Langensjö joined Brummer in August 2012, after completing his time as chairman of the government-commissioned review of the Swedish AP Fund system.During his six years at Mercer, he served as Nordic head of investment consulting and financial risk, leaving the consultancy in 1999 to work for Wassum Investment Consulting.From there, he moved to London to join Goldman Sachs Asset Management as head of its Scandinavian institutional business.He has since worked at Aon and Pioneer Investments, before being appointed chair of the AP Fund review – a review not received warmly by the funds themselves. Mats Langensjö, chairman of the review of Sweden’s AP Funds, has stepped down from his chief executive role at Brummer Life after less than 18 months in the role.Industry veteran Langensjö, who began his career two decades ago at Mercer, left by “mutual agreement”, according to a statement issued by parent company Brummer & Partners.Helena Palmgren, previously the life company’s vice-president, has been named interim chief executive following his departure.Svante Elfving, chairman of the board at Brummer Life, thanked Langensjö for his time at the company and wished him well with future endeavors.
Sweden’s AP funds have emphasised the importance for long-term planning in the wake of one of Brazil’s largest mining accidents, which led to scrutiny of its holdings in mining giants BHP Billiton and Vale.John Howchin, director general of the Ethical Council, responsible for the engagement efforts of the four buffer funds, said the asset owners were monitoring the plan being proposed to ensure the rehabilitation of a region in the southern Brazilian state of Minas Gerais.The scrutiny comes after a dam at an iron ore mine run by Samarco – jointly owned by Australia’s BHP Billiton and Brazil’s Vale – burst in November, destroying a nearby village, poisoning the Rio Doce river and triggering a BRL20bn (€4.6bn) lawsuit by the Brazilian government.The four funds have come under pressure to divest their holdings in the parent company after recent scrutiny from local media. Howchin, however, told IPE the buffer funds had been monitoring the emergency measures put in place since November’s disaster.“Secondly,” he said, “it’s important for the people around Rio Doce that there is a long-term plan in place regarding the rehabilitation of villages and the river itself.”He said initial surveys had shown it would take years to improve the river’s water quality in the wake of the accident, adding that the most important matter now was for a long-term plan for the rehabilitation of the river and surrounding area to be agreed.“Discussions between the companies and Brazilian authorities regarding how the social and environmental programmes will be financed long term is ongoing.“Hopefully, they can reach an agreement soon to start these programmes.”He pointed out that there would still be investigations by authorities to determine whether there had been any negligence by Samarco that resulted in the accident.He also agreed that, if the authorities rule found evidence of negligence, the funds would “absolutely” reassess their combined SEK1.7bn stake in both parent companies.
Under the targeted common framework balance sheet, assets and liabilities would have to be valued on a “market-consistent” basis and include all available security and benefit-adjustment mechanisms, such as sponsor support, pension protection schemes and benefit reductions.“However,” EIOPA said, “at this point in time, [we do] not advise on harmonising capital or funding requirements.”EIOPA said the term ‘standardised risk assessment’ has been used instead of ‘solvency capital requirement’ – and ‘common framework balance sheet’ instead of ‘holistic balance sheet’ (HBS) – “as these are more appropriate terms to use in the context of risk assessment and transparency”.The HBS has been controversial in the European pensions industry, viewed with suspicion and opposed by many who fear the introduction of Europe-wide regulatory solvency requirements.Under EIOPA’s latest proposals, occupational pension funds should publicly report the standardised balance sheet and the outcome of the risk assessment.National supervisors should “be provided with sufficient powers to act in response to the conclusions of the standardised risk assessment”.Special treatment should be available for smaller pension funds, according to EIOPA, such as exemptions, the use of simplified methods, and less frequent risk assessments.EIOPA chairman Gabriel Bernardino said: “This opinion presents a major step forward towards realistic, risk-sensitive information on the financial situation of pension funds.“Relevant transparent disclosure will trigger a dialogue on the long-term sustainability of occupational pension promises and encourage timely adjustments.“As such, our recommendations contribute to the protection of pension scheme members and beneficiaries and to a fair distribution of shortfalls between generations”. The European Insurance and Occupational Pensions Authority (EIOPA) has called for European occupational pension funds to be required to carry out a “standardised” risk assessment on the basis of a common framework but shied away from backing the introduction of harmonised capital or funding requirements “at this point in time”.The supervisor’s recommendations come as part of an opinion paper – ‘On a common framework for the risk assessment and transparency for Institutions for Occupational Retirement Provision (IORPs)’ – to the European Commission, Council and Parliament, and are the outcome of almost three years of work on the solvency of IORPs, the most recent input having been a quantitative impact assessment (QIS) conducted last year.EIOPA said the recommendations would strengthen the IORP Directive and “contribute to the sustainability of occupational pension promises and the protection of members and beneficiaries”.Under its proposals, IORPs would have to conduct a standardised risk assessment to calculate the impact of common, pre-defined stress scenarios on a pension fund’s balance sheet, which would be “set up for the very purpose of the standardised risk assessment”.
