Mirae Asset Global Investments Group – The emerging market equities specialist has hired Jad Shams to the newly created role of head of MENA sales. Based in London, Shams will be responsible for building the firm’s sales distribution network across the region. He was formerly a director with Natixis Global Asset Management in Dubai, a senior investment adviser at Credit Agricole Asset Management in Abu Dhabi and a vice-president at Deutsche Asset Management in Frankfurt.M&G Investments – Claudia Calich has been appointed manager of the M&G Emerging Markets Bond fund, formerly managed by Mike Riddell, who will remain on the fund as deputy manager. For much of the last decade, Calich, who joined in October, worked at Invesco in New York, most recently as head of emerging market debt.State Street Global Advisors – SSgA has appointed three research analysts to its fundamental equity team. Robert Allen joins from private equity firm International Investment and Underwriting, while Eoin Ó hÓgáin joins from Centrica. James Savage joins from Depfa Bank.ING Investment Management International – Marcin Adamczyk joins has senior portfolio manager for emerging market debt (EMD) local currency, based in The Hague. He joins from Dutch fiduciary manager MN, where he was a senior EMD fund manager.Oddo Asset Management – Laurent Denize, currently a senior manager at Oddo Asset Management, has been appointed co-CIO. He will start in her new role on 1 December. He will take responsibility for investment management alongside chief executive Nicolas Chaput.Altius Associates – Rhonda Ryan has been appointed as a partner and head of investment for the EMEA region. She was previously managing director and head of the private funds group for Europe at Pinebridge Investments. Before then, she was head of private equity at Insight Investment.Alceda – Silvia Wagner has been appointed managing director at Alceda Fund Management in Luxembourg, subject to regulator approval. She will be responsible for Structuring & Portfolio Management, Finance & Controlling and Central Administration. Prior to joining, she was head of DWS Distribution Services and a member of the managing board at DWS Finanz-Service.Trinity Street Asset Management – Pauline Stuart has been appointed institutional business director, joining from BNY Mellon Asset Management, where she was executive director of institutional business for the EMEA region. Sean Landers has also been appointed institutional business director, most recently working at BMO Capital Markets, where he set up its US equity sales platform in the UK.Carbon Tracker Initiative – Anthony Hobley has been appointed chief executive at the London-based financial think tank. Hobley, a partner at law firm Norton Rose Fulbright and global head of its sustainability and climate change practice, will formally take the reins on 1 February. Länsförsäkringar, AP3, Schroders, Pioneer Investments, Mirae Asset Global Investments Group, M&G Investments, State Street Global Advisors, ING Investment Management International, Oddo Asset Management, Altius Associates, Alceda, Trinity Street Asset Management, Carbon Tracker InitiativeLänsförsäringar – The pension fund is planning to sign the UN Principles for Responsible Investment in 2014 and has hired Christina Kusoffsky Hillesöy to head up its responsible investment efforts. She joins from AP3, one of the Swedish national buffer funds, where she was head of communications and sustainable investments. She will join Länsförsäkringar on 1 March 2014 and report to finance director Cecilia Ardström. Ardström said Kusoffsky Hillesöy had been the driver behind the successful work on sustainable investments at AP3 and that, with her on board, Länsförsäkringar would sign the UNPRI next year.Schroders – The company has set up an in-house convertible bond team in Zurich. Peter Reinmuth, the fund manager of Schroder ISF Global Convertible Bond and Asian Convertible Bond; Martin Kuehle, product specialist for the two funds; and Urs Reiter, senior convertibles trader; have all transferred to the company. Damien Vermonet has also been appointed as convertible bond fund manager, joining from Acropole AM.Pioneer Investments – Matthias Inderbitzin has been appointed senior wholesale sales manager for Switzerland. He joins from Dendro Partners in Zurich. Before then, he served as head of sales at Falcon Private Bank and senior sales manager of German institutional clients at Lombard Odier & CIE.
