UK regulators disclose combined approach to DC pensions regulation

first_imgHowever, to harmonise the regulatory approach for the FCA’s estimated 2.7m savers in contract schemes, and TPR’s 0.8m in trust schemes, the bodies have published a guide for trustees, advisers and DC providers.The guide is said to detail areas of common ground between the two bodies, as well as explain how both will ensure members are unaffected by the different regimes.Since the FCA’s regulatory approach includes a “multitude of financial services”, it was not deemed feasible to have identical approaches.However, both have identical expectations for scheme quality and member outcomes.“The regulators will take the lead on different kinds of activity, consistent with their respective regulatory remit, strategy and powers,” the report said.“TPR is more likely to take the lead where there are problems with an individual scheme, and the FCA is more likely to take the lead where the issue is caused by the pension provider.”“If there are potential implications for both regulators, they will agree who should take the lead and may undertake a joint investigation if appropriate.”Disjointed regulation between the two bodies has often been highlighted as a concern by think tanks, industry experts and backbench MPs in charge of scrutinising government pensions policy.However, despite this, pensions minister Steve Webb reiterated late last year that he had no plans for combining both bodies, or reforming the current system.Other arms of the government, including the Treasury, supported this view, as well as the former chairman at TPR, Michael O’Higgins, who said any merger would be “unwise”.On the launch of the guide, Andrew Warwick-Thompson, executive director for DC at TPR, said he saw no reason why the different types of schemes should ever deliver different outcomes.“However,” he added, “joined-up regulation is essential to build equal confidence in both types of scheme, and this guide clarifies the various ways in which we and the FCA work together to improve the quality of all DC schemes.”Director of policy at the FCA, Christopher Woolard, said: “As the new landscape takes shape, it is more important than ever that there be a consistent approach between the two regulators. The guide sets out how each of us will work to achieve that.” UK regulators have moved to tackle concerns of disjointed regulation for defined contribution (DC) pension schemes by publishing a guide highlighting each body’s focus and approach.The DC market is currently split between trust-based schemes, regulated by The Pensions Regulator (TPR), and insurance-based schemes, or contract schemes, which are regulated by the Financial Conduct Authority (FCA).This is due to the legacy requirement for the FCA to monitor and regulate all entities that provide financial products, which includes contract DC schemes.A dual approach has led to concerns within the industry of DC savers being treated in a different manner, thus affecting overall member outcomes.last_img read more

Towers Watson’s Mansi promoted to CIO of delegated investment business

first_img“There are significant advantages to be gained by establishing a level playing field between alpha, smart beta and bulk beta investments, as well as by treating risk management as a source of value creation rather than only considering return generation.”Ford added: “In an increasing number of jurisdictions, our clients are asking us to augment their internal resources by taking on the responsibility for implementing part of or their entire portfolio through a delegated or outsourced CIO service.”Mansi was named European delegated CIO in 2011 as part of a move to establish a separate team for Towers Watson’s delegated business.It has since gone on to win clients including the Lafarge UK Pension Plan and the scheme for car manufacturer Jaguar. Towers Watson has promoted Chris Mansi, currently the consultancy’s European delegated CIO, to a global role in charge of all $60bn (€44.2bn) of delegated mandates.Mansi, who has been with the firm for 15 years, has been promoted alongside Craig Baker.Baker was previously global head of research at Towers Watson’s investment division, and has been named global CIO.Chris Ford, global head of investments, said the changes were about providing a competitive advantage to clients.last_img read more

