September 2020

Webb offers hints on UK default fund charge caps

first_imgThe Liberal Democrat MP praised a number of existing providers – including master trusts The People’s Pension and Now Pensions, as well as contract arrangements provided by large insurers – for offering fees similar to those levied by NEST.He also said the DWP could consider several approaches in trying to reduce costs for DC members.“Should we just settle for a round number,” he asked in what was likely a veiled swipe at calls from the opposition Labour party to impose a 1% cap, “or should we go a bit harder?”Indicating the DWP would also consider a comply-or-explain scenario rather than an inflexible and immovable fee cap, he added: “Should we say ‘actually, we should get a low charge, but if there is something special you’re doing that justifies the higher charge, then you make the case’.”Turning to general quality standards for auto-enrolment funds, Webb said the department would outline its thinking early next year and “regulate pretty soon after”, and that he could be “quite adventurous” in what was regarded as the minimum threshold for any fund.He echoed his oft-repeated mantra that workers should not be auto-enrolled into a fund that is not deemed good quality, and noted that too big a variance in standards will also risk making automatic consolidation through the ‘pot follows member’ reform “look a bit ugly”.“Our minimum quality standards, I hope, will be demanding, but there might still be room for some form of recognition beyond ‘good’,” he said. Pension providers in the UK could soon be subject to a 50-basis-point cap on fees in default funds, pensions minister Steve Webb has hinted.In his speech at the National Association of Pension Funds annual conference in Manchester, he indicated that the fees paid by members of National Employment Savings Trust (NEST) could be seen as a benchmark during a forthcoming consultation on a charge cap for defined contribution (DC) default funds.Webb remained coy about the consultation, promised by the Department for Work & Pensions (DWP) if the Office of Fair Trading’s review of the DC market found problems with charging structures, and only provided the most general indication of the tone of the department’s questions.“All I would say on the subject of excess charges is, in a world where the government has created a provider with a public service duty to provide pensions at the basis of 50 basis points, why should anybody be automatically enrolled and have their money invested by default in something that charges twice as much? Maybe there is a reason for it, but I haven’t heard it.”last_img read more

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LPFA, Lancashire JV announce board members, first sub-fund

first_imgThe London Pensions Fund Authority’s (LPFA) £10bn (€13.6bn) joint venture with the Lancashire County Pension Fund (LCPF) has announced several board members, including the former head of BP’s pension fund, as it pushes ahead with the launch of its first sub-fund.Peter Rogers, Robert Vandersluis and Sally Bridgeland were named non-executive board members of the re-branded Local Pensions Partnership (LPP), as the venture was granted regulatory approval by the Financial Conduct Authority (FCA).It said it chose its new name to reflect its “readiness to partner with other [local authority] funds”.Bridgeland and Vandersluis bring with them significant pensions experience, as former chief executive of BP Pension Trustee and director of global pension investments at pharmaceutical GlaxoSmithKline (GSK), respectively.  Bridgeland will chair LPP Investment, one of two companies created by the partnership, while Vandersluis will chair the LPP’s risk committee.She told IPE the company, as of the beginning of April, employed the in-house investment teams of both the LPFA and the LCPF, including its respective CIOs Chris Rule and Mike Jensen. She likened LPP Investment’s role to that of BP Investment Management, her former employer’s in-house manager regulated by the FCA. “The pension funds will still have their governance [structures], and the investment company is the service provider to those pension fund trustees,” she added.First assets to be pooledWhile Bridgeland would not be drawn on the first sub-fund to be launched by LPP Investment, a spokesman said the two schemes would at first pool equity holdings. At the end of March 2015, the LCPF had £2.5bn in externally managed equity. Five external equity managers – Baillie Gifford, MFS, Morgan Stanley, NGAM and Robeco – were responsible for the majority of assets, while two UCITS funds managed by AFG and Magellan Financial Group held £504m. The LPFA had a total of £1.5bn in equity holdings, of which £921m was managed by MFS at the end of March last year, with smaller mandates overseen by Sarasin and Partners and Insight. Nearly £420m was managed through an in-house buy-and-hold strategy in March 2015 – a figure that increased to £600m by the time of the publication of the 2014-15 annual report. The venture has also set up a standalone administration company, LPP Administration, chaired by Rogers. He currently chairs New West End Voice, a business group representing the interests of retailers in the centre of London, and is a former chief executive of Westminster City Council and the London Development Agency.The three appointments come despite the two local government pension schemes’ (LGPS) failure to surpass the critical £25bn asset threshold desired by the Department for Communities and Local Government for the creation of one of six LGPS asset pools.The venture now has until the summer to find additional partners.It is likely to collaborate with the £35bn Northern Powerhouse pool being launched by the Greater Manchester Pension Fund, Merseyside Pension Fund and West Yorkshire Pension Fund.Michael O’Higgins, LPP’s chairman, said he was “delighted” the venture could now move forward as an accredited entity.“FCA approval is the cornerstone of our drive for good governance in LGPS reform and an essential part of our formation,” he said.“And our new name underlines the fact we are open for business, and ready and able to work with other LGPS funds in developing this exciting proposition.”Read more about the UK’s plans to reform the LGPSlast_img read more