The Dutch Pensions Federation said it wanted investment and macro longevity risk included in the risk-sharing arrangements.In recent months, four working groups have assessed the SER’s options on pension returns, viability, communications and legal and fiscal aspects, assuming the current average approach is replaced with fixed contributions and the age-dependent degressive accrual of pension rights.They concluded that the target variant scored better on participant protection and prosperity benefit but might be susceptible to legal challenges following the introduction of an age-dependent degressive accrual.The working groups concluded that individual accrual was much easier to explain than the concept of pension rights but said this variant would offer less protection or collective risk-sharing.“As a consequence of the latter, the case for mandatory participation in a pension fund would be weakened,” they said.Gerard Riemen, the Federation’s director, took pains to emphasise that the study had focused on a “hard feasibility check” based on data provided by 10 pension funds.In its letter to the SER, the industry organisation said new legislation should offer pension funds the choice between transferring existing arrangements into a new pension plan and keeping them in a closed scheme.The Federation also called for simplifying the current fiscal framework for a new pensions contract.Riemen said it was up to workers, companies and the SER to fine-tune a widely supported pensions contract, adding that it should be feasible to present a fleshed out version in early 2017.Meanwhile, Dutch supervisor DNB warned that the development of a new pensions system should not be used to introduce “too many new elements, as the transition to a new pensions contract in itself is already complicated”.The regulator referred to the freedom for individuals to select a pension fund and the use of part of the pensions contribution to pay off mortgages, as several political parties have promised in their election manifesto.According to DNB, even without the additional elements, the transition would demand much from pension funds in terms of preparation and ability to change.It said its supervision next year would pay additional attention to pension funds’ ability to “adjust in a dynamic world”. The Dutch Pensions Federation has said that the two options for a new sustainable pensions contract deemed “interesting” by the Social and Economic Council (SER) are feasible.In an official response, the industry organisation said further elaboration, together with the SER, could produce a widely supported alternative for a “robust, comprehensive, fair and future-proof” pensions system.Earlier this year, the SER produced two alternatives for a new pensions system, comprising a “target” contract for a pension in real terms and a set-up of individual accrual, both with collective risk-sharing.Jetta Klijnsma, state secretary for social affairs, has also approved both options.
Nordea, the Nordic banking and investment group, has decided to exclude three companies from its investment universe as a result of their involvement in the controversial Dakota Access Pipeline project in the US.Nordea has divested from bonds issued by Energy Transfer Partners, Sunoco Logistics, and Philips 66, in part due to the companies’ unwillingness to talk about the issue.“The US Department of the Army announced on 7 February 2017 that it intends to grant the final permit for the pipeline,” Nordea said.This action would make it possible for the pipeline to be built in accordance with the current cabling under Lake Oahe, and close to the Standing Rock Sioux reservation, it said. “The US Department of the Army has also cancelled the plan for a further environmental assessment,” Nordea said.The group said it had sought a dialogue with the three companies behind the pipeline about the possibility of an alternative location, but to no avail.“The companies have chosen not to enter into any kind of dialogue with Nordea,” it said.In November, Norway’s Kommunal Landspensjonskasse (KLP) sent one of its staff to North Dakota to assess the situation surrounding the underground pipeline, after the plans had drawn huge protests from Native American tribes and other people worried about the environmental impact.At the time, the project had been temporarily stopped by the US government.President Barack Obama said in November that the US government was looking at ways of re-routing the controversial oil pipeline, in order to accommodate the land of Native Americans.But in late January, new president Donald Trump signed orders easing the path for the Dakota Access and Keystone XL oil pipelines, in line with his aims of expanding energy infrastructure and reversing environmental action taken by his predecessor’s administration.