Brussels to ‘limit’ prescription in Shareholder Rights Directive

first_imgThe Shareholder Rights Directive will not result in an endless list of disclosures with which to comply but rather seek to limit the amount of prescription required, according to a senior European Commission figure.Jeroen Hooijer, head of the corporate governance and social responsibility unit, also stressed that the directive’s most important role would be to bring clarity to the investment chain.He added that a 2012 report by UK academic John Kay had been very influential in Brussels.Hooijer, speaking at a conference organised by the UK’s National Association of Pension Funds, also stressed that he was keen to strike a balance between principles-based guidance, such as the UK Stewardship Code, and prescriptive regulation. “The transparency requirements should not only be principles-based – or very high-level principles that show us how you engage, or be transparent about what your strategy is,” he said. “We have to go down to a certain level of prescription but be careful not to end up in an endless list of little things you have to show in your report – because then you get these reports of dozens and hundreds of pages.”His comments came after a speech by Win Bischoff, chairman of the Financial Reporting Council, who said that while the UK body supported the Commission’s work on stewardship, it was concerned about the potential level of prescription.“We don’t believe owners should be compelled to adopt any one particular approach to stewardship,” Bischoff said. “If it’s forced on them, it will only create more work for advisers and intermediaries.”However, the former Lloyds Banking Group chairman warned that asset owners needed to scrutinise asset managers’ stewardship activities if they wished to maintain the principles-based, ‘comply or explain’ approach of the Stewardship Code.“If our principles-based system is found wanting, we will only have ourselves to blame if European legislation takes its place,” he said. Bischoff also expressed reservation’s about Hooijer’s unit moving away from the single market commission to fall under the directorate general Justice (DG Justice) as a result of Jean-Claude Juncker’s reorganisation of Commission portfolios.He said he hoped DG Justice would have contact with Jonathan Hill, the UK commissioner appointed to the financial services brief, “rather than trying to reinvent [the Directive]”.Bischoff said there was a risk the new home for the Directive meant there was a “danger of [it] being prescriptive”.“I really hope and I do expect there to be a dialogue, rather than Justice going off on its own,” he said. “The more our own system of principles-based works, the more people will sign up – we’ve only got ourselves to blame, or partially ourselves to blame, if it works the other way.”last_img read more

Dutch consolidation forces Pensions Federation to cut jobs

first_imgThe Dutch Pensions Federation will have to make several of its employees redundant after cost-cutting efforts failed to achieve the results it hoped for. In its annual report, the Federation recorded a funding gap of 6%, citing falling revenues due to the declining number of pension funds in the Netherlands.It said a reorganisation set in motion last year had failed to rein in staff expenses.“Therefore,” it said, “the process will continue into 2015.” A spokesman for the industry organisation declined to specify how many jobs would be at stake.Last year, the Pensions Federation spent €230,000 to “streamline” its organisation.In its annual report, it said it was unable to estimate how much more it would spend on further reorganisation this year. It reported revenues of €5.9m last year, when the number of affiliated pension funds dropped from 258 to 240.However, membership fees fell at a lower rate, as the contribution level is based on assets under management, which has not decreased over the period.The Federation said it was also investigating whether its members needed guidance for their remuneration policy for board members, pensions providers and asset managers.last_img read more

Friday people roundup

first_imgPioneer Investments – Kevin Choy has been appointed as a portfolio manager on the alternative fixed income team. He joins from Hartford Investment Management, where he was a senior analyst covering a variety of sectors. Before then, he was a senior analyst at OFI Global Asset Management.Pitmans Trustees – The trustee and governance services provider has appointed Alison Bostock as client director. She previously worked at Punter Southall, where she was a scheme actuary, investment consultant and head of the London office. Before then, she was a consultant and actuary at Clay & Partners.SYZ Asset Management – The asset management division of Switzerland-based SYZ Group has appointed Adrien Pichoud as chief economist. He joined the SYZ Group in 2010 as an economist and before then spent seven years as an economist in a brokerage firm in Paris. European Fund for Strategic Investments, Fonditel, BBVA, Intermediate Capital Group, Legal & General Investment Management, Pioneer Investments, Hartford Investment Management, Pitmans Trustees, Punter Southall, SYZ Asset ManagementEuropean Fund for Strategic Investments – A former head of France’s debt management office has been named to the board. Ambroise Fayolle, vice-president for innovation at the European Investment Bank, is one of four members of the EFSI’s steering board, set to oversee the fund’s investment activities. Fayolle, who spent two years as chief executive at Agence France Trésor and has also acted as the French representative to the IMF and World Bank boards, will be joined by Maarten Verwey, a board member for the European Investment Fund. Gerassimos Thomas and Irmfried Schwimann from the directorates-general energy and competition will also sit on the board.Fonditel – Fernando Aguado, former head of investment and institutional asset allocation at BBVA, has been appointed CIO at Fonditel, asset manager for the pension fund of Spanish telecoms giant Telefónica. Aguado replaces Jaime Martinez, who previously announced his intention to pursue other projects. Aguado had been at BBVA since 1997, and joined BBVA Pensiones in 2008, working in investments and business development.Intermediate Capital Group – Malcolm White has joined the UK distribution team. He joins from Legal & General Investment Management, where he was head of fixed income distribution, working with investment consultants and institutional investors. Before joining L&G IM 10 years ago, he was head of credit at First State Investments.last_img read more