The €374bn asset manager and pensions provider APG has appointed Bart Le Blanc as a member of the supervisory board of APG Group. Currently, Le Blanc is a senior partner at Andreas Capital Group in Luxembourg.Over the last 10 years, he has been CFO at nuclear fuel company Urenco and chairman of the executive board at ETC.Previously, he worked for F van Lanschot Bankiers, the European Bank for Reconstruction and Development (EBRD) in London and La Caisse des Dépôts et consignations (CDC) in Paris. Le Blanc started his career in 1973 with the Dutch government, taking a position at the prime minister’s office.He concluded his government career as director general at the Treasury.Until recently, he was on the board of the €309bn civil service scheme ABP – APG’s main client – and a member of its investment and audit committee.Currently, Le Blanc is non-executive director for investments at the €6bn pension fund of telecoms provider KPN, a member of the supervisory board of ETC Nederland and a board member of the GAK institute, a Dutch endowment fund.
The Lancashire Country Pension Fund and the London Pensions Fund Authority (LPFA) have announced a partnership to create a £10bn (€13bn) pooled investment fund as both schemes look for cost savings and improved governance.It comes as the UK government looks to legislate changes to Local Government Pension Schemes (LGPS), aiming to create two collective investment vehicles for listed and alternative investments.Both pension schemes currently employ in-house investment teams and have stated they wish to increase internal investment expertise.The so-called asset and liability partnership will see the funds merge investment expertise and liability management and will eventually cover all areas, including administration. Investments will be run by an external fund authorised by the Financial Conduct Authority (FCA) and owned jointly by the two funds.The £4.9bn LPFA, created by the merger of several legacy pension arrangements stemming from the abolition of the Greater London Authority, now administers around 20,000 members.The £5.3bn Lancashire Pension Fund provides pensions to 150,000 public sector workers in the North-West English county.Susan Martin, chief executive at the LPFA, told IPE that, aside from pooling assets, the new fund would allow the growth of viable asset classes.The partnership will also improve the funds’ governance and administration, she said.“Liability management starts with having accurate data and ends with finding assets that match liabilities,” she said.Martin added that the structure of the partnership and how it would work in practice were still being discussed with Lancashire, with no firm decisions on which personnel from which scheme would lead the investment fund or where it would be situated.She also said both pension funds had to focus on setting up the partnership in the best interest of members and would not seek any additional pension fund contributors until fully operational.The LPFA shaved nearly £400m from its deficit over the year to April on the back of investment returns and the revamping its fund structure.Martin said this was evidence that the two pension funds could scale up and achieve better investment returns and internal cost savings by working together.Councillor Jennifer Mein, leader of the Lancashire County Council, said the partnership would allow the fund to build on its “proactive approach” to asset and liability management.“The government should be using the good practice of funds to drive up the performance of the Local Government Pension Scheme, rather than dumbing down to the average,” she said.The government is expected to announce its decision on the future of the LGPS in early 2015.Both pension funds responded to government consultation suggesting that mandating switches to passive investment was not the answer to reducing deficits in the LGPS, with more collaboration on governance and liability management mooted as a more appropriate solution.Lancashire previously indicated that it would overhaul its asset allocation, earlier this year tendering for transition managers that could handle mandates worth as much as £5bn ahead of “significant” allocation changes.Other London pension funds have also increased collaboration in recent months, announcing the launch of a collective investment vehicle, looking to reduce the cost of external asset management and allow greater exposure to illiquid assets.