Marinó Örn Tryggvason, the CIO of Frjálsi pension fund, told IPE: “This was earlier than we expected, but we did expect to get increased permission to invest abroad in next few months.”He said the long-term difference brought about by the central bank’s move could be significant for Frjálsi, even though it would not change much in the short run because the pension fund already had considerable allowances for foreign investment.Meanwhile Kristjana Sigurðardóttir, CIO of Almenni pension fund, said it had already made some foreign investments this year following a limited allowance granted by the central bank at the beginning of the year.“We are expecting to be on track with our investment strategy in four to seven years,” she said.Almenni’s foreign exposure varies according to portfolio, but averages around 25%, Sigurðardóttir said.Frjálsi also has about 25% of its assets invested abroad, Örn Tryggvason said.“In my opinion Icelandic pension funds should invest more than 50% of assets abroad in the long run,” he said. “In the shorter term, I think funds should increase foreign exposure by at least 2-3% of assets every year.”The central bank’s new rules also mean households and businesses will generally no longer be subject to the legislative limits on foreign exchange transactions, foreign investment, hedging, and lending activity, the bank said. The requirement that residents repatriate foreign currency has also been lifted.The bank said these were the elements of the capital controls introduced in autumn 2008 that had the biggest effect on households and businesses.Last October, the Icelandic parliament voted to lift some of the capital controls that were put in place after the 2008 crisis, liberalising controls on capital movements by individuals and firms. The legislation allowed for people and companies to invest a certain amount abroad by the end of 2016, rising to a higher level thereafter.However, the bill did not change things for pension funds, which have been permitted over the last few years to increase their foreign investment only in a series of time-limited allowances granted by the central bank.The bank said it had been able to change the rules on foreign exchange because, in the past year, there had been a big fall in the risk of monetary, exchange rate, or financial instability.Since the beginning of this year, individuals and companies had been effectively unrestricted in the level of capital transfers they could do, and there had been no noticeable effect on the foreign exchange market or on the cross-border capital movement, the bank said.In addition, the central bank has built up its foreign exchange reserves markedly in the past 12 months. Pension funds in Iceland will finally be free to invest as much as they like in foreign markets as the Nordic country’s central bank sweeps aside nearly nine years of restrictions imposed in the wake of the 2008 crisis.The move by the Central Bank of Iceland came earlier than the funds expected. The bank published a set of new rules on foreign exchange on 12 March to take effect today (14 March).It said restrictions on foreign exchange transactions and cross-border movement of domestic and foreign currency had “largely been lifted”.The bank said: “With the amendments, foreign investment by pension funds, funds for collective investment (UCITS), and other investors… which until now have been subject to explicit exemptions by the Central Bank, will now be authorised.”
It made clear that it would assess pension funds’ administration capabilities for flexibility, indicating that current IT systems were often outdated.Next year, DNB will complete an overview of outsourced administration in a survey that it started this year.The watchdog said it would also follow up on a survey of pension funds’ visions and strategies, in a move aimed at increasing their operational, organisational and board flexibility as well as resilience.As part of this, DNB is to monitor how pension funds implement strategies and how they anticipate vulnerabilities and risks.The regulator said it would also assess how asset managers prepared for the anticipated change from collectively managed pension assets to individually accrued pensions as well as the adoption of a greater variety of pension plans.DNB added that it would look into asset managers’ business models in a competitive market.In its outlook for the next four years, the watchdog also said it supported convergence of European pension fund supervision. This seems to be at odds with the new government’s intention to resist “new European infringements” on the local oversight of pensions.However, in the same paragraph, DNB said that it didn’t actually expect European harmonisation on pensions. Dutch supervisor De Nederlandsche Bank (DNB) said it would assess whether pension funds and asset managers were ready for switching to a new pensions system.In documents published this week outlining its vision of future supervision, DNB emphasised that preparation was essential for a smooth transition, describing the planned reforms as “a significant change”.Dutch pension funds have previously been urged to get ready for system reforms only for the changes not to materialise.However, DNB said that, although the new system was not yet fully developed, “a transition seems to be unavoidable as the need for innovation is only increasing”.