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Dutch regulator calls for limited buffers in new pensions system

first_imgDe Nederlandsche Bank (DNB), the Dutch regulator, has reiterated its support for a new pensions system with individual pensions accrual.Financial buffers in any new set-up, however, should be as limited as possible to avoid future squabbles over who is entitled to the reserves, it said in a statement.The regulator also asserted that individual pension rights and age-dependent investment policies would be “crucial” building blocks in building a sustainable pensions system.Last year, DNB produced a memorandum in which it called for the abandonment of average contribution, as well as average accrual. In its latest statement, however, it allows for a collective buffer on the condition that it remain limited in scale and “cannot be negative”.In an interview with Dutch news daily De Volkskrant, Job Swank, director of monetary affairs and financial stability at DNB, confirmed that a collective buffer would be considered “if this were considered important to the unions”.He noted, however, that the added value would decrease if financial reserves exceeded 10%.This is much less than the maximum of 30% employed by the Social and Economic Council (SER) in its survey or the 20% applied by the Dutch Bureau for Economic Policy Analysis (CPB) in its comparisons with other pension contracts.A collective buffer implies risk-sharing with future generations.In its last year’s memorandum, DNB said the limited benefit of such a reserve failed to outweigh potential drawbacks, such as conflict over how the buffer should be divided up.“Risk-sharing with future generations” the regulator warned at the time, “comes with governance risks, as well as discontinuity risks.”Meanwhile, Swank said that increasing options for participants or widening the scope of mandatory pension savings were no longer a priority for DNB, which seeks to expedite the decision-making process.He said these and other elements could be added at a later stage.last_img read more

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ECB: Pension funds will ultimately benefit from low interest rates

first_imgLow interest rates will only be a problem for pension funds for the short term, Mario Draghi, the president of the European Central Bank (ECB), has suggested.Addressing the Dutch Parliament on Wednesday about the ECB’s monetary policy, Draghi emphasised that the ultra-low interest rates policy was crucial for economic recovery, which will also benefit pension funds for the long term.The Netherlands’ predominantly capital-funded and defined benefit pensions system, with approximately €1.2trn of assets, has been particularly hit by low interest rates, with politicians and pension funds voicing strong opposition to the policy.The ECB’s deposit rate has not been above 1% since 2009. Recently, experts estimated the damage to Dutch pensions at €60bn: a €100bn rise in liabilities caused by the low rates was only partially offset by a €40bn rise in asset values, they calculated.While acknowledging the negative impact of low interest rates on pension funds that guarantee benefits, Draghi said that low rates were necessary for recovery and employment.“We need to offset short-term negative effects against the positive effects for the long term,” he said.According to the ECB president, with an economic recovery, interest rates and returns would also improve and liabilities would decrease.Draghi did not address questions about legal proposals from 50Plus, the Dutch political party for the elderly, to introduce a minimum discount rate for liabilities of 2%.“The ECB has not been tasked with setting the supervisory rules for pension funds,” he said.Dutch pension funds must use a discount rate based on the market rate, with the application of an ultimate forward rate of currently 2.8%.The official discount rate, as prescribed by supervisor De Nederlandsche Bank, stands at approximately 1.68% at the moment.last_img read more