The Norwegian municipality of Askøy is considering setting up its own, separate pension fund for employees, once its current arrangement with pension provider Storebrand comes to an end.The local authority, which lies within the county of Hordaland around the west Norwegian city of Bergen, has put out a tender notice on the EU’s TED service, looking for potential service providers for a separate occupational pension fund.Many Norwegian public sector employers have had to look for alternative pension fund provision arrangements for staff since commercial providers Storebrand and DNB Livsforsikring announced two years ago they were pulling out of the public service pensions market.In the tender notice, Askøy kommune said its chief councillor was now preparing a case on the future provider of the occupational pension for employees. The local authority currently has an occupational pension for its employees in Storebrand, it said, adding that the case would be decided by Askøy’s municipal council.“The establishment of a separate pension fund will be a real alternative,” it said.Askøy said it was inviting tenders for a turnkey system for a separate pension fund in accordance with the main tariff agreement in the KS (the Norwegian Association of Local and Regional Authorities) tariff area.This is to include tenders for all the necessary liabilities and assets services, it said, with the exception of the manager, board and auditor.The Askøy municipality pension scheme had 1,750 active members in 2014, and 650 pensioners.Total premiums were NOK115m.The local authority said the contract would be subject to two possible renewals, starting 1 January 2016.It said it envisaged inviting three providers to tender.The deadline for receipt of tenders or requests to participate is 13 April.Following the exits of Storebrand and DNB Livsforsikring, the only external provider that will be left in the sector is Kommunal Landspensjonskasse (KLP).KLP is the second-largest provider of public service pensions in Norway after Statens Pensjonskasse (SPK), and has been expanding rapidly over the last year as municipalities and other public sector employers transfer their existing schemes to it.It has said it is taking in 150,000 new members as a result of the corporate exits by the end of 2014.DNB Livsforsiking has blamed its decision to leave the public service pensions business on the tightening of requirements and regulations, and the intense competition that exists in the market.Storebrand said it would have had to put a high level of investment into systems and processes to continue direct provision of public service pensions.Earlier this month, KLP reported a 100% rise in contributions last year to NOK62.5bn in 2014 from NOK30.9bn the year before, as municipalities continued to transfer their pensions to the scheme.In 2014 alone, KLP said 58 local authorities and 203 public businesses had transferred their pensions to it.Some local authorities have already moved to set up their own pension funds, however.Last October, Tromsø regional council in the north of Norway established the new Tromsø Municipal Pension Fund with 5,000 members and NOK2.5bn in assets under management.
At the present time, these rates are higher than the one applied under IAS19.But German analysts expect the HGB to drop considerably as low interest rates factor more heavily into the HGB’s calculation over time.According to the DVFA’s survey, more than one-third of investment professionals (36.6%) fear that most German companies are failing to adjust to the new interest rate environment or increases in life expectancy.Many in the industry are hoping proposed amendments to accounting standards will help companies cope.Earlier this spring, the German pension fund association (aba) submitted a position paper to the government on this very issue. The aba calls for increasing the calculation period for the discount rate from seven years to 12 years or more. The government has approved the proposal, which could be included in the reform package linked with the implementation of the Portability Directive.These amendments are expected to be presented to Parliament in November and could come into effect before the end of this year.For more on the effects of accounting standards on Germany’s Direktzusage, see the guest viewpoint of former DVFA managing director Peter König in the November issue of IPE German companies are finding the prolonged low-interest-rate environment, combined with an increase in life expectancy, “problematic” or “very problematic”, according to a survey by the DVFA.The DVFA – an industry group for investment professionals – said nearly 90% of respondents to its survey were highly concerned that German companies were failing to adjust. Currently, companies using German accounting standard HGB are able to apply a discount rate to their on-book pension obligations, or Direktzusage, of 3.73% or 4.12%.The Bundesbank sets these rates using the seven-year average of a zero-coupon euro swap with a remaining maturity of 10 years or 15 years, respectively.