Joseph Mariathasan: The implications of DB transfers

first_imgOf course, dividends can go down in any year, but over many years they would be expected to keep up with inflation. There will be capital fluctuations of course, but if he has no intention of ever making a sale, capital volatility is irrelevant.The biggest attraction for him, however, is not the increased pension he would be able to generate, but the fact that a DB pension is an annuity. This means that if he dies, his wife may get a fraction of his pension. Once they both die, the DB pension disappears. In contrast, the full £700,000 plus any appreciation in its value over the rest of his lifetime of his SIPP (after drawing down income from it) would be available to pass onto his children.It is easy to see why pension schemes are willing to offer such attractive terms to deferred pensioners. The ultimate goal of derisking a closed pension scheme is to buy a bulk annuity, which removes all liabilities from the corporate sponsor. The pension scheme liabilities are valued on the basis of risk-free nominal and index-linked gilts. With demand overwhelming supply, index-linked gilt yields have turned negative, prices have gone sky high, and annuities have become very expensive.Conversely, a deferred pensioner effectively selling his future annuity back to the pension scheme can get a very generous deal. This situation is unlikely to change quickly, with real yields still kept low by the massive demand from pension schemes for gilts with which to derisk their portfolios.Despite DB transfers of this type leading to what appears to be a win-win situation for both deferred pensioners and the pension funds themselves, the situation does raise a number of questions.The most obvious would be: What happens if everyone who can take up the offer, does? Does the scheme in question have sufficient funds to pay 39 or more times the pensions due for everyone? If they do, are they possibly overfunding the pension scheme?The argument that is often made is that as schemes mature into negative cash flow in a run-off, the investment problem changes into a cash flow matching and liquidity issue. The risk for a particular scheme is that it won’t have enough money for the youngest members if it invests in equities, despite them giving higher yields. But the focus on eliminating that risk has ultimately led to the demise of DB pension schemes as bonds have become so expensive.What is good for a scheme – and for an individual within that scheme who takes up the opportunity today of transferring a DB pension – is not necessarily good for society at large. The focus on treating pensions as a liability that has to be matched has forced most DB pension schemes to close to new entrants. As a result, the lucky DB deferred pensioners aged over 50 may be able to benefit today, but society has been left with new generations in less generous defined contribution pension schemes who will struggle in the future.It does seem a hard price to pay because no one could think of a way to guarantee a long-term return equal to gilts whilst investing in equities. Perhaps that is what a UK sovereign wealth fund should be doing. A friend of mine with a deferred pension of £20,000 a year from the now-defunct ICI decided to explore what the transfer value would be if he chose to move it to a self-invested personal pension (SIPP). To his amazement and delight, he has been quoted a figure of £700,000, a multiple of 35 times his annual pension.ICI is not unusual. Aviva has been offering 39 times the value of a pension, while Barclays has been offering 41 times.For my friend and others, it can be a no-brainer. Taking his £700,000 and putting it into the Vanguard FTSE All World High Dividend Yield fund with a current yield of 3.25% would give him a pension of £22,750 – higher than he would have got from his defined benefit (DB) scheme. Putting it into the Henderson Far East Income fund with a current yield of 5.7% would give a pension of £39,900, almost double his DB pension.I am not recommending he does either, but the reader can get the general idea. The dividend yields of equity funds can far surpass the income available from an annuity.last_img read more

