Tata plans closure of UK’s British Steel pension fund

first_imgThe British Steel Pension Scheme (BSPS) is to close to new accrual, Tata Steel has told union representatives.Union GMB called Tata’s plan to close the fund “unnecessary and profoundly disappointing”, and said it was preparing a strike ballot.According to the union, the fund had £13.6bn (€17bn) in assets at the end of November last year, up from £12.6bn at the end of March. David Hulse, GMB national officer, said the union did not expect to find itself discussing closure to new accrual, following months of negotiations that got underway in November. “Throughout a long process, we have acted in good faith and negotiated constructively in trying to reach an agreement that addresses what we acknowledge to be a significant deficit in the scheme,” Hulse added.According to the fund’s most recent annual report from 2013-14, BSPS had a £1.1bn deficit in March 2013 when measured on an on-going basis.Hulse was critical of Tata’s plans to close the fund to new accrual.“We have made every effort to compromise with the company, even discussing the possibility of meeting the deficit through changes to member benefits, despite the fact the company is legally obliged to pay for the deficit and has always done so in the past,” Hulse said.“Sadly, the company rejected this offer out of hand. It appears they are hell-bent on closing the scheme and are not prepared to compromise.”He said the management of parent company Tata Steel Europe should “seriously consider their positions” after what he deemed a breakdown in trust between the scheme’s sponsor and its workforce.A spokesman for Tata said the company put forward changes to the defined benefits (DB) fund that would have balanced any changes across the entire workforce.“We believe the trade unions’ proposals to change member benefits would have unfairly disadvantaged younger scheme members, who would have had to bear most of the impact of the changes.He added: “We have been unable to come to an agreement that would have enabled defined benefit provision to continue and we will be consulting employees on a proposal to close the defined benefit scheme to future accrual.It is proposed that future pension provision will be on a defined contribution basis.BTPS is a DB scheme, with a standalone defined contribution arrangement launched in 2014.The DB section returned 1.6% over the course of the 2013-14 financial year, and 7.8% over the three years to 2014.last_img read more

European firms pay more into UK DB schemes

first_img Country 2015 contributions The consultancy firm analysed 75 UK-based DB schemes attached to companies located in Denmark, France, Italy, Germany, the Netherlands, Norway, Spain, and Sweden. The schemes had aggregated liabilities of more than £100bn (€117.3bn), based on data up to 31 December 2015. Andrew Vaughan, partner at Barnett Waddingham, said: “These figures raise an interesting question as to why are European companies with UK final salary pensions paying proportionately more than their UK counterparts to fund deficits?“One possible explanation is that European headquartered companies have tended to adopt a more cautious approach globally to managing their pension obligations. It will be interesting to see how this pans out post-Brexit.”In 2015, the 75 companies contributed £1.6bn in total to their UK schemes, broken down as follows:  Scandinavia £117m European-headquartered companies are on track to close the deficits of their UK pension funds sooner than their British counterparts, according to Barnett Waddingham.Continental companies are paying an average of £5,700 (€6,682) per employee into schemes they sponsor in the UK, the consultancy firm found, versus £2,400 on average for FTSE350-listed companies.This meant European firms could close their accounting deficits “in about six years”, Barnett Waddingham said, “nearly a year ahead of the FTSE350”. This is despite the cost of operating defined benefit (DB) schemes making up a greater proportion of total staff costs for European companies.“While UK subsidiaries only contribute 6% of global revenue, they account for 30% of global DB pension obligations,” Barnett Waddingham added.   France £479mcenter_img  Netherlands £99m  Spain and Italy £530m  Germany £399mlast_img read more