The International Financial Reporting Interpretations Committee (FRIC) has confirmed it will not seek to amend discounting rules under International Accounting Standard 19, Employee Benefits (IAS 19).The decision relates to uncertainty regarding the discounting of liabilities when using more than one currency.According the latest IFRIC update, “the committee concluded that the requirements in IAS 19 provide an adequate basis for an entity to determine the discount rate when the entity operates in a country that has adopted another currency as its official or legal currency”.In March the IFRIC proposed rejecting the call for it to start work on a project to develop interpretive guidance on the issue. The IFRS IC launched its probe of the topic after a company in Ecuador sought guidance on discounting its defined benefit liability, as this was denominated in US dollars.IAS 19 requires sponsors to use a high quality corporate bond rate to discount liabilities, or failing that a government bond rate.In the March edition of IFRIC Update, the committee confirmed current discounting practice in those terms.It also added that the discount rate was not meant to reflect the return on assets.Environmental lawyer highlights BoE climate change concernsSeparately, lawyers from environmental campaign group ClientEarth have warned that the Bank of England’s (BoE) policy focus on climate-change risk should serve as wake-up call for companies.ClientEarth corporate lawyer Alice Garton said: “The Bank of England continues its leadership on the financial risks and impacts of climate change. This latest statement reiterates that climate-related loss, mispriced assets and potential disruptions to financial markets must be taken seriously by all market actors, now.”In a quarterly update written by bank staff with responsibility for insurance and cross-border issues, the BoE said that climate change presented financial risks “which impact upon the bank’s objectives”.The bank identified these risks as manifesting through both the physical effects of climate change and the transition to a lower-carbon economy.The update said: “As banks and insurers realign their portfolios and adjust their underwriting practices, this will have consequences across the economy. Businesses and investors not considering these issues will be left behind.”Through its policy response, the bank was working with the sectors affected by climate change, such as insurers, it said.It was also aiming to enhance the resilience of the UK financial system through an orderly market transition to a lower-carbon economy.Recently, environmental NGOs such as ClientEarth, as well as investors, have shown a growing willingness to use the courts where companies fail to match their green commitments with deeds.FTSE 350 firms improve auditsMeanwhile, the UK Financial Reporting Council (FRC) has announced that its reviews of the audit environment among FTSE 350 companies during 2016/17 revealed an improvement in audit quality.Melanie McLaren, executive director at the FRC, said in a statement: “High-quality audit underpins public trust and confidence in business. While the progress made by individual firms differs, all firms are investing in audit quality and have set out further action to improve.”The FRC’s latest update revealed that 81% of the FTSE 350 audits it reviewed in the past year required no more than limited improvements.The FRC wants this figure to reach 90% by 2018-19.Among the areas singled out for improvement were revenue recognition and processes for complying with ethical or independence requirements.The review also noted that auditors must do more to challenge management in areas where significant judgement is exercised, such as impairment, asset valuation and provisions.
It highlighted this as an area of “policy direction” for the European Union, saying the ESAs “should build sufficient expertise on sustainability issues, scenario analysis and general ESG factors related to medium and long-term risks”.It specifically recommended that the role of the ESAs in assessing ESG-related risks be enhanced.The European Systemic Risk Board last year recommended that stress tests of European pension funds cover climate-related risks.The HLEG’s report set out eight recommendations in total in its report.It recommended that the EU develop a classification system and establish an official European standard and label for green bonds and other sustainable assets.Commissioners Valdis Dombrovskis and Jyrki Katainen said in their introduction to the report: “These labels will provide the confidence and trust in sustainable and green products needed for investors to fund the transition to the low-carbon economy.”PensionsEurope, the trade body for European pension funds, welcomed the classification and label recommendations. However, Matti Leppälä, secretary general of the association, cautioned against introducing new rules and obligations for the European pension fund sector, saying that the HLEG’s report included suggestions on revising the European pension fund directive IORP II.“The new IORP II directive includes many provisions on ESG, as part of risk management and investments,” he said. “It would be advisable to first see the impact of these new rules before expanding them.”ESG ‘integral’ part of fiduciary dutyThe HLEG noted that the IORP directive took sustainability issues into account, but said that it and other directives would need to be reviewed to implement “the clarification of fiduciary duty and sustainability”.The HLEG has recommended it be clarified that managing ESG risks is an integral part of fiduciary duty. A single set of principles on fiduciary duty and the related concepts of loyalty and prudence should be established in the European Union, according to the HLEG.Stefanie Pfeifer, chief executive of the Institutional Investors Group on Climate Change (IIGCC), said “the identification, disclosure and effective management of the huge physical and transition risks posed by climate change” must be at the core of any “functional definition” of fiduciary duty.“We therefore endorse the call by HLEG for the recent recommendations from the FSB’s Task Force on Climate-related Disclosures to be integrated in a way that advances EU leadership on this agenda and provides greater legal certainty alongside efforts to ensure an international level playing field,” she said.The other recommendations set out by the HLEG were to:- unlock investments in energy efficiency through relevant accounting rules; – strengthen ESG reporting requirements; – introduce a “sustainability test” for EU financial regulation; and – create an organisation dedicated to developing and structuring infrastructure projects and matching them with investors. The report said the group had identified “dual imperatives” for the European financial system.The Commission said it would start exploring the HLEG’s early recommendations “as of now”.The group is due to present a final report at the end of 2017 and will continue to examine other policy areas, such as integrating sustainability considerations in ratings.The report can be found here. The European Insurance and Occupational Pension Authority could in future include environmental, social and governance (ESG) risks in its stress tests of pension funds, the European Commission-appointed High Level Expert Group (HLEG) on sustainable finance has suggested.The idea was included in a wide-ranging interim report on its work to help develop an EU strategy on sustainable finance, published today.The other European Supervisory Authorities (ESAs) could do the same, the report said, identifying climate-related risks as the most “obvious”.However, this should only happen once “sufficient expertise on sustainability has been built up to avoid undue scenarios and outcomes”, according to the HLEG.
