BP Pension Trustees, CPB, AZL, BNY Mellon Asset Management, Macquarie Infrastructure & Real Assets, Heartwood Investment Management, Spängler IQAM Invest, LCH.Clearnet, Social Housing Pension SchemeBP Pension Trustees – Keith Shepherd is to join the executive team overseen by Sally Bridgeland, chief executive of BP’s £15bn (€17.5bn) UK pension fund. Shepherd will join in the new year, according to a spokesman for the scheme. He was most recently CIO at RPMI, joining as head of investment management in 2006. He also spent five years as head of private equity at the Wellcome Trust’s endowment and worked in the treasury department of the City of Edinburgh Council for a decade. The BP spokesman said Shepherd’s new role would involve identifying new investment strategies for the fund.CPB – Bas ter Weel has been appointed deputy director of the Dutch Bureau for Economic Policy Analysis (CPB). On 1 December, he is to succeed Casper van Ewijk, who has left to become director of Netspar, the research network for pensions, ageing and retirement. Currently, Van Weel is head of Labour and Education at the CPB.AZL – Michel van Elk has been appointed chairman of the supervisory board at pensions provider AZL. Van Elk succeeded Henri den Boer – former director of pensions at AZL’s parent company Nationale Nederlanden – who left the company last summer. Previously, Van Elk was chief marketing officer and chief executive at ING Investment Management Europe. BNY Mellon Asset Management – Heneg Parthenay has been appointed chief operating office, based in London. He joins from Aviva, where he has worked for eight years, latterly on the executive team at Aviva Investors. Before then, he worked in the insurance division of Renault and Axa Corporate Solutions.Macquarie Infrastructure & Real Assets – John Bruen has been appointed managing director of the London office. He joins from Ferrovial Aeropuertos, where he was corporate development director in Madrid. Before then, he was a director in the Structured Finance team at Royal Bank of Canada.Spängler IQAM Invest – The Austrian asset manager Spängler IQAM Invest has finalised the merger with its subsidiary IQAM Invest Asset Management. Both companies had been cooperating since 2007 and now have combined assets under management of €5.8bn. The new Spängler IQAM Invest will continue to operate with the same management board consisting of Werner Eder, Markus Ploner and Thomas Steinberger.LCH.Clearnet – Suneel Bakhshi has been appointed group chief executive. Subject to regulatory approval, he is expected to join in early 2014, at which point Jacques Aigrain, interim executive chairman, will resume his position as non-executive chairman of LCH.Clearnet Group, alongside his role as non-executive director of London Stock Exchange Group.Heartwood Investment Management – Guy Davies has been appointed head of charities. He joins from Evercore Pan-Asset, where he was head of charities, trusts and private clients. Before then, he was head of charities and philanthropy at Barclays Wealth. Social Housing Pension Scheme (SHPS) – Colin Small and Liz Hughes have been re-elected to the SHPS committee. Small has worked in the social housing sector for more than 35 years, holding various senior roles at a number of housing associations. His most recent full-time appointments were at Festival Housing and Touchstone as finance director. Hughes is the executive director of People and Resourcing at Metropolitan Housing Trust.ECM Asset Management – The multi-asset credit investor owned by Wells Fargo has appointed Cristiano Mela as an investment analyst covering Industrials. Before joining ECM, he spent six years at Deutsche Bank Corporate Investment Banking.
However, pension plans managing mandatory, as well as above-mandatory, contributions can lower the conversion rate for the above-mandatory part as long as the minimum benefit level stays the same for the mandatory part.Towers Watson said the variety of conversion rates was “surprising”, ranging from 5.49% to 7.1% for people aged 65.Additionally, more than 80% of the SLI companies now have a conversion rate below the legal minimum – two years ago, it was only 70%.To ensure the minimum benefit level, companies have increased contributions to the schemes, both for employers as well as employees.Further, the consultancy found more and more companies are introducing flexible elements to their pension plans, enabling employees to choose among various contribution levels according to their own personal situations.The average employee contribution rate has increased slightly from 4.8% in 2009 to 5.1% this year.The question of the correct conversion rate has been on the political agenda for several years now in Switzerland and is included in the latest reform package proposed by the government. Swiss listed companies continue to cut their conversion rates (Umwandlungssatz) and are raising employer and employee contributions to maintain benefit levels, according to a study by Towers Watson.The consultancy found that the average conversion rate, used to calculate pension payouts, in the plans of the companies listed in the Swiss SMI index sunk from 6.6% in 2009 to 6.36%.Among the 30 largest companies – the SLI segment – of the index, the conversion rate was even lower, at 6.32%.This means the average conversion rate is now much lower than the legal minimum rate set for 2014 at 6.8%.