Pensions industry weighs in on ECB data reporting plan

first_imgThe associations said it was not clear which German entities would have to report to the ECB. The central bank’s requirements would prove an additional burden for IORPs, the German organisations added, as such funds would be subject to “the almost simultaneous introduction of new reporting requirements by EIOPA”.“I fear this being a very significant resource drain for no demonstrable benefit”Mark Dowsey, Willis Towers WatsonIn total, pension funds would in future have to comply with three “extensive” reporting requirements, the associations added, including “existing, but hopefully reduced” reporting to the German national supervisor.They raised concerns about the timeframe for reporting liabilities – within 14 weeks – and said this was too short if a binding validation of the data was required within this period.Mark Dowsey, senior consultant at Willis Towers Watson, told IPE that the ECB’s data collection plans were “a big issue for many pension funds in Europe”.“I fear this being a very significant resource drain for no demonstrable benefit,” he said. “I understand the ECB’s wanting a broad handle on things at the macro level, but this sort of granular detail seems unnecessary.”What the European Central Bank has proposed EIOPA is still consulting on the regular reporting of occupational pensions information from national supervisory authorities. The requirements would apply to pension funds of €1bn or more in assets.According to Willis Towers Watson, the information sought by EIOPA goes beyond that targeted by the ECB – including, for example, data about pension protection schemes.In its work programme for 2018, EIOPA said its strategic ambition was to be “the EU data-hub for the collection, use and dissemination of reference and reporting data on EU insurance companies and pension funds”. It also claimed this year’s stress test of pension funds “will likely highlight a number of risks in relation to the occupational pensions market, and EIOPA will need to enhance its means of collecting, managing and analysing data on the sector”.EIOPA’s data proposals have already been criticised by pension funds, although formal responses will come in following the end of the consultation on 27 October.EIOPA and the ECB have worked together in setting up their definitions and frameworks with a view to minimising the reporting burden on the pensions industry, the two parties have said.EIOPA’s proposals – which are still open to consultation until 27 October – are focused on obtaining information from national supervisors. However, Willis Towers Watson’s Dowsey said regulators would still have to seek this data from individual pension schemes.The UK and other non-euro-zone European countries would probably be unaffected by the ECB’s regulation, Dowsey said, but – subject to Brexit negotiations – would probably still be affected by the EIOPA proposal. Proposed new data reporting rules affecting pension funds should be delayed by up to a year to aid understanding and compliance, according to German pension fund trade bodies.Both the European Central Bank (ECB) and the European Insurance and Occupational Pensions Authority (EIOPA) have proposed frameworks for data gathering from pension funds, both of which have been criticised already as posing a significant burden.Responding to the ECB’s consultation, which closed at the end of September, Germany’s aba called for a 12-month delay to the first required reporting date, from the end of 2018 to at least the end of 2019, “because from our perspective the earlier date is not feasible”.aba’s response was also on behalf of the German trade bodies for public and church pension funds (AKA) and Versorgungswerke (ABV).center_img The ECB wants pension funds to report regularly on their assets and liabilities as a means of “increasing transparency in this fast-growing sector of the financial services industry”. It published a draft regulation on this at the end of July and its consultation on the regulation ended on 29 September.According to Willis Towers Watson, the ECB regulation would require pension funds to provide broad and detailed reports on their assets, liabilities and membership numbers. At the asset level they would have to provide each security’s identification number (ISIN), price, market value, number of units, revaluations, and more.The draft rules state that “national central banks” should co-ordinate quarterly asset portfolio data and annual data regarding liabilities and membership. Dowsey questioned what the ECB or regulators would be able to do if they thought the data revealed a problem.“Let’s say they establish that pension funds have a significant exposure to Greek sovereign debt, or too many people are investing in a certain security,” he said. “They can’t compel [investors] to sell. Even issuing a warning would move markets, perhaps unnecessarily.”Trade bodies call for minimal reporting burdensPensionsEurope – the continental trade body for pension funds – and the Netherlands’ Pensioenfederatie both voiced support for the ECB’s aims in their consultation responses.The Dutch trade body appeared relatively unconcerned by the central bank’s plans. In comments shared with IPE, it said the dataset as requested by the ECB was not as comprehensive as the dataset requested by its national supervisor.“Consequently, the effect of this initiative on Dutch pension funds should be limited,” it said.In general, however, it was very important that reporting burden and costs were minimised as much as possible for its pension fund members, the Pensioenfederatie added.“When it comes to the process of data collection and distribution, a central role should be played by the national authority, that already [has] a lot of information available (at least in the Netherlands),” the federation said. PensionsEurope also emphasised the importance of keeping the reporting burden and costs to a minimum, but said it was “happy to see that the ECB already pays a lot of attention to that in its draft regulation”. However, it reiterated that pension funds should not be required to pay high fees to third parties to obtain the information required by the ECB and EIOPA.EIOPA’s plans for an EU “data-hub”last_img read more