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UK pension lifeboat fund makes two senior appointments

first_imgThe UK’s Pension Protection Fund (PPF) announced two senior appointments this week: a head of environmental, social and corporate governance (ESG) and a new chief risk officer (CRO).Stephen Wilcox is the £29bn (€33bn) fund’s CRO, replacing Hans den Boer, who had worked at the PPF for three years.Wilcox joined the PPF from Allianz Insurance, where he was chief risk officer. He is a Fellow of the Institute of Actuaries and a chartered enterprise risk actuary.Oliver Morley, chief executive of the PPF, said: “We can only continue to properly serve our members and levy-payers by appropriately managing the risks we face. As the PPF continues to grow and evolve, identifying and managing those risks will only become more important. Stephen’s proven expertise and leadership will ensure we remain committed to best practice in risk management.” Claire Curtin, the PPF’s new head of ESGPPF chief investment officer Barry Kenneth said: “Claire’s experience of working and communicating with institutional investors across a wide range of asset classes as well as a deep technical understanding of ESG issues will help grow and evolve our investment function.“Attracting professionals of Claire’s calibre to join our team is an endorsement of where we are going.” Meanwhile, Claire Curtin has taken on the ESG role. She joined the PPF from consultancy Trucost – now part of S&P Dow Jones Indices – where she was head of research, financial institutions. Before that she was a client relationship manager at EIRIS and head of investment communications for single manager hedge funds at Pioneer Alternative Investments.The PPF’s previous most senior dedicated ESG hire, Leanne Clements, left in the autumn of 2016. Her appointment followed the death in 2015 of Ebba Schmidt, who implemented and led the PPF’s responsible investment strategy after joining the institution in 2009.last_img read more

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Cambridge University endowment gains 8.8%; Oxford ‘flat’ for 2018

first_imgDuring 2018, according to Nick Cavalla – then Cambridge’s CIO – the fund’s holdings in private equity and other alternative asset classes performed strongly. Alternatives included direct property, private credit and absolute return.In terms of public equities, Cavalla said the US was the strongest performing regional stock market, fuelled by significant advances in large-cap technology stocks. Oxford University“It would be remiss not to mention that 2018 itself saw periods of negative equity returns and elevated volatility,” the managers said. “The fund’s equity exposure is significant and not immune 
to such volatility.”The fund – run on behalf of Oxford University and a number of individual colleges – returned 9% a year on average over the past decade.Public equities finished the year with an allocation of 53.6%, slightly up on the previous year, although the managers increased cash holdings as valuations in public and private equity markets continued to rise. The private equity allocation totalled 22.3% at the end of December.Oxford’s public equity managers returned 10.6% annualised over the past 10 years, OUEM reported. Private equity annualised returns over 10 years were 13.9%.The endowment’s 2017 return was 9.2%, due in part to a flexible currency strategy benefiting from sterling’s movements after the UK’s EU membership referendum in June 2016. Kings College, CambridgeHe said: “[Cambridge’s] public equity portfolio underperformed its market index benchmark, in part because of an underweight to the US market and technology as a sector, but also because of some idiosyncratic exposure to portfolio companies that emerged as ‘value traps’, in the UK in particular.”At end-June 2018, Cambridge’s portfolio was invested 59% in public equities, 11% in real assets including property, 10% in absolute return and 9% in private investments.Cavalla has since left the Cambridge endowment to lead family office Talisman Global Asset Management as CEO.Meanwhile, Oxford University’s £3.4bn endowment fund made a “flat” investment return to end-December 2018 over what was a volatile and challenging year for all financial assets, according to Oxford University Endowment Management (OUEM).center_img Cambridge University’s £3.2bn (€3.6bn) endowment fund posted an 8.8% investment return for the 12 months to 30 June 2018 – just under half its 18.8% return for the previous 12-month period.The fund, managed by the university’s investment office, finances university posts and activities and includes several of its colleges as investors.Over 10 years to the end of June last year, it generated an annualised return of 10%.Last year’s stellar return was achieved partly through an increase in the dispersion of individual stock returns in the second half of the year, which favoured active management, Cambridge said. This helped the endowment’s equity and hedge fund managers outperformed their benchmarks.last_img read more