Large cross-border pension funds would be better equipped to enter the lending market than their national counterparts, the European Insurance and Occupational Pensions Authority’s head of policy has suggested.Speaking at the annual conference for the aba, Germany’s pension association, Justin Wray sought to highlight the benefits of a more unified, European pensions market.Wray, who prior to joining EIOPA was head of pensions administration and governance at the UK Pensions Regulator, also spoke of the possibility of pension funds filling the gap left by the banking sector’s reduction in lending.“It is not, of course, the case that pension funds can easily take the place of banks in areas such as infrastructure investment,” he said. “But it is important to consider that it would be easier for larger, pan-European pension funds to do so, with the benefits of scale. And the ability to acquire expertise would be easier in a genuinely European market than on a purely national basis.” Wray noted that, as the number of schemes operating across national boundaries currently barely exceeded 80, it could not be argued they accounted for a significant number of the nearly 140,000 IORPs across the European Union.“On that basis, not only is the number of cross-border IORPs very low, but what is perhaps of even greater significance is that the number has barely changed in the last five years,” he said.“Whatever the ambitions of the first IORP Directive might have been to make easier cross-border pensions, we have to be honest and accept it has not succeeded.”A number of pension investors have grown their exposure to loans since the 2008 financial crisis, with the UK’s East Riding Pension Fund recently telling IPE it expected the retreat of banks to last for up to 10 years.Institutions across Europe have already been active in lending to small and medium-sized enterprises (SMEs), with the Irish National Pensions Reserve Fund a year ago investing €500m in three funds aiding domestic firms.The €36bn Fonds de Réserve pour les Retraites in France last summer also confirmed it had committed €120m to an SME financing fund backed by the government and insurance industry, while the Danish pension association F&P recently struck an agreement with its government to promote SME lending among local pension funds.Italy’s PensPlan, meanwhile, launched a fund investing in corporate bonds of SMEs in the South Tyrol region.
In carrying out the mandate, asset managers should either use hard currency only, local currency only, or a blended product, the search stipulates.While the mandate is for government bonds, the consultant said a limited allocation to corporates or quasi-sovereigns would be allowed.The final closing date for the search is 8 April at 5pm UK time, and a short-list will be selected on 29 May. After that, the deadline for RFPs will be 30 July, with the board making its final selection on 23 September.The IPE news team is unable to answer any further questions about IPE Quest tender notices to protect the interests of clients conducting the search. To obtain information direct from IPE Quest, please contact Jayna Vishram on +44 (0) 20 7261 4630 or email email@example.com. A consultant based in Switzerland is looking for an asset manager to take on a $30m (€27m) mandate for global emerging market government bonds, according to a search on IPE Quest.The mandate is for core investment using an active process, with the preferred benchmark being the JPMorgan Government Bond Index-Emerging Markets.The search does not name the consultant or provide information about any investor client.Firms responding to the search should have a track record of at least one year, although three years’ history would be preferred.
