“This is not just a ‘nice to have’ thinking about using our stewardship role appropriately, it’s a must. And it’s not just for the long term, it’s to protect members’ money now.”Fawcett singled out JP Morgan joint chairman and chief executive Jamie Dimon for criticism, noting that he held both roles “against all best governance practices” and in spite of opposition from shareholders – although he noted that the percentage voicing concern had declined at the most recent annual general meeting over the previous year’s share of around 40%.He said this demonstrated how important collaboration was to persuading large companies to change their ways.#*#*Show Fullscreen*#*# Mark Fawcett (right) collects NEST’s IPE Award for best risk management at the ceremony in Noordwijk on 21 November.“Jamie Dimon kind of believes he can do what he wants, right?” he said.“He shows little remorse for $13bn of fines that have been levied on them, and he’s perfectly happy to be joint chief executive and chairman.”According to an analyst note by MSCI ESG Research, JP Morgan’s fine amounted to 78 days of revenue when basing revenue on a three-year average.However, the company also found that financial institutions subject to extraordinary fines – where the one settlement was more than 30% larger than the cumulative fines of the preceding three years – the return on average equity (ROAE) fell 75% for the quarter in which the fine was levied, compared with ROAE from the same time last year.The note, which based its analysis on data from the four years to October, contined: “While this result is expected when the fine was booked, we found ROAE remained depressed for up to five consecutive quarters following an ‘extraordinary fine’.”It added that this contrasted with no depression at institutions that were not subject to extraordinary fines.Matt Moscardi, senior analyst at MSCI and author of the note, told IPE there was “without a doubt” an impact on returns due to the fines.However, he said that while the extraordinary fines often led to a “shoring up of governance” across the affected banks, it was change that took years to implement.“But it’s not uniform that it’s necessarily the shareholder pressure,” he added.“What we are finding more often than not is that, when banks are making money, the shareholders largely are hands-off about it, and the governance changes are mandated by the regulatory aspects of the fine.”Moscardi noted that similar challenges were not often found elsewhere – such as in the more strictly regulated utilities sector – and that the size of fines levied at the banks were the result of more than a decade of de-regulation of the industry.“These fines are in lieu of regulation,” he said. “The new regulations are largely being lobbied away in the US […] and we haven’t noticed any change in controversial behaviour, for the most part.” Pension funds must cooperate on engagement to ensure banking institutions showing “little remorse” over multi-billion-dollar fines are held to account, the CIO of the UK’s National Employment Savings Trust (NEST) has said.Mark Fawcett noted that the six largest US banks had been fined around $100bn (€73.6bn) in recent years – including a $13bn settlement between JP Morgan and the US Justice Department over the investment bank’s involvement in the subprime mortgage crisis – and that the sums were largely down to failures of governance.Speaking at the National Association of Pension Funds stewardship conference earlier this week, Fawcett added that this was essentially $100bn in funds taken away from investors, including pension funds, and that, as defined contribution funds such as NEST were now the “genuine” long-term investors in a world of declining defined benefit funds, it was important to take the role seriously.“I’ll argue, given those sorts of numbers, that, to date, institutional investors, asset owners, fund managers – despite the best efforts of most people in this room – have failed to focus on stewardship and governance,” he said.