​Netherlands, Denmark first class in Melbourne Mercer pensions index

first_img35Turkey42.2Dn/a 16Malaysia60.6C+58.5 27Indonesia52.2C53.1 36Argentina39.5D39.2 1Netherlands81A80.3 16US60.6C+58.8 26South Africa52.6C52.7 15Hong Kong61.9C+56 24Spain54.7C54.4 13Germany66.1B66.8 37Thailand39.4Dn/a 27Italy52.2C52.8 2Denmark80.3A80.2 10Chile68.7B69.3 6Norway71.2B71.5 7Singapore70.8B70.4 14UK64.4C+62.5 21Poland57.4C54.3 19Peru58.5C62.4 31Japan48.3D48.2 The Dutch pension system has retained its crown as the world’s best in the latest annual Melbourne Mercer Global Pension Index (MMGPI), even improving the already high score it was assigned last year.Denmark came second in the 2019 assessment from the consultancy’s Melbourne branch, with both countries maintaining their 2018 positions of first and second, respectively. The countries were the only two to have pension systems make Mercer’s A category, for which qualification requires a “first class and robust retirement income system that delivers good benefits, is sustainable and has a high level of integrity”.The Netherlands scored 81.0 in this year’s edition of the index, up from 80.3 in 2018, with Denmark improving too but by a narrower 0.1 of a point, rising to 80.3 from 80.2.center_img Commenting on the results, the Dutch Pension Fund Federation said a strong point for the Netherlands was the country’s combination of state pension and supplementary pension, with the state pension age also shifting with increasing life expectancy.“According to the study, the Netherlands could score even higher by reducing household debt and increasing labour market participation among the elderly as life expectancy rises,” the association said.Publication of the 2019 Melbourne Mercer ranking comes as Dutch pension stakeholders negotiate the details of a new system due to come into effect in 2022 and underfunded pension funds face the prospect of having to make pension cuts. Meanwhile in Denmark, Karina Ransby, deputy director of lobby group Insurance & Pension Denmark (IPD), said: “It is really nice that Denmark’s pension system again this year gets the A grade together with the Netherlands as the only two countries.”The association had expected Denmark to reach the top again this year, she said, but noted that the Netherlands had once again taken the very top position.There had been major improvements in the Danish pension system in recent years, she said.“When the latest changes have been allowed to unfold, we expect it to be reflected more in Mercer’s annual assessment of Denmark”Karina Ransby, deputy director of Insurance & Pension Denmark“When the latest changes have been allowed to unfold, we expect it to be reflected more in Mercer’s annual assessment of Denmark,” said Ransby.European pension systems appearing in the Global Pensions Index’s next categories (B+ and B) are Finland, Sweden, Norway, Ireland Switzerland and Germany. A system making this grade is judged to have “a sound structure, with many good features, but has some areas for improvement that differentiates it from an A-grade system”. UK still in C grade territoryThe UK improved its score to 64.4 in 2019 from 62.5, but this was 0.6 of a point shy of pulling it out of the C+ and C categories. The description for countries falling within this bracket is: “A system that has some good features, but also has major risks and/or shortcomings that should be addressed. Without these improvements, its efficacy and/or long-term sustainability can be questioned.”Benoit Hudon, head of wealth, Mercer UK, said: “The UK retirement system’s strong score for integrity needs to be matched by improving adequacy, in other words what people actually receive in retirement.”He said a lack of understanding of what they will receive and of what they will actually need in retirement has led to a gap in retirement savings for many UK employees.“This begs the question as to whether employers should play a greater role, both in educating and supporting their workforce,” Hudon said.Internationally, Mercer said its research showed that a strong correlation existed between the levels of pension assets and net household debt, with growth in household debt in developed and growth economies paired with the growth in assets held by pension funds.It said the report was the first international study of its kind to document the tendency for spending to increase with rising wealth in relation to pension assets.“The MMGPI’s data suggests as pension assets increase, individuals feel wealthier and therefore are likely to borrow more,” the firm said.The Melbourne Mercer index is supported by Australia’s Victoria government and is a collaborative project between the Monash Centre for Financial Studies – part of Monash University in Melbourne – and Mercer. It can be found here.Full rankings 25Austria53.9C54 22Saudi Arabia57.1C58.9 8New Zealand70.1B68.5 23Brazil55.9C56.5 12Switzerland66.7B67.6 18France60.2C+60.7 11Ireland67.3B66.8 4Finland73.6B74.5 3Australia75.3B+72.6 29Korea49.8D47.3 20Colombia58.4C62.6 30China48.7D46.2 5Sweden72.3B72.5 9Canada69.2B68 34Philippines43.7Dn/a  Country 2019 score and grade 2018 score 32India45.8D44.6 33Mexico45.3D45.3last_img read more