AP7 cuts gearing and adds risk-factor investments

first_imgSweden’s AP7 plans to introduce factor investing into its portfolio for the first time as part of a risk-reduction exercise.The national pension fund that provides the default option in Sweden’s Premium Pension System (PPM) will also lower the gearing on its equity portfolio.The SEK430bn (€41.4bn) pension fund said: “As a step in implementing the new strategic portfolio, which was decided in 2016, AP7 is now starting to invest in factor premiums.”The goal, it said, was to invest 10% of the fund in these strategies over the next few years. 
“At the same time, the normal level of leverage is being reduced to 25%,” it said. This is reduction from the previous normal level of 35%.However, the actual level of gearing was to be set even lower, at 15% percent, AP7 said, due to its previous assessment of market valuations.At the end of December, the pension fund’s actual level of gearing was around 25%, according to its 2017 annual report.Since 2010, a central part of AP7’s management strategy for its SEK396bn equity fund – which accounts for the vast majority of its overall assets – has been passive exposure to a global index with leverage of 50%. AP7’s default option pension product, known as AP7 Såfa, is a lifecycle fund combining AP7’s equity and bond funds.In 2015, AP7’s board opted to halve the actual level of gearing to 25% because stockmarket valuations were considered high. In December 2016, when presenting a new strategic portfolio to be implemented by 2020, it reduced the normal leverage to 35% from 50% in order to increase the room for manoeuvre associated with the change.The first step in introducing other risks then began in 2017, and involved increased exposure to emerging markets and private equity, AP7 said.The pension fund said the new management strategy was aimed, in particular, at reducing risk through diversification.“Another central part of the strategy is to systematically apply more dynamic risk-taking, where the fund’s overall risk level is adjusted to extreme market valuations,” it said.In February the pension fund put out a tender for advice on “active alpha” procurement, in part of its move to add risk-factor investments to its portfolio.last_img read more

Abu Dhabi’s sovereign fund buys 21% stake in UK pension insurer

first_imgIn the past 12 months PIC has backed pension fund buy-ins and buyouts worth more than £2.3bn. Competition within the sector has increased markedly in recent years, though, as companies seek to de-risk their existing DB pension schemes.Earlier this month, the trustees of the Littlewoods Pensions Scheme agreed an £880m (€1bn) pensioner buy-in deal with Scottish Widows and, in the first quarter, Rothesay Life acquired a £12bn portion of Prudential’s annuity book. According to JLT Employee Benefits, more than £19bn of bulk annuity transfer deals, longevity swaps, buy-ins, and buyouts have been struck in 2018 so far – close to the £21bn agreed in 2017.Tracy Blackwell, CEO at PIC, said: “We are confident that… they will continue to build on the valuable support provided by JC Flowers over the past 12 years, and ensure that PIC is ideally placed to meet the increased demand from pension fund trustees.”PIC has more than £25bn of assets, representing the benefits of over 150,000 individuals.Estimates put ADIA’s overall portfolio holdings at between $800bn (€692bn) and $875bn. The PIC purchase is the latest in a long line of investments by ADIA designed to build up its private equity arm across a range of sectors, including financial services, healthcare and technology.In recent years, ADIA has acquired stakes in KKR India Financial Services – a wing of the US private equity giant KKR – and US firm Hyatt Hotels, as well as holdings in the UK’s Gatwick Airport and Thames Water. The Abu Dhabi Investment Authority (ADIA), one of the largest sovereign wealth funds in the world, is to acquire up to 21.4% of the Pension Insurance Corporation Group (PICG) for an undisclosed amount from private investment firm JC Flowers.PICG is the parent company of Pension Insurance Corporation (PIC), the specialist insurer that provides bulk annuities to UK corporate pension schemes in what has become an increasingly buoyant market in recent years.“This investment is a further demonstration of our ongoing strategy to seek out principal investments in market-leading businesses with strong management teams,” said Hamad Shahwan Aldhaheri, executive director of the private equities department at ADIA. “PIC has proven its ability to respond to the growing trend for UK companies to de-risk their defined benefit [DB] pension obligations and, as such, has strengthened its position as the industry’s leading pension insurance provider.”last_img read more

