Institutions considering farmland investment should examine the opportunities presented by harvesting seaweed and sandalwood, according to a Thai company involved in contract farming.Arvind Narula told Nina Röhrbein in the February issue of IPE that the harvesting of edible seaweed carrageen would go a long way towards meeting unmet demand.The chief executive of organic rice company Urmatt also highlighted sandalwood cultivation as a way of diversifying the returns from farmland, as it is used in the production of perfume.While Narula conceded that accusations of land grabbing were “of course” an issue, he said there were approaches that benefitted both investor and farmer – as long as everyone involved understood supply and demand. “Out-grower projects that are well thought-out and well manned, with the correct expertise and technical know-how in crops for which demand exceeds supply, can be very rewarding for all players,” he said.Sweden’s AP2, which, in 2011, invested $250m (€177m) in a joint venture with US institution TIAA-CREF, stressed the importance of sustainability for all farmland holdings.Christina Olivecrona, sustainability analyst at the SEK248bn (€28.3bn) buffer fund, said its approach was well suited to a partnership with TIAA-CREF.“To make sure our investments are sustainable, we have to undertake in-depth due diligence to ensure the companies we select share our values,” she said.The fund in 2012 increased its initial commitment and said last year that it would grow its agricultural and timberland holdings beyond its 10% benchmark.For more on farmland investment, see the current issue of IPE
BP Pension Trustee has named chief risk officer David Rix interim chief executive following the departure of Sally Bridgeland.Bridgeland, who joined the £15bn (€17.5bn) scheme seven years ago from consultancy Hewitt, left at the beginning of April, according to a company spokesman.Discussing her time at the scheme, Bridgeland said she had “done a lot, learned a lot – and it was time to move on”.“At the moment, I am just going to have some talks with a number of wonderful people I know in this industry and see what the possibility and options are.” Bridgeland spent most of her career at Hewitt, working as head of investment research prior to joining BP in 2007.She said she would consider sitting on other pension fund trustee boards while continuing to promote her charity, Executive Shift.In her time at the BP scheme, she championed a focus on cash flows, telling delegates at the IPE Awards in Noordwijk last year: “Why are we thinking about volatility and market values? That’s irrelevant. What matters is volatility and diversification of cash flows.”BP confirmed that Rix, the fund’s chief risk officer since 2010, would act as interim chief executive.“A permanent appointment of a new CEO will be subject to a future announcement,” a company spokesman said, but could not provide any details of a timetable.Prior to joining BP Pension Trustee, Rix was treasurer of the Baku-Tbilisi-Ceyhan pipeline company, in which the oil major had a stake. He joined BP in 1988, following 10 years at Bank of America.
Finland should not impose a limit on the amount of first-pillar pension an individual can have because more money entering the system benefits all members by stopping the rise in collective costs, according to pensions alliance TELA.Nikolas Elomaa, legislative director at TELA, told IPE: “TELA does not want to have a ceiling on pensions – we think taxation is already taking care of the ceiling.”He was responding to the ongoing political debate within Finland about the possible imposition of a limit on the monthly amount of pension from the first-pillar earnings-related system an individual may receive.With the Finnish parliamentary election coming up on 19 April, it is seen as possible that some of the left-of-centre political parties could include a pension ceiling in their plans. The idea has gained popularity as an ethical issue, with some seeing it as wrong that very wealthy individuals can save for pensions that are much higher than those received by people on low incomes.Elomaa said people with very high pensions in Finland already have to pay 7% more in taxes.He said a pension ceiling would in any case fail to prevent the very wealthy from accruing large pensions.“These wealthier people would still get their pensions elsewhere,” he said, citing private insurance.In neighbouring Sweden, he said the pension ceiling in force had resulted in very high earners buying independent insurance from private providers.However, in Finland, 95% of all pensions are accrued in the first-pillar earnings-related pension system, he said.The fees paid by very high earners on money invested in pension funds in Finland are good for the system, Elomaa argued.“They are also good for people on low pensions because, if we look into the future, there is going to be a problems with an ageing Finnish population,” he said.“The more money [pension funds] get, the more they can stop rising costs.”Elomaa said TELA was wary of a proposal that could create two classes of pension saver – those in the regular system and those with private providers – saying it was more useful to have a system of solidarity.