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Low interest rates drive Dutch schemes’ funding to drop by up to 3.7%

first_imgA drop in January’s interest rates in the Netherlands has lead to a fall of up to 3.7% in the country’s large pension schemes’ funding ratios.The €465bn civil service scheme ABP and the €238bn healthcare pension fund PFZW reported a fall of 3.7% to 94.1% and a 3.5% decrease to 95.7%, respectively.Both PMT and PME, the large pension funds for the metal sector, posted a drop of 2.5%.The €29bn multi-sector scheme PGB said its coverage ratio had decreased by 3.6%, but still stood at 101.8% at the end of last month. Investment consultancies Aon and Mercer had estimated that the funding ratio of Dutch pension funds had dropped between 2-3% on average.The firms attributed the drop largely to market volatility as a consequence of the coronavirus, also known as COVID-19. However, they also cited shriking equity markets.In January, the 30-year swap rate – the main criterion for discounting liabilities – dropped to 33bps from 60.The fact that large schemes had been hit harder than estimated has been caused by their lower than average interest hedge levels.Whereas the consultancies based their calculations on an imaginary “average pension fund” with a 50% interest cover, ABP and PFZW for example, had hedged no more than 21% and 30% of the interest risk on their liabilities, respectively.As part of their dynamic hedging policy aimed at benefiting from rising rates, some pension funds had even reduced their cover last year following plummeting interest rates.By contrast, PMT (€86bn) and PME (€50bn) had a higher hedging level, with PME sticking to its existing 40%, while PMT increased its interest cover to 45% from 40%.At the end of January, the funding ratio of the metal schemes stood at 96.4% for PMT and 96.2% for PME.Interest rate levels haven’t shown any sign of improvement so far this month, with the 30-year swap rate standing at 0.34% on 16 February.last_img read more

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TV personality Luke Bradnam’s dream home up for rent

first_imgRadio star Luke Bradnam’s dream home has hit the rental market.QUEENSLAND radio star and TV weatherman Luke Bradnam’s dream home, complete with its own mechanics pit, pontoon, resort-style pool and tennis court, has hit the rental market.The Triple M 104.5 Brisbane and 92.5 Gold FM host, who runs “South East Queensland’s only local and live Drive show” with swim star Libby Trickett and Ben ‘Dobbo’ Dobbin, had only just sold the double block waterfront home in Broadbeach Waters on May 19 for an undisclosed amount before it was back on agent listings. TV’s highest paid star lists out of this world mansion More than one way to own a house The garage (right) has its own mechanics pit.The property was also a motor enthusiast’s dream with undercover work and storage spaces, a large six car garage which has a purpose built mechanics pit and a quadruple carport.Broadbeach Waters is just three kilometres from Surfers Paradise and is within easy reach of Pacific Fair, the Star Casino and the Convention Centre, according to Bradnam’s selling agent Campbell Moore of Harcourts Coastal — Broadbeach. FOLLOW SOPHIE FOSTER ON FACEBOOK You could build another home given how big the tennis court is.Among its charms was a full size floodlit tennis court and its own pontoon to tie up the boat, with 35.8 metres of main river frontage. Boats have direct ocean access from the pontoon as well.“Go fishing and boating casting off from your own pontoon, put your pots out overnight and pull up a ‘muddie’ without leaving home,” was how it was described. The home offers the best of the Queensland indoor-outdoor lifestyle.This time though it was up for rent, with Lucy Cole Prestige Properties listing it at $1,500 a week.Bradnam and partner Cathy Hallam had bought the massive 2,031 sqm property home in December 2006 for $1.85m. The property was on the market for 145 days before a deal was sealed. More from newsParks and wildlife the new lust-haves post coronavirus17 hours agoNoosa’s best beachfront penthouse is about to hit the market17 hours agoIt has its own pontoon with direct ocean access for boats.It had been marketed as a home that could be the “bargain of (a) lifetime”. The property has formal and informal livings areas, a study, five bedrooms, three bathrooms, huge outdoor living areas and a resort-style pool. Triple M Brisbane Drive Show hots Ben Dobbins, Libby Trickett and Luke Bradnam. Picture: AAP Image/Mark Calleja.last_img read more

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Tenants hoping to cash in on Airbnb must be aware of their rights and obligations