Ex-CEOs of major European pension funds back new climate endowment

first_imgThree individuals were identified as “initiators and founders” of the endowment:Jochen Wermuth, founder of German family office Wermuth Asset Management and member of the investment committee of Germany’s newly created €24bn fund to finance the storage of nuclear waste;Markus Bodenmeier, co-founder of AQAL, a Munich-based multi-family office; andPatrick Horend, former special situations investor and risk manager at the Abu Dhabi Investment Council.AQAL and Wermuth Asset Management are also separately named as backing the launch. Philippe Desfossés (top) and Mats AnderssonThe initiators of Climate Endowment aim to raise €20bn-40bn in commitments from the public and private sector.It is due to be launched in the autumn and will be headquartered in Berlin, “the centre of the energy transition and home to many research and policy institutions on climate change”, the statement said.Targeting institutional investors such as EU pension funds, it said it would focus on illiquid investments in renewable energy, new mobility, and related clean tech assets.Large US endowments had achieved better financial results than EU pension funds and insurers over the past decades, according to the statement, which attributed this to the former being able to invest with a long-term horizon, “largely in illiquid assets, alternative asset classes and largely taking equity risk”.EU pension funds and insurers, in contrast, were prevented from investing in this way by regulation, and often did not have the resources to do so. The former chief executives of two major European pension funds are supporting a planned new endowment focused on investing in climate change solutions.Mats Anderson, former CEO of AP4 in Sweden, and Philippe Desfossés, ex-CEO of France’s ERAFP, are supporting the founders of the Climate Endowment, according to a press release.Stephen Blyth, former chief of Harvard University’s endowment fund, is the third major investment expert on the new group’s advisory panel.According to the press release, the Climate Endowment was being launched as “an urgent response to the climate crisis and to the European voters’ outcry for a green revolution”.last_img read more

​AMF, ATP, Folksam join $1bn capital raise for Swedish green battery firm

first_imgThree major Nordic pension funds have backed a $1bn (€886m) capital raising for Swedish lithium-ion battery maker Northvolt, led by Goldman Sachs and Volkswagen.Sweden’s AMF and Denmark’s ATP announced investments of SEK740m (€69m) and DKK650m (€87m) respectively in the start-up company, which said it would use the equity to “enable Europe’s first homegrown gigafactories for lithium-ion batteries”.Folksam, the Swedish pensions and insurance group, said it put SEK200m into the company via the capital raising.With debt financing to be provided by the European Investment Bank and other lenders, Northvolt said funding was in place to set up the initial 16 gigawatt hours of lithium-ion battery cell manufacturing capacity at its Northvolt Ett factory. Construction of the the factory in Skellefteå in north-east Sweden was due to start in August, with production scheduled to begin in 2021, it said.#*#*Show Fullscreen*#*# An artist’s impression of the Northvolt Ett factoryUlrik Weuder, head of alternative investments at ATP, said: “With the investment in Northvolt, we can be involved in promoting the development of a green car industry and create a good return for our members – that is a match we really like.”He said the car industry was undergoing a transformation and both the development of and demand for electric cars was rising strongly, which increased the need for lithium batteries.Weuder said that, with the local hydro-electric power plant providing electricity for Northvolt’s battery production, the CO2 burden of the development was being significantly reduced.Tomas Flodén, AMF’s CIO, said the pension fund aimed to be a long-term owner of Northvolt, after taking a 5% stake. “It feels particularly good to be part of a Swedish industrial investment of this size,” he said. “The investment has the potential to be good not only for our savers, but also for Sweden at large.”Michael Kjeller, Folksam’s CIO, added: “The investment will yield profits economically, environmentally as well as for the local community.”Folksam said the investment would be divided equally within the group between the life and pensions arm Folksam Liv, non-life arm Folksam Sak and the pension fund KPA.Other investors in Northvolt included German carmaker BMW and the IMAS Foundation, a sister foundation to the INGKA Foundation, the indirect owner of IKEA.last_img read more