Carillion – a major supplier of services to the UK government – was founded in 1999 and has since acquired a number of other companies, meaning that it is the ultimate sponsor for as many as 14 separate defined benefit pension schemes.The Pension Protection Fund (PPF) is designed to step in to take over DB schemes when their sponsors go bust.However, the nature of the liquidation means that, so far, not all of its subsidiaries have been declared bankrupt. As such, only seven of the 14 schemes have today transferred into the PPF’s assessment period, according to a spokeswoman for the lifeboat fund.The spokeswoman said the schemes in assessment covered roughly 5,900 members (out of a total of 27,500 across all Carillion schemes).The PPF assessment period typically lasts about two years, during which time members’ data is analysed to ensure the correct payments are made, and the scheme’s financial position is assessed to ascertain whether it would be able to pay benefits above the level of PPF compensation. The UK’s pension scheme trade body has called for regulators to “act urgently” to protect defined benefit (DB) scheme members from scams, following the collapse of construction company Carillion.Joe Dabrowski, head of governance and investment at the Pensions and Lifetime Savings Association (PLSA), said the trade body had “already seen warning signs that scammers may be seeking to exploit DB scheme members’ fears about their future”.“We call upon regulators to act urgently to ensure that members are protected, and to take the strongest possible action against unscrupulous companies looking to take advantage of savers,” Dabrowski said. “Transfers should only be undertaken if they are in the best interest of the scheme member and with the right level of guidance.”A spokeswoman for the PLSA later clarified that its concerns related to the wider UK DB sector, and not just Carillion’s schemes. Both the Pensions Regulator (TPR) and the Financial Conduct Authority (FCA) have said that, in most cases, transferring out of a defined benefit (DB) scheme is not the best option.Responding to the PLSA’s concerns, a spokesman for TPR said: “Some members of the pension schemes connected to the Carillion group may be considering transferring their benefits (known as a cash equivalent transfer value) to other pension arrangements rather than staying in their scheme.“However, in this case, some schemes have already transferred to the Pension Protection Fund’s assessment period and so members are no longer eligible to apply for a transfer.”The regulator urged individuals to seek advice before making a decision. Under UK law, those with a pension valued at more than £30,000 (€33,800) must obtain advice from a regulated adviser.The PLSA’s concerns come after the FCA banned a number of financial advice firms from transferring members’ DB pensions to alternative arrangements.Some advice firms and introducers had targeted members of the British Steel Pension Scheme and persuaded thousands of members to exit the scheme as it underwent a restructure.At a hearing in front of a committee of UK politicians in December, the FCA was criticised for not acting quicker to clamp down on inappropriate pension transfer advice – although DB pensions are regulated by TPR.The Pension Advisory Services (TPAS) has established a dedicated Carillion line for pension scheme members: (+44) (0) 207 630 2715. Liquidator PricewaterhouseCoopers has a dedicated web page for the pension schemes available here.Note: This article has been updated following a clarification of the PLSA’s comments.Carillion: A rapidly changing situationThe London-listed construction company collapsed into liquidation yesterday morning after last-minute rescue talks over the weekend failed.