The current system will offer a tax rebate on annual contributions up to €1,000, which it was hoped would offer an average replacement rate of 9% after 40 years of contribution.The pension strategy group’s report said that, while 2015 was too early to assess how successful the rollout of the new scheme had been, by 2020, the commission should conduct an “in-depth” review of its success.“In the event the Review shows the [Supporting Retirement Scheme] would not have delivered as planned,” the paper says, “the Review should give strategic consideration to recommending a mandatory opt-in, voluntary opt-out scheme, where the employer is responsible for managing the administration aspects of the scheme, and the government is responsible for the design of the fiscal incentive framework.”Malta has previously been criticised by the European Commission for failing to raise its statutory retirement age to compensate for increasing longevity.In country-specific reform proposals published last year, the European executive noted: “The statutory retirement age remains disconnected from life expectancy, which poses a problem for the long-term sustainability and adequacy of pensions.” The Maltese government should introduce auto-enrolment if its latest attempt to boost private pension saving fails, a comprehensive report on the country’s pension system has urged.The government should also conduct strategic reviews of the pension system every five years, with the parameters of each report set by a standalone commission, according to a paper by the Pensions Strategy Group.The group set out to review the Maltese system by taking into account the “solid foundation” of the state pension while recognising it cannot serve as the sole source of income on retirement.The report, prepared for the Ministry for the Family and Social Solidarity, suggested that if the introduction of a voluntary third pension – an individual savings account administered by the banking sector – failed to attract sufficient interest despite tax incentives, then employees should be auto-enrolled.
Under the revised IORP Directive, member states would no longer be able to prevent up to 70% of assets from being invested in shares, negotiable securities treated as shares or corporate bonds. However, the Czech Republic recently pushed ahead with the closure of its second-pillar pension system, which, following a change in government, is set to close in 2016 after being in place for just three years.The comments are in stark contrast with those of the Polish Chamber of Pension Funds, which argued in favour of lifting investment restrictions as a means of diversifying investment risk facing members.It noted that current rules restrict Polish pension funds’ ability to invest outside the country, and that, according to OECD data, only 1.4% of assets are invested outside of Poland.“Lifting current restrictions,” its response said, “would help local pension funds diversify risk, thereby increasing consumer protection while ensuring these funds can be invested freely to support projects across Europe.“Only Estonian private pension funds are invested substantially cross-border, with 75% of total assets invested in foreign investments.”Polish second-pillar funds must invest 75% of assets in equities under changes pushed through by the current government. The Czech government has warned the European Commission against harmonising pension investment rules, arguing that such rules should be left to individual member states.In its response to the recently concluded Capital Markets Union consultation, the Finance Ministry welcomed the idea of changes to the private placement regime, endorsing the development of a common framework rather than further regulation.“The result,” it said, “should not be revision of eligible assets for pension funds because the decision on setting a portfolio of eligible assets falls within the scope of competencies of the CZ [Czech Republic] and should not be harmonised by EU legislation.”The comment comes after the Commission’s attempts to lift investment restrictions facing pension funds.
The commission advising the Austrian government on the reform of the pension system is to be “restructured”, with entirely new members being selected in the coming months.The commission – comprising politicians and representatives from unions and employers – was mandated earlier this year to look into all three pillars of the pension system, instead of just the state pay-as-you-go system.Its members have publicly fallen out, however, over estimates on the development of first-pillar funding for the coming years.Representatives for the left-of-centre SPÖ party have argued that increasing the first pillar’s state subsidy will be “manageable”, while the right-of-centre ÖVP has warned of “massive” funding problems in the PAYG system. Both sides have accused the other of injecting politics into the interpretation of statistics. According to figures compiled by the SPÖ-led Social Ministry, the state subsidy to ensure pension payments from the first pillar will increase by 50 basis points over the next two decades, as the reforms of the civil servants pension take effect.In recent years, a generous civil servant pension scheme based on tenured contracts has been phased out, with all new federal employees accruing benefits equal to those of other employees.However, Martin Gleitsmann, head of the social policy and health department at the Austrian Economic Chamber, argues that the share of overall pension payments in the state budget will reach approximately 33% by 2019 from its current 24%.He has also warned that this development is set to accelerate from 2020.In the wake of the brouhaha, the government has decided to dissolve the commission, although it claims the timing is “coincidental” and that the restructuring had been on the cards as early as last year.According to the government agenda, the commission is to include more experts on second and third-pillar pensions, for a more “holistic view” of the system.The government has not said whether the commission’s dissolution will effect its target of producing a pension-reform proposal by 29 February 2016.