first_imgReiq chair and real estate agent Wayne Nicholson. Picture: Zak SimmondsAirBnB’s popularity continues to grow and the opportunity to make some extra cash is appealing to many, whether they are home owners or renters, which leads to the question – can a tenant legally sub-lease part or all of their rented property on AirBnB? And if so, under what circumstances can they do it?, writes REIQ Townsville Zone chairman Wayne Nicholson.When a tenant arranges to rent out part or all of a property they are renting this is called a sub-lease or sub-letting.The legislationThe Act that governs rental accommodation in Queensland is the Residential Tenancies and Rooming Accommodation Act 2008.If a tenant wants to sub-let the property they are renting, they must seek written permission from the landlord, usually via the property manager.The Act states that the lessor/agent must not unreasonably refuse permission to sub-let or transfer the agreement from one person to another.What does this mean? Well, according to the Act it means the lessor must act reasonably in failing to agree to consent to sub-let, and will be taken to be act unreasonably if they behave in a “capricious or retaliatory way” in failing to agree to the sub-let.More from news01:21Buyer demand explodes in Townsville’s 2019 flood-affected suburbs12 Sep 202001:21‘Giant surge’ in new home sales lifts Townsville property market10 Sep 2020It’s important to understand that this sub-lease does not remove the original tenant’s responsibility for the property.So, for example, if Jane is renting a property from Bob and she’s going away for a fortnight, she may ask Bob if she can put it on AirBnB for the fortnight she’s away.If Bob says yes, Jane is still responsible for the property, even while she is away, so if the property is damaged by the AirBnB visitors (the sub-tenants), subject to any other agreement Jane and Bob may have in respect of this arrangement, Bob will still likely have recourse against Jane under their lease agreement in respect of that damage.If Bob says no, then Jane doesn’t have permission to sub-let the property.If Jane believes Bob has acted unreasonably in failing to agree to a sub-let arrangement then Jane can apply to a tribunal to obtain a determination.In the REIQ’s view, a landlord is more likely to say yes to a sub-lease arrangement that is a longer-term arrangement and where the normal checks and balances are in place, such as the normal vetting of the potential sub-let tenant. With AirBnB those checks and balances are not in place and this may, understandably, make some landlords nervous because they have no idea who is residing in their property.last_img read more

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TV presenter Sam Squiers sells Brisbane home after NSW move

first_imgThis house at 49 Crown St, Bardon, has sold.The couple recently moved to the seaside town of Coledale, north of Wollongong.Sam’s husband, Ben, who is a senior firefighter with Fire and Rescue NSW, had been commuting between Brisbane and Sydney for work after the pair made the move to Brisbane for Sam’s career nearly five years ago.But the situation became “impossible” after the dramatic premature birth of their now one-year-old daughter Imogen, who spent 44 days in hospital care. Sam Squiers, her husband Ben, daughter Imogen and Broby the dog. Picture: Mark Cranitch.POPULAR sports presenter Sam Squiers and her husband, Ben, have sold their beloved Brisbane home as they settle in to their new lives in New South Wales.The property at 49 Crown St, Bardon, sold for $788,000 through Jacob Pirrone of Pirrone Property to a young couple moving in to the area.Mr Pirrone said the property’s most significant selling feature was the parkfront location.“That’s what really pulled buyers in to the property,” Mr Pirrone said.He said it attracted multiple offers.“This location is very desirable, which makes it very tightly held, and the potential scope to improve and further enhance the home was also appealing,” he said. This house at 49 Crown St, Bardon, has sold.The post-war home on an elevated block in Bardon has a front deck to enjoy views over the park.It has been renovated to a high-standard, with polished hardwood floors, a kitchen with stone benchtops and quality appliances.Records show the couple bought the property in 2015 for $704,000. Views through to the deck of the home.It means they decided to sell their two-bedroom house bordering Jubilee Park. More from newsParks and wildlife the new lust-haves post coronavirus15 hours agoNoosa’s best beachfront penthouse is about to hit the market15 hours ago“We’re so happy it’s sold, but there is some bitter sweetness as we loved that house and it’s kind of final now that we’re closing the door on the Brisbane chapter of our story,” Sam said.She said they would miss their neighbours the most.“The park (we lived opposite from) was the focal point of our neighbourhood and we all met, chatted, laughed and cried there,” Sam said.“There were ‘Tour de Bardon’ races for the kids around the park and there was always a neighbour to help with advice, babysitting, Broby sitting, taking the bins out and even leaving meals at our doorstop when were in hospital for Immi. “If neighbours were included in the valuation of your property then ours would skyrocket.”Despite the sadness of the move, Sam said they were loving their new home and enjoying living near the beach again.“We have started our renovations, or, as I like to call them, ‘Benovations’, and can safely say you’ll NEVER catch us on The Block!” she said.“It’s a new challenge for us but seeing the transformation renos make is addictive. In short: we’re really happy!”center_img The modern kitchen in the home.Sam had been a sports presenter and reporter for Channel 9 in Brisbane.She will continue her work with Sportette and Surfing Australia TV, as well as some hosting on Wide World of Sports in NSW. Inside the house at 49 Crown Street.last_img read more

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