Holdings in government bonds and inflation and interest swaps were PFZW’s best-performing portfolio in 2014, returning more than 43% and outperforming its benchmark by 1 percentage point.In its annual report, the €178bn healthcare pension fund cited the impact of falling interest rates and narrowing interest spreads in Europe.Closing the year with an official funding ratio of 108%, PFZW said it would be unable to grant any cost-of-living-allowance.As a result, indexation in arrears increased to 12.9%. It said ongoing uncertainty in the financial markets, combined with the scheme’s financial position, made it “uncertain” whether it could achieve its long-term targets.“The search for yield has caused high valuations of investments worldwide, and as such, low expected returns,’’ it said.Peter Borgdorff, director at PFZW, said the fund had raised the issue of the impact of lower bond yields on pension funds as a result of the European Central Bank’s (ECB) quantitative easing programme.“We expressed our worries to the DNB member of the ECB, Klaas Knot,” Borgdorff said.“He said he had done everything he could to change the policy of the ECB because of the consequences for pension funds and insurance companies in the Netherlands, but they did not listen.“We are a small country compared with the rest of Europe, but the consequences are that it is bad for pension funds and insurance companies.”In its 2014 annual report, the pension fund posted an overall return of 15.5% and attributed a 0.2-percentage-point outperformance to the performance of government bonds, swaps and infrastructure.The latter returned 12.4% for PFZW, outperforming its benchmark by 6.2 percentage points.Public real estate also performed well, returning 17.9%, driven by the recovery of the US property market and a reduction in financing costs in the wake of falling interest rates.Its 32.8% equity holdings returned 10.5%, while its 5.6% private equity allocation produced 12.3%.High yield and emerging market debt returned 4.8%, an underperformance of 0.5 percentage points the pension fund attributed to “poorly performing investments in Russia and Venezuela, as well as disappointing returns in the energy sector’’.The healthcare scheme lost 37.7% on its 4% commodities allocation due to the falling prices of most commodities, including oil’.It said it limited the loss on commodities by reducing the strategic allocation and adjusting the composition of the portfolio in the second half of the year.In 2014, the pension fund began divesting its holdings in hedge funds after concluding the asset class produced “insufficient and uncertain” returns, offered “limited options” for sustainability and incurred high costs.As of the end of 2014, it had reduced its allocation from 2.7% to 0.4%, after generating a return of 6% against costs of €73m.PFZW reported Q1 results in mid-April, returning 9.3% over the period.However, it saw its coverage drop 4 percentage points to 104%.The scheme said only its commodities portfolio incurred a negative return of 8.6% triggered by oil market volatility.It added that the negative performance of its currency cover caused a 0.3% loss, on balance, on its combined hedging policy.For 2014, PFZW reported total costs for asset management and transactions of 0.54% and 0.07% of assets, respectively, and spent €73 per participant on administration.To achieve its indexation target, it left its risk profile unchanged following the introduction of the new financial assessment framework (nFTK), which prescribes stricter rules for funding and inflation compensation.PFZW raised its allocation to short government bonds at the expense of liquid equity to compensate for increased risk as a result of rising liabilities and falling interest rates.Previously, it decided not to increase its strategic interest hedge of 46% in sync with rising liabilities.It said it had nominally covered “much less than 46%’’ at year-end, adding that it hedged approximately 6% of its inflation risk.It added that it reduced its currency hedge of the US dollar to 70% last year.The healthcare pension fund has more than 2.5m participants in total, affiliated with 22,400 employers.For more on PFZW, look out for How We Run Our Money in the June edition of IPE magazine
RobecoSAM — Olaf Martin has joined RobecoSAM as senior portfolio manager for the investment management firm’s sustainable global equities strategy, a role he took up in May. Before this he worked for Zürcher Kantonalbank where he was responsible for the portfolio management of global sustainability investing and European equity funds. Sackers — Kirsty James and Andrew Worthington have been hired by the pensions law firm as associates. James joins the firm from Eversheds and Worthington comes from Slaughter and May. Both were pensions associates at their previous firms. Sampension, Hermes, LPFA, RobecoSAM, SackersSampension — Majken Hauge Johansen and Henrik Braasch have been hired to boost the pension fund’s alternatives team. Johansen, who moved from Danske Capital Alternatives where she was chief portfolio manager, joined in March as chief portfolio manager. Senior portfolio manager Braasch joined in June and has previously worked at Carnegie, Nordea and Cheyene Capital Management.Hermes Investment Management — Emma Hunt has been hired by Hermes Investment Management’s investor engagement service Hermes EOS as director, strategic client management and business development. She will be based in London and report to Colin Melvin, chief executive of Hermes EOS. Hunt joins from Towers Watson, where she was global co-head of sustainable & responsible investment. She will take up the new role in September. Her departure follows that of Jane Goodland, fellow co-head of sustainable investment, for a role at Old Mutual. London Pensions Fund Authority — Edi Truell, the chairman of the London Pensions Fund Authority (LPFA) is stepping down to advise the mayor of London on collaboration between local government pension schemes (LGPS) and infrastructure investment. He will resign as chairman of the LPFA and set up an advisory board for the newly-established partnership between LPFA and the Lancashire County Pension Fund. He will work as an unpaid adviser to London mayor Boris Johnson on pensions and investments, working towards Johnson’s aim of creating a London infrastructure investment fund using assets from the capital’s LGPS.