Hemmingsen is a thorough and skilled leader, also capable of finding and executing attractive investment opportunities, he said.“With Morten’s appointment, we have an organisation in place to continue our successful investment strategy and to manage the growing complexity there that exists in the investment field,” Fels said.Hemmingsen said getting the best possible return for PenSam’s more than 400,000 members was a big responsibility.“My task is to continue the good steps taken within investment by building further on the strategy PenSam has followed successfully since 2010,” he said.After Kobæk retires, Buchardt Andersen is due on 1 August to move up within the organisation’s leadership to take over the position of group director, replacing Fels. In all, the PenSam group has just under DKK140bn (€19bn) in assets under management. PenSam, the Danish labour-market pension provider, has appointed Morten Hemmingsen (pictured) to take over as director of investments from 1 May, replacing the fund’s CIO Benny Buchardt Andersen. PenSam said Hemmingsen, up to now head of fixed income and equities, had been a very important part of the company’s investment team leadership in recent years, having been involved in formulating and realising strategy.Torsten Fels, due to take over as chief executive at PenSam when its long-serving leader Helen Kobæk retires in July, said: “I am pleased Morten has said yes to taking the helm in PenSam’s investment operations.”
Lloyds Banking Group intends to sack Standard Life Aberdeen from mandates worth £109bn (€123bn) due to competition issues.The decision relates to investments run by Aberdeen Asset Management on behalf of Scottish Widows customers. Lloyds sold Scottish Widows’ investment business to Aberdeen in 2014, but the asset manager continued to run money for Lloyds customers.However, the deal was placed under review following last year’s merger of Aberdeen with Standard Life – one of Lloyds’ competitors in the UK insurance sector.In a statement, Lloyds said: “Aberdeen has delivered good service and performance and Scottish Widows and [Lloyds] would welcome their participation in the review if Standard Life Aberdeen is able to resolve the competition issue.” In a statement, Standard Life Aberdeen co-chief executives Keith Skeoch and Martin Gilbert said they were “disappointed” by the decision and would discuss its implications with Scottish Widows and Lloyds.Standard Life Aberdeen said it expected to take a hit of £40m to its 2017 results as a result of Lloyds’ decision. The revenue from the contracts made up less than 5% of its revenue last year, the company added. Antonio Lorenzo, chief executive of Scottish Widows, said the company had begun an “in-depth assessment of the market” to identify replacement managers.The contracts have a 12-month notice period. Any changes are expected to be completed in the first half of 2019. According to data from IPE’s annual Top 400 Asset Managers report, Standard Life and Aberdeen ran a combined €393.8bn of institutional money at the end of 2016, making the merged entity the fifth largest institutional asset manager in Europe. Ranked by global assets, the new company was the 24th largest in the world. Aberdeen Standard’s new HQ in Edinburgh, Scotland
The Dutch pension fund association, Pensioenfederatie, said in a response it is currently investigating the consequences of DNB’s decision for the coverage ratios of pension funds.Elegant solutionWichert Hoekert, senior consultant at Willis Towers Watson, said DNB’s action was “an elegant way” to smooth the impact of the new UFR. The new UFR will be based on market interest rates up to a duration of 30 years, up from the current 20 years.DNB’s 30-year swap rate stood at 0.198% on 31 July, compared to 1.509% at the start of 2019.The DNB announcement did not come entirely as a surprise for Hoekert. “The impact of the new UFR would have been extreme. This is why we already had doubts introducing it next year,” he said.The exact impact of the decision on coverage ratios remains hard to predict, however, because interest rates remain subject to change. “The difference between the old and the new UFR will continue to change over the next four years,” Hoekert added.The length of the adjutstment period is significant too, as it means the new UFR will be fully in force as of 2024. This is important because it marks the starting point of the transition period to the new Dutch pensions contract.The level of interest rates will be the most important factor to determine how a pension fund’s assets will be split between the different age groups in a pension fund under the new contract.€sterSeparately, DNB said it will for now hold off on using the new interest rate benchmark €ster to determine the new UFR because the market for €ster interest rate swaps is deemed not liquid enough as of yet.This is good news for pension funds, as the introduction of €ster would have put even more pressure on coverage ratios.Instead, DNB will continue to use Euribor to calculate the UFR. DNB is still planning a switch to €ster at a later stage, but said it will make sure the impact on coverage ratios of pension funds will be neutralised.To read the digital edition of IPE’s latest magazine click here. De Nederlandsche Bank (DNB), the Dutch pensions regulator, will introduce the new, lower Ultimate Forward Rate (UFR) in four batches until 2024. By taking this step, an ensuing drop of pension funds’ coverage ratios by at least 6% is being smoothed out over a four-year period.DNB was expected to introduce the new UFR, which is used to calculate pension funds’ liabilities, by 1 January next year. The new interest rate curve, which had been established by a special commission led by former finance minister Jeroen Dijsselbloem last year, would have led to an average 2.5% drop in pension funds’ coverage ratios, it was estimated at the time.However, the interest rate drop that has occurred since means coverage ratios would now fall by at least 6% if the new UFR would be introduced today, with funds with a relatively young population being affected even more.The decision comes as a relief for pension funds with a current coverage ratio close to or below 90%, such as ABP, PFZW, PME and PMT. An immediate introduction of the new UFR as of next year would almost inevitably have led to massive pension cuts in 2022.