Nudgee development is just one block away from being sold out

first_imgNudgee Place is just one block away from being snapped up, after strong buyer demand has seen the community almost completed within just a couple of years.A development in Nudgee is just one block away from being snapped up, after strong buyer demand has seen the community almost completed within just a couple of years. NEXT GENERATION SUBURB CREATES BUYER BUZZ Konnect Group director and marketing agent Alexander Klibschon said the development was made up of two sites, what were once semirural properties, one a hobby farm, one a horse property“It took just one year for all 29 blocks, ranging in size from 418sq m to 1.2ha, in the first stage to sell and settle.“Sales and marketing commenced mid-2016 and 100 per cent were sold and settled by June 2017,” Mr Klibschon said.The second and final stage is just one block away from being completely sold and settled.“Sixty-six blocks, ranging in size from 405sq m to 3023sq m, went on sale in April 2017,” he said.“Sixty-five have sold and settled and just one is left for sale.” More from newsParks and wildlife the new lust-haves post coronavirus17 hours agoNoosa’s best beachfront penthouse is about to hit the market17 hours agoFamilies have seen great value in Nudgee Place.Mr Klibschon said house and land packages started from the low $600,000’s and the highest house and land sale was $1,245,000, which was well under construction with completion due before Christmas.“Demand has been overwhelming as it represented phenomenal value.” >>FOLLOW EMILY BLACK ON FACEBOOK<< Mr Klibschon said both sites backed on to Nundah Creek and were surrounded by protected environmental zones and green open space.“Development involved rehabilitation and rejuvenation of 1.6ha of land for green space,” he said.“One hectare of turf was planted as well as over 74,000 natives, tubestock and mature.“Both stages have larger rural lots within them, maintaining a connection between smaller lot residential housing with surrounding larger rural use blocks.”Mr Klibschon attributed the community’s success to the proximity of Brisbane’s CBD, the fact that it had easy access to Gateway Motorway and was a short drive to Brisbane Airport.“It was also the proximity to major employment hubs — the airport and Port of Brisbane (AKA Australia TradeCoast), as well as having Australian Catholic University, Banyo Retail Centre, Nudgee Beach and local parks,” he said.“Roughly 75 per cent of sales to owner occupiers, mix of first home buyers, second and third home buyers, downsizers.”last_img read more

Set on acreage, this new creation is a modern showpiece

first_imgShaun Lockyer of Shaun Lockyer Architects dubbed this Chandler creation as The Long House. Photo: SuppliedMore from newsParks and wildlife the new lust-haves post coronavirus14 hours agoNoosa’s best beachfront penthouse is about to hit the market14 hours agoMr Lockyer said the house was a great example of “simple, done well”.“The only challenges were to do with planning, title and some technical issues regarding the drainage and foundations. However, these were overcome very early on in the process and the builders, M2 Construct, did a fantastic job, completing the project on time and on budget,” Mr Lockyer said.“Architecturally, this project represents a great example of how with relatively limited means, something interesting can be achieved.” The new build cost about $1 million.Combined with a couple of full-height walls featuring large circular apertures, the design of the outdoor room adds depth and intrigue to the property without inhibiting the flow of space and light. “The clients were interested in mid-century modern work, referencing white painted brick specifically, but they also wanted to contextualise the house in the subtropics,” Mr Lockyer said. “To this end, we proposed a mix of simple modern forms with some playful combinations of simple, timeless materials.”He said they chose a random selection of bricks from PGH Bricks and had them painted in Dulux’s Lexicon Quarter Strength. Shaun Lockyer of Shaun Lockyer Architects dubbed this Chandler creation as The Long House. Photo: SuppliedThis masterpiece at Chandler has been dubbed The Long House for a reason.Shaun Lockyer, of Shaun Lockyer Architects, created the house which is set on acreage. The elongated, linear floorplan stretches out across the east-west axis to take advantage of the northeastern exposure.Capitalising on the space available, and creating a fluidity inside and out, Mr Lockyer created an outdoor room defined by white brick “ha-ha’’ walls; a ha-ha being a recessed landscape design element that creates a vertical barrier whilst still preserving uninterrupted views of the area beyond. Inside The Long House. Photo: SuppliedMr Lockyer said the brick was renowned for its robust nature and longevity and provides a fresh, bright contrast to the timber and dark cladding above; a striking juxtaposition that continues inside with crisp, white ceilings and walls setting the backdrop for charcoal cabinetry and spectacular mosaic cladding in the kitchen and bathroom.last_img read more