However, after the UK government removes the need for defined contribution pots to be annuitised, providers in the £12bn a year individual annuity market will need to look elsewhere to satisfy longevity budgets, with the bulk business an easy solution.This was shown after IPE reported that LV=, currently not active in the bulk space, is looking to enter the market, and Aviva, which previously retreated to writing smaller deals, is set to ramp up its writing capacity.Commentators suggest further new entrants will grace the market over this year and next, but the question remains – how will the market be formed in the future?Demand vs supplyConsultants advising in the area are less convinced about an over-supply of bulk annuity quotes driving down prices for schemes, although for a variety of reasons.Matthew Demwell, a partner in Mercer’s financial strategy group, believes not only that recent developments will have little impact on prices but also that the notion insurers will step into the market is overstated.“There might be some price impact at the margins, but [it will not be] significant,” he says. “There is always pent-up demand from pension schemes and companies looking to shift risk. Supply increases can very quickly get mopped up from demand, which may have been holding back before.“There are forces going in different directions here – there might be some marginal improvement in pricing, but do not hold your breath for a massive supply-driven price drop.”Dominic Grimley, principal consultant at Aon Hewitt, goes one step further in suggesting the demand from the market, and the potential growth in this, will offset any increase in supply.“Schemes invest similarly,” Grimley says, “so, last year, Gilt yields rose, easing liabilities, and funding levels rose by over 10%. But this tends to be the same effect on lots of scheme at the same time.“It has helped but not moved schemes to 90-100% buyout funding. But if they improve further, a lot of schemes simultaneously could think now is the time.”However, James Mullins, a partner at UK consultancy Hymans Robertson, says market forces remain in the buyers’ hands.He suggests that, despite demand from schemes being on the increase, the market, even in its current state, has enough competitive appetite.“The extra supply will benefit schemes for the time being,” he argues. “The balance is still in schemes’ favour.”However, any increase in the long-term interest rate, and thus scheme funding, will tip the balance into excess demand, he says.Unpredictability is a key factor in the market, with demand on supply affected by differing metrics, and no one can be quite sure how pricing will level. This raises the possibility of volatility, with the moving value of assets used in risk transfers – namely fixed income – yet to be accounted for.Crunching capacityThe issue of capacity within the market does not necessarily stem from writing ability but rather surrounding market factors that make up this complicated industry. Capacity increase in insurers writing bulk annuities is anticipated. But issues remain with re-insurance, corporate bonds and human resource. This could lead to providers being more selective, and discriminatory overpricing for smaller, less prepared schemes.General insurers often look to re-insure longevity risk from annuities to balance internal budgets. While the capacity in the UK to write these deals increases, the global re-insurance market remains stagnant.Schemes in the UK and US account for well over £4trn in liabilities, but the market simply isn’t deep enough to handle this.Mullins says the key here is the US market, where risk transfers are less developed. UK schemes should not be concerned with capacity, unless their North American counterparts pick up the pace.“The North American market is developing quite rapidly and would use up capacity if attention were diverted towards there,” Mullins says. “This is a conceivable impact but still not a short-term issue.”However, Aon Hewitt’s Grimley suggests the bigger capacity issue would be underlying investments. A popular way for insurers to profit from bulk annuity deals is to take scheme Gilt holdings and swap them into higher-yielding corporate bonds, making depth in this market fundamental to pricing and writing capacity.“I don’t how many corporate bonds are still being issued – a lot are owned by insurance companies already,” Grimley says.“Insurers are looking at infrastructure and property, but the question is whether there are enough of these assets available to both support the current pricing and not be too risky to meddle with solvency margins. If funding positions hold up, the first question will be sourcing assets over how many writers there are.”The latter factor is the physical human capacity of providers to manage the level of demand. As schemes come to market, deals require a high level of analysis and pricing strategy, regardless of size.Commentators suggest existing providers, namely Rothesay Life and L&G, are looking to increase staffing levels. However, should a sudden rush take place, providers can easily become more selective in the business they write, thus capping demand.Impacts on the bulk market will differ in tenure. However, there is no doubt the latest changes from the UK government, and a growing desire to shift risk away to insurers, will see the market fundamentally change, however long into the future. Taha Lokhandwala explores how recent changes announced in the UK Budget will affect the bulk annuity market in futureLast year turned out to be a record-breaker for the UK bulk annuity market, as pension schemes flooded in and insurers wrote more than £7bn (€8.5bn) in buy-in and buyout deals.The market boomed for a variety of reasons, mainly due to buy-side players. Pension schemes with significant Gilt holdings could have executed a pensioner buy-in at little cost, as pricing remained more favourable than Gilt valuations throughout most of the year, according to consultancy LCP. Increased funding levels fuel the buyout market, with both expected to continue.As demand from pension funds grows – and the number of suppliers remains stagnant, or dwindles, as has been the case in recent years – basic economics shows that pricing for schemes would increase.