MORE NEWS: Why rents on the Gold Coast are going up They’re spending up to two weeks longer on the market.“A correction phase of the market, which always follows a rising market … (buyers are) driven by a different kind of fear, that’s a fear that they might pay too much so they are slower to make decisions.” Mr Bell said sellers’ unrealistic price expectations were also contributing to it. “The reason properties stay on the market like this is that it takes a lot of sellers longer to come to terms with the fact their property is not going to be worth what they thought it was worth,” he said. “In many parts of Australia properties are blowing out to 120-130 days (on the market). “(The Gold Coast) average will keep rising, I expect to see it surpassing 100 days during the second half of this year.” More from news02:37International architect Desmond Brooks selling luxury beach villa12 hours ago02:37Gold Coast property: Sovereign Islands mega mansion hits market with $16m price tag2 days agoCoreLogic research analyst Cameron Kusher agreed the average days on market would likely increase.“The only thing that could stop that is if people get more realistic about prices,” Mr Kusher said. MORE NEWS: Would you live in a display home? Video Player is loading.Play VideoPlayNext playlist itemMuteCurrent Time 0:00/Duration 0:51Loaded: 0%Stream Type LIVESeek to live, currently playing liveLIVERemaining Time -0:51 Playback Rate1xChaptersChaptersDescriptionsdescriptions off, selectedCaptionscaptions settings, opens captions settings dialogcaptions off, selectedQuality Levels720p720pHD576p576p432p432p270p270pAutoA, 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 Rate1xFullscreenStarting your hunt for a dream home00:51 Gold Coast properties are taking longer to sell compared to a year ago.THE patience of Gold Coast sellers is set to be tested with properties spending up to two weeks longer on the market than they were a year ago. And experts believe the average days on market for properties is only going to get longer. Houses on the Glitter Strip took an average 74 days to sell last year, according to CoreLogic’s Quarterly Regional Market Update, which analyses data in the 12 months to November 2018. The report, released last week, showed the average increased by 11 days. Unit sales were even slower, spending an average of 90 days on the market — 14 days longer than a year ago. Ray White Surfers Paradise chief executive officer Andrew Bell said as the market moves through a “correction phase”, days on market typically start to blow out. “The market goes through cycles, we have a rising cycle where people are driven by fear of missing out and (have) a great deal of confidence, in that space they move quickly,” Mr Bell said. “We are seeing this across the board, around the country, properties are taking longer to sell.“There are tighter credit conditions, fewer buyers and fewer sales, but it’s not just on the Gold Coast. It’s a tougher market now than it has been.”The latest data also found sales activity on the Gold Coast dropped by 14 per cent, with current activity 15 per cent below the five year average.Home values across the region have increased slightly, houses by 1.6 per cent (about $10,000) and units by 1.5 per cent ($6000). The median house value sits at $645,000 while units have a median value of $417,000. Professionals Surfers Paradise director and REIQ director John Newlands said buyers were more cautious in the current conditions but expected the market to stabilise throughout the year. “Buyers want to see value for money and that puts a bit of pressure on sellers,” Mr Newlands said. “They have to be realistic and listen to the market conditions, it’s different today than what it was 12 months ago.”