The value can be broken down by stakeholder group and UN Sustainable Development Goal (SDG).Util uses four main sources of data to arrive at an “annual value generated” figure, which it shows in monetary terms. The company sources data from disclosed financial and environmental, social and governance (ESG) data; external data providers; “data science and machine learning”; and other proprietary models.Hermes said the analysis would help it identify and oversee investments to deliver “superior financial and non-financial performance”.Kamhi said: “The effective measurement of social and environmental returns to stakeholders, alongside the financial, is key to enabling the investment industry to deliver the holistic needs of beneficiaries and achieving the UN SDGs.”In June last year BNP Paribas Securities Services partnered with Sycomore Asset Management to accelerate the deployment of a new metric for assessing the environmental impact of the economic activities of a company, a portfolio or an index.KBI GI completes SDG impact quantification exerciseKBI Global Investors (KBI GI) says it has quantified its natural resource strategies’ contribution to achieving the UN SDGs as a percentage of the constituent holding’s revenues.#*#*Show Fullscreen*#*# KBI GI calculates the percentage of its holdings’ revenue that contribute towards meeting the UN Sustainable Development GoalsThe Dublin-based manager, formerly Kleinwort Benson Investors, took the total amount of revenue earned by the companies in the portfolios and then assigned that revenue to various business activities. For each business activity it then decided whether it had a positive, neutral or negative impact on delivering the SDGs. On a weighted basis it then calculated the percentage of any portfolio’s revenue that was positively or negatively contributing to the achievement of the goals. Taking the firm’s water strategy as an example, the asset manager said its work showed that 68% of the portfolio’s business activities contributed directly to the achievement of the SDGs on a net basis and that seven of the 17 SDGs were directly benefitting from the portfolio’s investments.KBI GI described the quantification as “a breakthrough” and said it followed a body of work carried out over the course of the last six months.Eoin Fahy, head of responsible investing at KBI GI, said the asset manager was still “diving into the numbers” and evolving its methodology, but that it was hopeful its work might provide a methodology for companies to report their own impact as well.“We like the transparency the new approach brings and will most certainly be reporting to clients in this way going forward – and our work may well prompt the ‘green washers’, those trading on a generic alignment of their strategies with the SDGs, to revisit their approach,” Fahy added.Schroders flags SDG ‘misappropriation’ riskSchroders earlier this month warned about the risk of investors being misled by inappropriate use of the SDGs.“SDGs were not designed for investors,” it said. “We are concerned they are being misappropriated and misused.”Established corporate social responsibility activities were being “squeezed into ill-fitting SDG categories”, it said, and companies tended to report on obvious goals such as ‘economic growth’ or climate action’ despite the indicators underpinning the goals lacking company-focus or materiality.Adopted by the UN General Assembly in 2015, the goals set the agenda for an attempt to solve the world’s biggest environmental and societal challenges by 2030. There are 17 goals and 169 indicators to measure progress against them. They have captured the imagination of investors and companies — although Schroders contended that they were aimed more at policy makers than the private sector. “Most of these measures are directed at systemic challenges that investors and companies have no direct mechanism to address,” said the asset manager.It estimated only 15-20% of the 169 metrics could reasonably be measured at a company level and only 6-8% using data currently available.Without a consistent reporting framework, companies and investors could apply positive filters to their SDG efforts, demonstrating constructive activities without an objective assessment of the negative impacts their business might have. SDG metrics are badly aligned to corporate performance indicators, says Schroders Hermes Investment Management has entered into a partnership with Util to test the Oxford-based fintech’s “holistic” company valuation methodology.The asset manager said Util’s proprietary methodology “addresses the need for a standardised and comparable analysis that considers a company’s social and environmental performance alongside its financial performance”.Over the next 12 months Hermes said it would assess and audit Util’s methodology by applying it to specific Hermes listed equity funds. Leon Kamhi, head of responsibility at Hermes, is to join Util’s advisory committee.According to Util’s website, the methodology quantifies both the financial and non-financial value a company creates and destroys “across a wide range of stakeholders that interact with a company on a daily basis”.