Philip Dunne, president of Prologis Europe, said: “This acquisition is a unique opportunity to purchase high-quality assets that complement PELP’s existing portfolio.”Demand for logistics infrastructure in Spain was on the rise and construction of new facilities at a historic low, he said. The portfolio had been bought at a discount to replacement costs, he said.Including this deal, the PELP portfolio now included 230 logistics facilities in Europe with 5.3m square meters of space, Prologis said.NBIM said Prologis would manage the portfolio.The deal was signed on 22 August, it said.A year ago, the joint venture acquired a 12,600sq2 distribution facility in Tongeren, Belgium. Norges Bank Investment Management (NBIM), which runs the NOK5.5trn (€673bn) Government Pension Fund Global (GPFG), has bought half of a portfolio of Spanish logistics properties through its European joint venture with international industrial property provider Prologis.The 50-50 joint venture — Prologis European Logistics Partners (PELP) — has acquired a portfolio of 152,029m2 of logistics facilities and development land in Madrid and Barcelona from SABA Parques Logisticos, Prologis said.The portfolio includes eight buildings and two plots of land totalling 14.9 hectares, NBIM said.NBIM did not disclose the value of the latest deal, but said it had now paid a total of €242m for its 50% stake across four transactions via the joint venture, which began in 2013.
Brazil’s Bradesco Asset Management (BRAM) has co-operated with FTSE Group in the UK to launch a Latin American equities fund that will track a newly developed equity index consisting of low-volatility, high-quality names from across the region.The move comes as BRAM appointed a replacement for its high-profile chief executive, Joaquim Levy, who became finance minister in the new administration of Brazilian president Dilma Rousseff at the end of November.The asset manager confirmed Reinaldo Le Grazie as its new chief, after his promotion from head of fixed income and hedge funds at the company.The systematic, rules-based index, designed by FTSE with input from BRAM, will be the benchmark for a new Luxembourg SICAV called Bradesco Global Funds – FTSE Latin America Quality Value Equity. It is weighted by low volatility, quality and relative valuation factors, each contributing equally, rather than by market capitalisation.The universe for the index and fund will include almost 150 companies in Brazil (58% of the index), Chile (10%), Colombia (6%), Mexico (25%) and Peru (1%), as defined by FTSE’s market capitalisation indices for these five countries.The valuation factor is based on a mix of price-to-equity, price-to-book and price-to-sales ratios, as well as cash flow and dividend yields.Quality is determined by measuring factors such as profitability (in the form of return-on-equity), leverage (debt-to-assets) and operational efficiency (by measuring revenues against turnover of assets). Axel Simonsen, who joined BRAM this year to head its new Systematic Products division, said: “The combination enables investors to tilt towards quality companies at reasonable valuations.“The low-volatility factor helps investors to avoid some of the over-glamorous stocks in the universe.”As it launches, the smart-beta index is tilted towards financials and utilities and away from consumer stocks.This fund is BRAM’s seventh UCITS fund.The company aims to grow its Systematic products division during 2015 and is currently considering the possibility of bringing to market a similar alternative beta fund for institutional Brazilian investors.Luiz Osorio, BRAM’s head of international business development, said: “European investors are already familiarised with smart-beta methodologies.“Local investors are starting to look into it but are not yet investing, and we have to see how these products work with local regulation.”Le Grazie joined BRAM in 2011 as fixed income director after nearly three decades in financial services in Brazil.Levy departs after joining BRAM as chief strategy officer in 2010 and became chief executive in 2012, after a career that took him from the IMF, through the Brazilian Ministry of Finance and the National Treasury, to the State of Rio de Janeiro.Banco Bradesco established its asset management arm more than 40 years ago, before separating the business in 2001.BRAM manages in excess of $150bn (€91bn), mostly in Brazilian and Latin American assets, for international investors and more than 100 public and private pension funds in Brazil.
“Aer Lingus Limited has also been involved in a separate set of discussions concerning the Pilots Scheme, a single employer scheme for Aer Lingus pilots,” the report added.It noted that, following negotiations with the pilots’ union, a funding proposal for their scheme had been submitted to the regulator in early December.The company also disclosed professional and legal fees of €6.4m in 2014, which it said “principally” related to settlement talks relating to the IASS.Aer Lingus currently faces a lawsuit from the pensioners of the IASS, with a group representing pensioner interests’ threatening a High Court case worth €170m over the benefit cuts suffered by retired workers. Aer Lingus suffered a pre-tax loss on the back of its €190m payment to settle the dispute over the underfunded Irish Airlines Superannuation Scheme (IASS).The Irish flag carrier suffered a pre-tax loss of €180.3m, but would have seen a profit of €72m had it not been for a number of one-off costs, including the €190.7m payment to launch a new defined contribution (DC) plan.The plan will offer benefits to members of the IASS that have seen their future IASS payments reduced as part of the proposal to tackle the more than €700m deficit, which the company was barred from solving through additional contributions.The airline’s preliminary results for 2014 showed that the Pensions Authority had signed off on the IASS funding proposal in late December, with the €190m immediately placed in an escrow account.