Thinking about the final homeowner key to successful renovation

first_imgLocation, purchase price, and budget are all important factors to consider when finding a renovation property. Picture: istock.RENOVATING a property can be tricky and unless you have the experience, it’s best to leave the hammer and nails to the professionals. However its location, purchase price, and budget are all important factors that are under your control, according to REIQ Cairns zone chairman, Tom Quaid.He said it was important for the renovator to understand both the suburb and the street where the project was being planned.More from newsCairns home ticks popular internet search terms2 days agoTen auction results from ‘active’ weekend in Cairns2 days agoLocation, purchase price, and budget are all important factors to consider when finding a renovation property. Picture: istock.“When you’re renovating a home, the last thing you want to do is have the home you’ve just done as the best one on the street, because anybody coming in as a potential purchaser is going to be looking at the values everywhere else along that street,” Mr Quaid said.“But if you took a home that was the worst on the street in the $200,000s, you’ve spent your $50,000 and then it’s valued at $300,000 – that’s where you really want to be.”He recommended choosing a location where the eventual resident will benefit the most. “So anywhere that you’ve got a tight supply. People want to be in an area such as Edge Hill, Whitfield, the M suburbs – Manunda, Manoora and Mooroobool, because they’re fully developed and they’re close to amenities.”Mr Quaid said old Queenslander homes were perfect for renovations because they proved less restrictive.last_img read more

Spacious penthouse for sale with never to be built out city views

first_img WOULD YOU SWIM IN A SKIP BIN? The last four-bedroom penthouse is for sale at Dwell Newstead.Dibcorp managing director Franco Di Bartolomeo, who is retaining a penthouse himself in tower two, said the project was a “labour of love”.Mr Di Bartolomeo said tower one included 75 apartments.“Level one to eight is sold, and we have six skyhomes and one penthouse to sell out of a total of 22,” he said.Only two penthouses are part of tower one, the other sold for $2.95 million.One of Dwell’s main points of difference is the “create your own” feature, along with expansive podium green spaces, stunning city views, plenty of natural light and breezes, and the best lift-to-resident ratio in the area. Dwell Newstead is penthouse living at it’s best. Dwell Newstead’s offer to“customise and create’’ your own personalised penthouse and skyhome focuses on buyers who want to plan their own standout dream home.Designed as an oasis within a busy inner city location, the last remaining four-bedroom, three-bathroom penthouse is for sale on level 14, atop Dwell Newstead. The 307sq m penthouse with a media room also includes three side-by-side car spaces and the ability to purchase additional car park and storage cages.The half-floor penthouse has 6m floor to ceiling glass panels, and never to be built out city views. Stunning river views and northern views of Hamilton Hill are also part of the luxury living experience. Dwell Newstead is the perfect place to kick back and relax.Mr Di Bartolomeo said the penthouse buyer could still customise their own apartment down the track if they chose.More from newsParks and wildlife the new lust-haves post coronavirus11 hours agoNoosa’s best beachfront penthouse is about to hit the market11 hours ago“They can move any walls around. There is the opportunity here for someone to include a mezzanine down the track,” he said.Only launched to the market this month, Mr Di Bartolomeo said local downsizers had shown a keen interest in the penthouse. “We designed this building based on our clients. We identified they are moving from a home and want something equivalent to a home,” he said.“This could be their last acquisition and there is the opportunity to create it. Everyone wants an outlook, they want views, they want something unique.“They want low body corporate fees and that’s why we opted out of pools and gyms and provided green space.“In every thing we do, we will always be guided by our core values of family, care, loyalty, clarity and enthusiasm.”Mr Di Bartolomeo said other focal points of the development included a 15m ‘spider wall’ at the front of Dwell, worth more than $500,000. He said more than $2 million had been spent on the building’s facade so it never had to be painted again. Follow us on Facebook.center_img MORE QLD REAL ESTATE NEWS: WHAT’S INSIDE A $16M PENTHOUSE? TAKE A LOOK AT THIS RIVERFRONT LUXURYlast_img read more