Termite-infested house attracts 13 bidders in heated auction

first_img 30 Altair St, Tweed Heads South was boarded up and had termite damage.“It was a boarded up house in need of a hell of a lot of repair and so we didn’t do any actual inspections,” he said.“We had the listing and a walk around tour video and then people just drove by if they wanted to see it.“It was in a good street and close to the river but it had heavy termite damage.“We were basically selling as a knockdown and selling it as land value.” There were only dive-by inspections and video tours permitted.The auction, held last weekend via video technology platform Zoom attracted 50 bids from 13 bidders.Bidding started at $150,000.“We had the auction via Zoom to cater for the public distancing,” Mr Shugg said.More from news02:37International architect Desmond Brooks selling luxury beach villa8 hours ago02:37Gold Coast property: Sovereign Islands mega mansion hits market with $16m price tag1 day ago“There were 13 bidders and each bidder had their own representative.“I’ve not been in a Zoom meeting with that many people before.” Video Player is loading.Play VideoPlayNext playlist itemMuteCurrent Time 0:00/Duration 2:12Loaded: 0%Stream Type LIVESeek to live, currently playing liveLIVERemaining Time -2:12 Playback Rate1xChaptersChaptersDescriptionsdescriptions off, selectedCaptionscaptions settings, opens captions settings dialogcaptions off, selectedQuality Levels540p540p360p360p270p270pAutoA, selectedAudio Tracken (Main), selectedFullscreenThis is a modal window.Beginning of dialog window. Escape will cancel and close the window.TextColorWhiteBlackRedGreenBlueYellowMagentaCyanTransparencyOpaqueSemi-TransparentBackgroundColorBlackWhiteRedGreenBlueYellowMagentaCyanTransparencyOpaqueSemi-TransparentTransparentWindowColorBlackWhiteRedGreenBlueYellowMagentaCyanTransparencyTransparentSemi-TransparentOpaqueFont Size50%75%100%125%150%175%200%300%400%Text Edge StyleNoneRaisedDepressedUniformDropshadowFont FamilyProportional Sans-SerifMonospace Sans-SerifProportional SerifMonospace SerifCasualScriptSmall CapsReset restore all settings to the default valuesDoneClose Modal DialogEnd of dialog window.This is a modal window. This modal can be closed by pressing the Escape key or activating the close button.Close Modal DialogThis is a modal window. This modal can be closed by pressing the Escape key or activating the close button.PlayMuteCurrent Time 0:00/Duration 0:00Loaded: 0%Stream Type LIVESeek to live, currently playing liveLIVERemaining Time -0:00 Playback Rate1xFullscreenCOVID-19: What will happen to house prices? 02:13A BOARDED UP house infested with termites attracted 13 bidders, 50 bids and ended up selling at auction for 10 per cent over the reserve.The property, in northern NSW sold to a Hong Kong bidder for $383,000 under the hammer.Real Specialists partner James Shugg, who marketed the property, said he didn’t conduct any physical inspections for the two-bedder at 30 Altair St, Tweed Heads South.center_img The property was close to the Tweed River.Mr Shugg said the COVID-19 restrictions didn’t deter buyers from the property.“We started marketing this property the first week of April which was a few weeks into the restrictions,” he said.“I think real estate continues to be a good avenue with investment with the way the stock market is and low interest rates.”last_img read more