Haringey Local Government Pension Fund, which provides pensions for employees of the London Borough of Haringey, has announced it will move one-third of its equity funds – roughly equivalent to £200m (€263m) – into a low-carbon fund.The decision, made at a pensions committee meeting earlier this month, followed lobbying by borough residents and groups including Friends of the Earth and Muswell Hill Sustainability Group.As at 31 March, the pension fund portfolio was worth £1bn, having returned 16.1% for the previous 12 months, 0.75% less than target.At that date, 50% of the portfolio was invested in overseas equities and 16% in UK equities. A report prepared for the pensions committee by council officers shows that, at mid-December 2015, equity investments were worth £724m.This is spread across six regional indices, each with a fossil fuel sector, varying between 1% (Japan) and 9% (UK).The aggregate monetary value of the fund’s exposures to the fossil fuel sector was £39m.Haringey runs passive global equity and bond mandates with BlackRock (52.5% of total assets as at 31 March) and Legal & General Investment Management (27.8% of total assets).The committee has now decided to move one-third of the passive equity exposure into the MSCI World Low Carbon Target Index Fund, run by LGIM.As a result, the pension fund will own no investments in coal industries anywhere in the world.It has also decided to explore making specific investments in low-carbon economy sectors, such as renewable energy.The pensions committee were advised by Mercer, which was of the opinion that: “Excluding a particular sector or sub-sector from Haringey’s investment portfolio but retaining the current passive approach is feasible, with some cost implications.”The report said Mercer’s preferred passive approach to low-carbon investing was to utilise LGIM’s capacity to invest in line with the MSCI World Low Carbon Target index fund.The index reweights the constituents of the MSCI World index to reduce exposures to carbon emissions by 80%, while targeting a return closely correlated with the standard index.The reduced carbon exposure is achieved by a reduction in exposure to the major oil companies.Last June, the Environment Agency Pension Fund committed £280m to the same fund.Cllr Joe Goldberg, Haringey Council’s cabinet member for economic development, social inclusion and sustainability, said: “When we are seeking to become London’s first zero-carbon borough, it doesn’t make sense for us to continue to invest in fossil fuels when we want to reduce, and indeed end, demand for them.”He continued: “I’m proud the council’s pensions committee has agreed not only to move some funds into a low-carbon fund but to also consider investing in low-carbon industry, giving us the opportunity to tackle carbon emissions while still getting the best return on our pension fund.”
Shareholders expressed “significant dissent” over twice as many pay-related resolutions at FTSE 100 company general meetings this year than last year, according to analysis by the trade body for the UK asset management industry.During the annual general meeting (AGM) season this year, more than 20% of shareholder votes were against management on 18 pay-related resolutions, compared with nine in the same period last year.Executive pay was less of an issue for companies listed on the broader FTSE All Share this year, however, with the Investment Association (IA) recording 61 resolutions in its public register as opposed to 68 last year.Since being asked to do so by the government last year, the IA maintains a public register of FTSE All Share companies where more than 20% of votes on any resolution at an AGM or general meeting were against management. Chris Cummings, chief executive of the IA, said the jump in the number of FTSE 100 companies facing a pay rebellion this year was “deeply disappointing”.“Shareholders clearly remain unimpressed with the approach to pay last year, and are frustrated the message is not getting through to some boardrooms,” he said. “FTSE 100 companies must do more to ensure the pay packets of their top team align with company performance and remain at levels that shareholders find acceptable.”According to recently published research from the High Pay Centre and the Chartered Institute of Personnel and Development (CIPD), median pay of CEOs at FTSE 100 companies increased by 11% between 2016 and 2017 “despite prominent criticism from the investor community and the government over excessive CEO pay awards”.If the mean measure were used, CEO pay increased by 23% in 2017, according to the High Pay Centre and CIPD.The IA’s data for this year’s AGM season showed that shareholder rebellions against the re-election of individual directors more than doubled, with the number of resolutions attracting a vote of more than 20% against increasing from 38 in 2017 to 80 in 2018. Among the 46 companies that were added to the public register in 2018 due to opposition over director re-election, nearly half (43%) drew significant dissent from shareholders over their proposal for the chair to be re-elected.This pointed to “a growing disquiet over individual accountability for the decisions made”, said the IA.Overall, shareholders expressed “significant dissent” over 237 resolutions at FTSE All Share companies in 2018, a quarter more than last year, according to the IA. This landed 120 companies in the public register, up from 110 companies last year.