Dutch asset manager PGGM and Switzerland’s UBS Asset Management have partnered to develop an impact measurement framework and methodology that tackles food security, the UN’s second Sustainable Development Goal (SDG).In a joint statement, the investors said they had launched a sponsored research project with Wageningen University & Research (WUR) in the Netherlands and Harvard University in the US.The project aims to build scalable models that can be applied to global listed equities of companies selling technologies to improve agricultural yields and access to nutritious food.The research project was initiated by UBS AM two-and-a-half years ago, after its sustainable development team was selected by PGGM – the asset manager of the €197bn Dutch healthcare scheme PFZW – to manage a €1.5bn mandate of listed equities for its impact strategy. PFZW selected food security as one of its priority areas for investing in solutions with a real-world impact.“With the global population approaching 9bn in 2030, it is evident that providing food poses a great challenge, especially if we consider nutritional quality, access to food and resource productivity,” said Piet Klop, senior adviser for responsible investment at PGGM.“To tackle such a complex issue, we partner with the best in finance and [the] academic community to develop a replicable, science-based methodology for measuring impact in food security.“We are happy to lead the charge and hope to demonstrate that mainstream investors can deliver both market-rate returns and a measurable impact.”WUR, a leading Dutch university focused on healthy food and living environments, will examine the link between technologies produced by listed companies and agriculture yields. Harvard’s TH Chan School of Public Health is building models that provide deprived communities with access to nutritious food.Dinah Koehler, executive director of the global sustainable equities team at UBS AM, said that the research would focus on four food security-related metrics.“Given the complexity of our global food system, building these models is challenging,” she commented. “Based on our experience building impact models for climate change and water, we believe we have established a solid foundation for extending our measurement impact framework.”UBS AM said it also wanted to deploy academic expertise to develop impact measurement methodologies for climate change, air pollution, clean water access and healthcare, in line with other relevant UN SDGs. It has already begun developing models in conjunction with Harvard University.
Source: Wates GroupJames WatesDirectors should foster effective stakeholder relationships aligned to the company’s purpose. The board is responsible for overseeing meaningful engagement with stakeholders, including the workforce, and having regard to their views when taking decisions.Boards should have a clear understanding of the views of shareholders including those with a minority interest. Boards will appreciate the importance of dialogue with the workforce and wider stakeholders around the company’s stated purpose and be proactive in ensuring it takes place.The board should establish clear policies on remuneration structures and practices which should enable effective accountability to shareholders.The board should present to stakeholders a fair, balanced and understandable assessment of the company’s position and prospects and make this available on an annual basis.Boards should ensure that there are channels to receive appropriate feedback from discussions with stakeholders.Wates said: “Good corporate governance is not about box-ticking. It can only be achieved if companies think seriously about why they exist and how they deliver on their purpose, then explain how they go about implementing the principles. That’s the sort of transparency that can build the trust of stakeholders and the general public.”Chris Cummings, chief executive of the Investment Association, the UK’s asset management trade body, added: “It is essential that both private and public companies operate with high standards of corporate governance to promote their long-term success and ultimately that of the UK economy. Recent instances of corporate failure and concerns over governance have damaged the public trust in business as a whole.“These principles provide an important framework for private companies to articulate how they are delivering good governance and will help to build trust and confidence in the UK business community and wider society.”The code is to take effect from 1 January 2019. The Financial Reporting Council (FRC), the UK’s audit regulator, has published a code for the corporate governance of large private companies aimed at helping them meet legal requirements and achieve long-term success.It comes in response to concerns that while privately-owned companies are not subject to the same level of reporting and accountability requirements as publicly listed companies, their economic and social significance can be as great – and when problems occur there are comparable risks to a wide range of stakeholders.The code was developed by a coalition established by the FRC and chaired by James Wates, chairman of Wates Group, the privately-owned construction company.It was intended to help companies comply with recent UK regulations on governance reporting, the FRC said, and applied to companies with more than 2,000 employees, or a turnover of more than £200m (€221m) and a balance sheet of over £2bn. The code listed six “Wates Principles”, covering purpose and leadership, board composition, director responsibilities, opportunity and risk, remuneration, and stakeholder relationships and engagement.Recommendations included: