with commercial companies appearing to have relatively high earnings while also having expensive asset management in terms of overall costs.At the same time, most Danish labour-market pension companies were not exposed to competition, Schultz said.“The vast majority of Danes’ pension schemes follow the agreements entered into by their place of employment – that is, the companies, or the social partners. It is therefore primarily these players, rather than the individual saver, who can contribute to strengthening competition,” he said.As things stood, Schultz said, it was hard for decision makers to make an informed choice of pension provider, in the case of both labour-market and company pensions.“We propose independent ongoing evaluations of pension companies that manage compulsory, savings-based pension savings – also in view of the fact that the pension companies manage a substantial part of national wealth and around [DKK1.3trn] of the state’s money in the form of deferred tax,” Schultz said.The council said it had identified several steps to strengthen competition for labour-market pensions for the benefit of the savers, including setting up a working group to develop a model that could make sure company pension schemes were priced more cost-effectively.Currently these schemes were typically made up of cheap insurance products and expensive asset management, Schultz said.“This makes comparison of pension provision more difficult and can be a barrier for new players in the pension market,” he added.On the topic of intermediaries, he said that while brokers were very important for competition for company pensions, it was “a major challenge” that they did not always create competition for the significant task of advising savers afterwards, with the big brokers typically taking on that advisory role themselves.“It hampers competition when savers find it difficult to change company,” Schultz went on.For this reason, he said the council was proposing solutions be found to enable a larger share of the collective savings capital to be moved, and to make it easier to move retirement pensions and retirement savings to another company once the saver had retired. The Danish Consumer and Competition Authority has put forward a range of proposals to make it easier to move collective pension savings from one provider to another, after finding that there are real restrictions to competition in the DKK2.9trn (€388bn) non-statutory pensions market.It its 342-page study of the sector, which the watchdog started working on in June 2017, the authority said there were big gains to be made from improving competition between pension companies, made 22 recommendations aimed at strengthening competiveness.Christian Schultz, chair of the agency’s Competition Council, which has overall responsibility for the authority, said: “Denmark has one of the world’s best pension systems. However, our analysis shows that it can be even better.“There is little competition for the management of non-statutory pension savings. In total, they amount to [DKK2.9trn], so even small efficiency improvements will bring big benefits to both savers and society,” he said.
John Preston at LPFAThe LPFA is a defined benefit local government pension scheme with more than 88,000 members, 142 actively contributing employers and assets of £6bn (€7bn).Together with Lancashire County Council, the organisation is also a shareholder of the Local Pensions Partnership (LPP), which manages the assets of, and administers, the LPFA scheme.He said: “We will carry on our working with LPP to ensure that we provide efficient administration services to all clients and the scheme will continue to invest prudently and be recognised for our approach to responsible investment.”The LPFA is a Tier 1 signatory to the UK’s Stewardship Code, a signatory of Climate Action 100+, a member of the Local Authority Pension Fund Forum (LAPFF) and is a participant in the C40 Cities Divest Invest Forum. John Preston, chair of the Sainsbury’s defined benefit pension scheme, has joined the London Pensions Fund Authority (LPFA) as chair. He replaces Sir Merrick Cockell, who stepped down last December after four years in the role and nine years on the LPFA board.Preston is a fellow of the Institute of Chartered Accountants in England and Wales and a council member and past president of the Chartered Institute of Taxation.He spent 23 years as a partner at PwC working on global clients within financial services and other industries.He held several management positions within PwC’s lines of service including chief operating officer, head of risk and quality, financial services market leader and global head of external relations, regulation and policy. In addition to his role as chair of the LPFA, he is also chair of the Medical Research Council pension scheme. He will continue at Sainsbury’s DB scheme.His other roles include treasurer and council member of the University of Bath.
QUU’s Michelle Cull inside one of the restored dunnies. Picture: SuppliedMore from newsParks and wildlife the new lust-haves post coronavirus16 hours agoNoosa’s best beachfront penthouse is about to hit the market16 hours agoQUU, which has been shortlisted for a PRIA award for its Great Australian Dunny Search, has found a way to ensure the humble outdoor dunny continues to be celebrated, creating a special Looseum at the Luggage Point Sewage Treatment Plant in Brisbane.“The backyard dunny is such a great Aussie icon and we wanted to preserve this important piece of history before it disappeared.” Kids playing cricket with a 100-year-old backyard dunny used as wickets. Delilah Williams bowls to Finn Crawford-Clayton as Dexter Williams and Ida Mellows do the fielding. Picture: AAP Image/Mark Calleja.ITS occupants have been spooked by redback spiders, snakes and even canetoads springing out of nowhere, but the humble outdoor dunny has found a way to live on.According to Queensland Urban Utilities, Brisbane homes were still using outside dunnies right through until the early 1970s.Spokeswoman Michelle Cull told The Courier-Mail that it was an important reminder of just how far Brisbane had come in the past 40 years.“Brisbane was sewered quite late compared to other major cities,” she said. “We still had thunderboxes up until late 1960s and early 1970s.” On the market for $220,000 is 33 Hodgson St, Maryvale which has an outside septic loo set up in the traditional dunny style building.“I think most people are quite happy to see a flushing inside toilet. The vast majority now are indoors and people that do still have them have converted them to toolsheds and the like. Some people are just keeping them because they love them. It’s a piece of history.”QUU has about 500,000 properties in its service region stretching from Brisbane to Ipswich, Scenic Rim, Lockyer Valley and Somerset, though the number of actual flushing toilets may be much more. “A lot of homes have two or three toilets,” Ms Cull said. A 2.91ha backyard built for entertaining atSouth Isis near Childers is on the market for $690,000 complete with an entertainment house and its own separate outdoor dunny.“We had lots of really funny dunny stories about night soil men, we heard about pranks paid on parents, scary trips to the dunny in the middle of the night. We then set about rescuing an restoring a number of dunnies, three in particular that we restored through the Men’s Shed at Wynnum-Manly.”Despite all the goodwill, Ms Cull does not believe backyard dunnies in their old form will ever make a comeback. Follow Sophie Foster on Twitter Stunning picture of dunnies lined up in backyards of housing commission houses at Norman Park in Brisbane.circa 1950. Picture: Supplied“In those days people had to walk right down the backyard, they often used old newspaper for toilet paper, put sawdust in after they did their business and then once a week the pans would be collected by the nightsoil men. Someone had to do it. It’s really not that long ago.” MORE: Lounge aquatica Three dunnies restored as part of the Great Backyard Dunny Search now sitting pretty at Australia’s first Looseum. Picture: SuppliedThey launched a nationwide appeal, and received over 200 submissions from across the country of dunnies surviving in backyards.“We flushed out lots of dunny history. We uncovered more than 120 still standing across Australia. Some of them are still being used, but as tool sheds, chicken coops, though there was also the rare dunny still in use.” QLD home built into the mountain Video Player is loading.Play VideoPlayNext playlist itemMuteCurrent Time 0:00/Duration 0:51Loaded: 0%Stream Type LIVESeek to live, currently playing liveLIVERemaining Time -0:51 Playback Rate1xChaptersChaptersDescriptionsdescriptions off, selectedCaptionscaptions settings, opens captions settings dialogcaptions off, selectedQuality Levels720p720pHD576p576p432p432p270p270pAutoA, selectedAudio Tracken (Main), selectedFullscreenThis is a modal window.Beginning of dialog window. 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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 Rate1xFullscreenStarting your hunt for a dream home00:51