Andrea Ash, private markets investment director, RPMI RailpenPrior to joining Tesco, Ash worked for Amundi Asset Management and Pioneer Investments, primarily in hedge fund research. Her appointment to Railpen follows that of Ted Jennings, who joined in September from Aviva as a senior investment manager in the private markets team.According to RPMI Railpen’s 2017 annual report, the scheme had £2.2bn invested in its private equity pooled fund and £579m allocated to a dedicated infrastructure fund.Under its revised investment strategy, new allocations to private market assets are housed in either its illiquid growth fund or its long-term income fund. Ash is to focus on growth assets, the pension scheme said. Source: RPMI RailpenRPMI Railpen’s asset allocation as of 31 December 2017 The UK’s industry-wide pension scheme for the railway industry has hired Andrea Ash as an investment director for its growing private markets team.Ash joins from Tesco Pension Investments, the in-house asset manager for the £13.2bn (€15bn) Tesco Pension Scheme, where she was an alternatives fund manager.Paul Bishop, head of private markets at the £27.4bn railways scheme, said: “Andrea’s appointment marks another chapter of growth as we develop the capabilities of our private markets team.“She brings valuable perspective and experience in sourcing, executing and managing illiquid investments and we are delighted to welcome her to the business.” Ash added: “RPMI Railpen is rightly recognised as a leading global investor, with a strong and growing reputation for excellence in private markets investing. I look forward to working with the team in continuing to generate sustainable, long-term returns for the schemes’ members.”
AFM – The Dutch financial markets watchdog will have a new chair as of February next year, with Laura van Geest appointed to succeed Merel van Vroonhoven for a four year term. Vroonhoven left on 1 September, with his position currently being filled by Hanzo van Beusekom.Van Geest has director of the Netherlands Bureau for Economic Policy Analysis (CPB) since 2013. Before that she worked at the Dutch finance ministry and at the International Monetary Fund.Smart Pension – The UK defined contribution master trust provider has recruited Anna Darnley, a 26-year-old digital strategist with a special interest in artificial intelligence and blockchain, to its trustee board. Darnley is also a trustee for the £1.3bn (€1.5bn) Accenture Retirement Savings Plan, and, according to Smart, “works internationally on innovative and start-up projects, using her Internet of Things and broader digital expertise to advise clients across strategy and consulting needs”.It said its independent trustee board was now 60 per cent female, and “representative of all generations saving into the pension scheme”. Just under 60 per cent of Smart’s members are younger than 40, with more than 30 per cent aged between 22 and 30. Andy Cheseldine, Smart Pension’s independent chair of trustees, said: “Anna is a very engaged and digital-savvy addition to our independent board and brings with her an understanding of the millennial and Gen Z mindset.”PensionDanmark — Danish labour-market pension fund PensionDanmark has appointed Rune Gade Holm as its new head of private debt. In his new role, he will work as part of the DKK257bn (€34bn) fund’s alternative investment team, after the department was merged with PensionDanmark’s private debt department in March.Gade Holm has worked at the pension fund since 2012 as a senior investment manager and, prior to this, worked for corporate financial adviser Clearwater International as associate director. He replaces PensionDanmark’s previous head of private debt Kim Nielsen, who was appointed head of alternative investments after the departments came together, while also continuing to work as head of private debt. PensionDanmark said Gade Holm took up his new role on 1 October.Sampension — Mads Smith Hansen is returning to Danish labour-market pension provider Sampension, where he has been appointed as chief operating officer and the second member of the executive board of the two entities Sampension Livsforsikring and Sampension Administrationsselskab. The pension fund said it decided to expand the executive board to two in light of its growing business volume and the associated complexity. Smith Hansen joins the fund from his current role of chief executive of Danish traditional pensions specialist Norli Pension, which is owned by Nordic Insurance Consolidation Group. He worked at Norli Pension since February, following a three-year spell as chief risk officer for Danish statutory pension fund ATP staring in 2016. Before that, Smith Hansen worked at Sampension for nine years — the last six as chief financial officer. Sampension said Smith Hansen will take