International buyers splash big cash on Gold Coast rainforest estate

first_imgA rainforest estate at 32 Carey Pde, Tamborine Mountain, has changed hands for a figure believed to be just below $3 million.ONE of the country’s largest privately-held rainforest estates has sold to international buyers in a multimillion-dollar deal. The 21.47ha property perched on top of Tamborine Mountain is known as Carinya and has an 800m driveway which winds through the private piece of rainforest. The deal, which is set to settle in the next few weeks, was rumoured to be inked for a figure just below the $3 million mark. MORE NEWS: Hong Kong buyers turn to Coast following protests Ms Brunt said they wanted a home with casual elegance, contemporary lines, warm tones and to have an artistic celebration of nature within the interiors. “The owners rebuilt the property and did all the gardens — it’s beautiful,” she said. “They are wanting to travel more, they have been there for over 10 years and have decided to have a change.“They have loved it and put their mark on it but want a lifestyle change.”CoreLogic records show the property last changed hands for $1.75 million in 2008. The property is one of the largest privately-held rainforest estates in the country. The international buyers plan to split their time between Europe and the Gold Coast.The four-bedroom house hit the market in August and was passed in at an auction event in September. Amir Prestige Property Agents’ Colleen Brunt and Nick Zhang notched the deal. Ms Brunt would not reveal any details about the sale price but said it was another impressive sale on the mountain. She said the overseas buyers fell head over heals for the property and plan to divide their time between Europe and the Gold Coast. “The buyers are international, from Europe, and were looking for something unique and away from the hustle and bustle of the Gold Coast,” she said. “The buyers looked up and down the Coast, they didn’t just concentrate on Tamborine. “They really loved the Tambourine village lifestyle and the feel it gave them, they felt at home.“They wanted to live with nature and this property allows them to do that.” There are impressive views from almost every room. The house has four bedrooms and three bathrooms.The grounds feature low-maintenance gardens, a fruit orchard, workshed and lagoon and boarder Tamborine National Park. A sweeping panorama of the city skyline, ocean and rainforest were another highlight of the Hinterland home. “Carinya is one of the largest rainforest estates in Australia,” Ms Brunt said. “There are a few of them but this one is one of the largest. It was amazing it attracted an international buyer and we had a substantial amount of inquiries due to the uniqueness of it.” More from news02:37International architect Desmond Brooks selling luxury beach villa9 hours ago02:37Gold Coast property: Sovereign Islands mega mansion hits market with $16m price tag1 day agoThe vendors spent years recreating the property, drawing inspiration from the picturesque surrounds. Not a bad spot for a game of pool. The property was named Carinya. Video Player is loading.Play VideoPlayNext playlist itemMuteCurrent Time 0:00/Duration 1:02Loaded: 0%Stream Type LIVESeek to live, currently playing liveLIVERemaining Time -1:02 Playback Rate1xChaptersChaptersDescriptionsdescriptions off, selectedCaptionscaptions settings, opens captions settings dialogcaptions off, selectedQuality Levels720p720pHD540p540p360p360p270p270pAutoA, 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 Rate1xFullscreen5 wow rural home sales around Australia01:03center_img MORE NEWS: Secluded slice of ‘God’s country’ hits the market last_img read more