The Greater Manchester Pension Fund (GMPF), England’s largest local government pension scheme (LGPS), underperformed other local authorities in the year to the end of March with an 11.7% return on investments.Even though the return is markedly higher than the pension fund’s 7% return posted the year before, it is lower than the average UK local authority pension fund return of 13.2%.Total assets held by the GMPF rose to £17.6bn (€23.9bn) at the end of March 2015, up from £13.3bn 12 months earlier.In the fund’s annual report, Kieran Quinn, chair of the pension fund management panel, described the relative performance as disappointing but said: “The GMPF has strengthened its investment management arrangements this year with the aims of improving performance and broadening the options for the future.” As part of these plans, it appointed LaSalle as its property manager, which took over from the in-house team, and handed Investec a global equity mandate.“The appointment of a debt manager in the next financial year will complete our revised arrangements,” Quinn said.The pension fund said it had positive returns in all investment categories, describing them as “substantial” for all categories except UK equities and cash.It increased its benchmark weighting to overseas equity during the year to 65% of the total equity weighting from 60%, following a decision in 2014, according to the annual report.At the end of the year, it implemented a 5% target allocation to private equity and a 4% allocation to infrastructure, with new commitments to specialised private equity funds set at £200m a year and to specialised infrastructure funds at an average of £95m a year.The pension fund also set a target allocation to its Special Opportunities Portfolio of 5%.These targets compare to current realistic benchmark allocations of 2.5%, 1% and 1.5%, respectively. Even though the latest annual return was disappointing compared with other pension funds, Quinn insisted the GMPF had an excellent long-term track record, which underpinned the funding level.On a like-for-like basis, the GMPF was the third best funded LGPS of the 89 funds in England and Wales at the actuarial valuation in 2013, he said.Quinn said investment returns were having an ever-greater impact on contributions as the GMPF matured.A 1% investment return now equates with 8% of a contributing employer’s payroll, and this ratio is expected to rise in the future, he said.
Aon Hewitt – Matthew Fletcher has been appointed as a senior consultant for Aon’s Risk Settlement Group. He joins from Hymans Robertson, where he was a technical consultant within its longevity company Club Vita. Before then, he spent 11 years at Towers Watson.BMO Global Asset Management – Phil Webster has been appointed as a portfolio manager. He joins from Aberdeen Asset Management, where he worked for more than a decade, most recently as senior investment manager on the pan-European equities team. AllianzGI, Profond, AXA Investment Managers, Financial Stability Board, PGGM, CPPIB, Aon Hewitt, Hymans Robertson, BMO Global Asset Management, Aberdeen Asset ManagementAllianzGI – Deborah Zurkow has been appointed head of alternatives at the German asset manager, where she will also become a member of the global executive committee, effective 1 June. Claus Fintzen will take over her role as CIO and head of infrastructure debt. Zurkow and Fintzen joined the manager in 2012 from Triennium Advisors to form part of a new team dedicated to infrastructure debt investments. Zurkow was appointed to lead that team. AllianzGI established an alternatives investment platform in December 2014, which had roughly doubled in size in terms of assets under management by the end of the first quarter of 2016.Profond – The Swiss multi-employer pension scheme has created the position of CIO, with Christina Böck of AXA Investment Managers appointed to the new role. Böck has been at AXA for more than 15 years, most recently as head of solution strategists for Central Europe, and CIO Switzerland at AXA in Zurich. She will join Profond in mid-August.Financial Stability Board (FSB) – Senior investment officials at Dutch pension fund manager PGGM and the Canada Pension Plan Investment Board (CPPIB) are among nine new members of the Financial Stability Board’s Task Force on Climate-related Financial Disclosure as it embarks on a second phase of work. Eloy Lindeijer is CIO at €183bn Dutch asset manager PGGM, while Stephanie Leaist is managing director and head of sustainable investing at CPPIB. They join the following seven other appointees to the FSB task force.