up his new role by 1 April 2020 at the latest.AMF — Aino Bunge has been hired as the new chief of staff at Swedish blue-collar pension fund AMF. She replaces Tomas Flodén, who was appointed as the fund’s new CIO in April. Bunge previously worked at the Swedish Ministry of Finance, where she was head of the financial markets department, and at the Swedish financial services authority, in various senior roles.AMF told IPE that, as head of the fund’s staff unit, she will be responsible for areas including finances, compliance, sustainability and the actuarial function, and she has also become a member of AMF’s management team. Bunge began work in her new role on 20 August.Folksam — Anders Hjelm has been appointed the new head of compliance at the Folksam group’s life and pensions unit, Folksam Liv. Hjelm, who has already started work in his new position, is filling the gap left by Charlotta Carlberg, who was recently appointed chief executive of the company’s investment subsidiary, Folksam Fondsforsäkring.Hjelm’s most recent role at Folksam was that of head of the legal affairs department, and he has been replaced in that job on a temporary basis by Eric Fredriksson. Frediksson was a member of Folksam’s legal team before his appointment as acting head of the legal affairs department.Autorité des Marchés Financiers (AMF) – Didier Deleage has joined the French financial market regulator’s asset management department as its deputy head, working alongside Philippe Sourlas, managing director.Deleage is a veteran of the French asset management industry, having held roles such as chief operating officer and deputy CEO of HSBC Global Asset Management (France) and, more recently, chaairman of the executive board of Edmond de Rothschild Asset Management (France). He was a member of the board of directors at AFG, the French asset management association, between 2006 and 2014.Natixis Investment Managers – Bank-owned Natixis has created the role of chief operating officer, which Joseph Pinto will take up in the coming months. He will report to Jean Raby, CEO of the asset manager. Pinto started his career in 1992 with Crédit Lyonnais, working in the securitisation business, before moving to Lehman Brothers in London. He has been at AXA Investment Managers since 2007, most recently as chief operating officer and a member of the management board.Separately, Philippe Setbon has been named chief executive of Ostrum Asset Management, the renamed Natixis Asset Management and Natixis IM’s largest affiliate. He will replace Matthieu Duncan at the end of November. Natixis CEO François Riahi said: “Philippe Setbon will lead one of our key strategic initiatives: the creation and development with La Banque Postale Asset Management of a European leader focused on insurance-related euro fixed income.”AXA Investment Managers – Gérald Harlin has been appointed executive chairman of AXA Investment Managers (AXA IM), taking over from CEO Andrea Rossi. Harlin, who is currently group deputy CEO and group CFO, will take up his new role on 1 December, continuing to report to Thomas Buberl, CEO of AXA. He has also assumed the role of chairman of the board at AXA IM, succeeding Christof Kutscher, who had held this role since 2014.Rossi, who had led the asset manager since 2013, will become a strategic advisor to Harlin on December 1. Nuveen – Gregory Ohlson has been hired for the newly created role of head of UK consultant relations for the international advisory services (IAS) team at Nuveen, the investment manager of US pension fund TIAA. He was most recently consultant relations manager at PineBridge Investments, and has also worked for Candriam Investors Group, Spirit Advisory Services, Legal & General Investment Management and AXA Investment Managers.Nuveen said the role was created to help it achieve its growth ambitions in the UK. Triple Point – The UK impact investment manager has appointed Jennifer Ockwell as partner and head of institutional, responsible for growing the institutional business in the UK and Ireland. She was most recently head of UK institutional at Franklin Templeton Investments, and before that at Janus Henderson Investments, becoming head of its UK institutional business after the merger with Henderson Global Investors, where she had a similar role. She was also a trustee director for the defined benefit and defined contribution schemes at Janus Henderson.Triple Point described her as playing an instrumental role in establishing The Diversity Project, an industry-wide initiative to foster diversity in the investment profession. Ockwell is a member of the Diversity Project neuro-inclusion committee, which aims to make the financial and savings sector more accessible to those with a variety of neurological differences.Actuarial Association of Europe (AAE) – Falco Valkenburg has been elected the new chairperson of the umbrella body for the year to October 2020, succeeding Esko Kivisaari. Valkenburg was chair of the association’s risk management committee from 2005 to 2011 and chaired the AAE’s pensions committee from 2011 to 2018. He is also a member of the Occupational Pensions Stakeholder Group at EIOPA.Valkenburg said: “I feel privileged to represent this great organisation of volunteers as chairperson. We face big challenges: the low interest environment, our climate, changing regulations – just to mention three – are all impacting insurers, pension funds, consumers and the work of actuaries.