A UK court has ruled that the country’s pensions regulator was right to use its power to get broadcaster ITV to support its Box Clever pension scheme. Published today, the judgement follows a two-week hearing in January.The scheme has 2,800 members and a deficit of about £115m, the Pensions Regulator (TPR) said in a statement about the ruling today.ITV will be seeking to appeal the decision, according to a spokesman for the company.“ITV continues to believe that the case brought against it is unfair,” he said. Mike Birch, TPR’s director of case management, said the regulator was pleased with the ruling.It sent “a clear message to companies with defined benefit schemes that we will not hesitate to use our anti-avoidance powers where we believe it is reasonable for them to provide financial support,” he added.Alan Herbert, chairman of the Box Clever scheme trustees, said: “This is another step forward towards securing the pension benefits of nearly 3,000 former Box Clever employees and their dependants.“It’s been a long and incredibly complex journey”.The dispute between TPR and ITV goes back to 2011, when the regulator made what has been described as a landmark decision to issue “Financial Support Directions” to ITV to require it to financially support the scheme.The broadcaster referred the decision to the Upper Tribunal with considerable back-and-forth since then. January’s hearing was the “substantive hearing” of the case, according to law firm Eversheds Sutherland, which has been advising the trustees of the Box Clever scheme for more than nine years.It said the long-running case was the first challenge to TPR’s anti-avoidance powers to be heard in full by the Upper Tribunal.Box Clever was formed in 2000 as a joint venture between the TV rental businesses of Granada, now ITV, and Thorn, now Carmelite. In 2003 it collapsed. Before that, employees of the joint venture were transferred into a new Box Clever scheme with the intention they would receive the same benefits as they would have gained from their previous pension arrangements.TPR has argued that ITV “extracted significant value” from the joint venture before the collapse.According to the regulator, the Upper Tribunal ruled that it was reasonable for ITV to provide financial support for the Box Clever scheme in the circumstances of the case.It today said the judges held that: “By their choice of structure for the Joint Venture, the Shareholders extracted considerable cash from the business with no risk of recourse to their assets.“They retained an ongoing interest in the merged business with the possibility of further value being generated if the business was successful, but without having to bear any responsibility if the business, whose strategy they continued to determine, subsequently failed.”The ITV spokesman said: “The Tribunal repeatedly stressed in its judgment that no blame or criticism should be attributed to ITV concerning the transaction, 18 years ago, that formed the Box Clever joint venture. “There were sound reasons for implementing that transaction, which was, in good faith, regarded as being in the best interests of Granada’s shareholders, employees and consumers.”Emma King, partner at Eversheds Sutherland, said that “in spite of its best efforts to avoid its moral responsibility to pension scheme members almost all of ITV’s arguments have been rejected”.
For BPP, Apollo has pledged annual contributions of £3.8m a year for eight years, increasing annually in line with inflation.Additionally, the scheme has been granted contingent property assets worth £40m “reducing in line with the additional cash contributions… to £25m by 2027”. Apollo also pledged a parent company guarantee of up to £20m.“The trustees of the BPP scheme have confirmed that, having regard to the information and mitigation provided, the acquisition is not materially detrimental to the security of members’ benefits under the BPP scheme,” Apollo stated.For the M&H scheme, Apollo had earlier this week stated that the memorandum of understanding would mitigate the impact of the acquisition “through the exclusion of the employer from the debt security package and a £10m guarantee from M&H Group Limited”. According to RPC Group’s 2017-18 annual report, its UK pension schemes had combined assets of £511.5m, and total liabilities of £607.3m as of 31 March 2018.XPS reassures on GMP costsThe cost of equalising guaranteed minimum pensions (GMPs) will be less than 1% of liabilities for more than half of UK pension schemes, according to analysis from XPS Pension Group.Initial estimates had put the total cost to the pension industry of implementing October’s court ruling at between £15bn and £32bn, depending on accounting methods.However, a survey of 90 of XPS’ defined benefit scheme clients found that more than half would see their total pension obligations rise by less than 1%.The research chimes with data gleaned from company annual reports by IPE, which showed that of 10 company pension funds to have published estimates, most expected total costs of less than 1% of liabilities.Wayne Segers, head of transactions at XPS Pensions Group, said: “This is good news for employers and shows the value of getting a robust estimate that takes into account the specifics of their schemes.“However, it appears to confirm a worry that the industry may now incur significant cost and administrative complexity with little real benefit for members. Given that, it is important schemes use the work needed on GMPs to drive improvements. “Increasing data quality, streamlining benefits and removing GMPs for good can all help reduce cost and risk for employers, and help drive better options and outcomes for members.” Private equity firm Apollo has agreed a funding package worth roughly £90m (€104m) with the trustees of pension funds sponsored by packaging company RPC, which it is set to buy this year.Apollo Global Management agreed a £3.3bn deal to buy RPC on Wednesday.In an announcement to the stock exchange yesterday, Apollo said it had entered into a memorandum of understanding with the trustees of the British Polythene Pension Scheme (BPP) and with the M&H Staff Pension Plan regarding funding arrangements post-acquisition.The private equity group was also in “advanced negotiations” with the trustees of the the RPC Containers Limited Pension Scheme, it said.