The Waltham Forest Pension Fund has become the first of the UK’s Local Government Pension Schemes (LGPS) to decide to divest from all fossil fuels.Simon Miller, chair of the pension fund committee, said: “Waltham Forest Pension Fund is proud to commit to divesting from fossil fuels.“Not only does this mean the fund will not be invested in stranded assets but will be actively investing in cleaner, greener investments to the benefit of our community, borough and environment.”The London pension fund has assets of £735m (€851m) and invests £23.9m in the oil and gas industries, according to US-registered climate campaign group 350. A recommendation at last night’s pension fund committee meeting in the north east London borough was approved, stating that the pension fund would “exclude fossil fuels from its strategy over the next five years”.Rob Platts of the local divestment campaign being run by Friends of the Earth Waltham Forest said: “With this decision, Waltham Forest has tonight shown true leadership.“By divesting from fossil fuels, the fund is not only taking necessary action to protect fund members’ pensions from risky investments, but it is also joining hundreds of public institutions worldwide in taking a stand against an industry that is causing climate chaos and endangering our future.”International divestment campaign group Fossil Free published data a year ago showing UK LGPS invest more than £14bn in the fossil fuel industry.In July 2015, the London Assembly recommended that the London Pensions Fund Authority (LPFA) change fossil fuel investments to more responsible positions.But, before now, no LGPS pension fund had actually committed to divesting from fossil fuel industries.In Edinburgh, the Lothian Pension Fund rejected calls from its council to divest from the sector, saying the cost of such action would be too high.In January this year, however, Haringey Local Government Pension Fund announced it would shift one-third of its equity funds – equating to about £200m – into the MSCI World Low Carbon Target Index Fund, run by LGIM.In June 2015, the Environment Agency Pension Fund committed £280m to the same fund.
They said that although the mandate assigned to Norges Bank looked strong on environmental policy and sustainability, the finance ministry was undermining this by asking the manager to use the FTSE Global All Cap Index as the benchmark.The ministry should shift to ethical benchmarks, as insurer Swiss Re has done, or low carbon indices, according to the report.It described the mandate as restrictive, but said that Norges Bank could still do more within it, such as by taking a stance on carbon pricing or perform carbon stress tests on its portfolio.NBIM should also apply the same standards it expects of third party asset managers to itself, according to the authors. They referred specifically to NBIM “Expectation Documents” on human rights, children’s rights, climate change, water management and tax and transparency.Other policy recommendations set out in the report include that the ethical council take a less restrictive stance when applying conduct criteria, and that the GPFG join investor coalitions that have been formed to address different social, environmental and governance challenges, such as excessive use of antibiotics.The report was published in anticipation of domestic elections this year and subsequent renewed discussions about how the GPFG is run.It comes after a government commission set up to review Norges Bank presented its conclusions in June, recommending that GPFG be managed separately from the country’s central bank now that it had grown so big and NBIM be set up as a separate statutory entity. In their report, Kapoor and Zeilina said that if the Norwegian parliament adopted a recommendation to set up an independent professional board for GPFG, then at least one board member should have expertise in sustainable investing.Sustainability should be incorporated into the Pension Fund Act as a core criterion for the fund’s investment strategy, as well as “the principle of diversification”, they said.In explaining why it was a good and important time to carry out a “reality check” on the oil fund’s sustainable investing, the authors also noted that the finance ministry and parliament are due to debate whether GPFG should be allowed to invest in illiquid assets such as infrastructure, reducing exposure to fossil fuel assets, and investing in renewables and developing economies.The report is not the first time that Re-Define’s Kapoor has sharply criticised the GPFG. In 2013, the think tank produced a stinging report with Norwegian Church Aid after a new government broadened the mandate of the fund.The new report was commissioned by several non-governmental organisations, including Amnesty International Norway and Norwegian Council for Africa.In a response to the report, a spokesperson for NBIM told IPE that “the development of principles and standards for market participants is important for the management of the fund”.“We engage in dialogue, make submissions and launch initiatives to promote good practices and well-functioning markets,” he said.The spokesperson also said that NBIM assesses environmental, social and governance (ESG) risks across the fund and that these risk assessments and related monitoring were integrated into the fund’s overall risk management.It has divested from 210 companies on the grounds of ESG risk, he noted, also pointing out that a separate climate risk framework was set for NBIM last year. Norway’s NOK7.75trn (€829bn) sovereign wealth fund has strong policies on sustainability and climate change but falls short on putting these into action, according to a critical report from think tank Re-Define.Produced by Sony Kapoor, managing director at Re-Define, with assistance from Linda Zeilina, special adviser at the think tank, the report argued that the oil fund needed “to learn from its peers and significantly enhance its approach to managing climate risk and investing sustainably, based on rigorous risk/return considerations”.“A cohort of investors, who are savvier than the oil fund, have made far greater strides on sustainability, in almost all cases based on rigorous risk/return calculations rather than on ethical or political gorunds,” the report said.The authors’ criticism was aimed both at the government mandate for Norges Bank, whose investment management arm manages the Government Pension Fund Global (GPFG), as well as how the mandate is implemented by Norges Bank Investment Management (NBIM) itself. The Council of Ethics could also do more, they argued.