“As European profession of actuaries it is our aim to contribute to the well-being of society. This will also be an important objective for the next year.”Goldman Sachs Asset Management – Tim Verheyden, previously of Arabesque, joined GSAM’s quantitative investment strategies team as an executive director, focusing on the discovery and refinement of environmental, social and corporate governance (ESG) signals for inclusion in the group’s equity strategies. At Arabesque Verheyden oversaw ESG research and the creation of its S-Ray sustainability ratings platform. TKP Pensioen, AFM, Smart Pension, PensionDanmark, Sampension, AMF, Folksam, Natixis IM, AXA IM, Nuveen, Triple Point, AAE, GSAM, ArabesqueTKP Pensioen – Paul Everloo will be CEO of the Dutch pensions administrator from April 2020, succeeding Ernst de Bie. Everloo will be joining TKP from Aegon, its parent, where he has worked since 2010, most latterly as director of pensions operations. De Bie has been at TKP for almost 30 years, joining in 1999 as a controller and becoming CEO in 2011. As at 2018 TKP administered pensions for 3.7 million people.
Jaap van Dam, 300 Club“A logical choice is a shift to more business values. But that conversation cannot be conducted now. Due to the great focus on nominal certainty, we have to deal with a mountain of limitations,” he said.“I am not saying that you should not invest in bonds at all. There are short-term obligations that you must cover with certainty. But if you look at PFZW, for example, the peak of obligations will be in 2050. And they will continue until at least 2100. For that, you really have to focus on long-term returns. We have to pursue that more than we do now,” he continued.He advocated more freedom for investors for long-term wealth creation with “immersed” governance and monitoring in mind.“Pension funds issue mandates to asset managers, in which they have very limited freedom of movement around a benchmark,” Van Dam sai, adding that perhaps better returns are achivable if managers can “look beyond the boundaries of their domain.”He said an asset manager should be able to get a “looser assignment”. “The challenge is how you manage governance. The fund board must be more intensively involved,” he said.Van Dam said that a model where more internal management or a smaller number of external asset managers could be beneficial. “Everyone with responsibility for investing must be able to sit together at one table.”During a voting session, approximately 60% of delegates indicated that a focus on sustainable wealth creation would be the best way to align objectives and outcomes to managing assets over a long-term horizon, agreeing with the views of the 300 Club.“The 300 Club agrees that internal management is better to maximise alignment between funds and the implementation,” said Van Dam. “It sends out the strong message that as long as you create the strategy internally you can outsource the mandates externally. The key focus for improving an asset owner’s investment approach in the coming decades is a long-term horizon, which should include long-term drivers of sustainability issues, such as climate change and good governance, according to experts on investment strategy.At the IPE annual conference in Copenhagen this week, Jaap van Dam, director of investment strategy at €238bn Dutch asset manager PGGM and chair of the European chapter of the 300 Club, said pension funds must shift from a pure risk managewment/benchmark-based approach to a more returns-focused approach.Van Dam, who reflected the views of the 300 Club, warned investors “needed to reduce the short-term mark-to-market volatility thinking”.“[A] new investment approach requires a much more selective set of assets in portfolios to achieve the desired outcome,” he noted. He continued: “There is now a lot of activity focused on reducing risks. But the biggest risk is that you will not achieve any returns in the coming decades.”Pension funds invest a substantial percentage of their assets in bonds, whci don’t yield much, Van Dam explained, adding that “this is at odds with the idea that pension funds must use participants’ capital productively.”