Sweden to review costs, fund options in premium pension system

first_imgSweden is to review its defined contribution premium pension system (PPM), with the report set to investigate the impact of maintaining the status quo or reducing the number of fund options from the hundreds to 10.Pensionsgruppen – the cross-party group that considers pension reform – said last week that a review had been agreed that would examine the two options outlined in a report published last year.The report at the time said retaining the current system largely unchanged would prioritise a saver’s freedom of choice, but it recommended that savers be required to reaffirm their fund choice in a system that has more than 800 investment options.The more radical proposal put forward last year by Stefan Engström – to limit investment options to 10 funds, likely coordinated with AP7’s default Såfa investment option – would also be investigated, with the impact of the reforms examined by the committee and an emphasis on option one. While the government has yet to set out the precise terms of reference for the review, Pensionsgruppen said in a statement it would examine a number of ways of improving the PPM.As a result, the investigation will examine the legal hurdles to a number of reforms, including allowing the Swedish Pensions Agency, Pensionsmyndigheten, to flag up AP7 Såfa as the best option for investors with little or no financial expertise.Furthermore, the commission will also look at limiting the number of total fund options available to savers, and ways of making the PPM fund supermarket more transparent.Finally, it will also examine how feasible it would be to charge PPM savers fees dependant on how often they use the system’s fund supermarket. A spokesman for Ulf Kristersson, who, as minister for social security chairs Pensionsgruppen, said it had yet to set a deadline for the delivery of the report.The spokesman also said no decision had been reached on who would chair the investigation.last_img read more

EIOPA finalises vision on pan-European personal pensions

first_imgFlexible ElementsGuarantees The paper is the latest step in a European Commission (EC)-led investigation into the potential development of a EU market for personal pension schemes, envisaged as a third-pillar retail product.It takes into account feedback received as part of a consultation carried out last summer on the creation of a standardised PEPP, which in turn built on a preliminary report on PPPs by EIOPA in 2014. Last summer’s consultation and the latest consultation will allow EIOPA to respond to a call for advice by the EC in July 2014.Among responses to EIOPA’s PEPP consultation last summer were a warning of the risk of “regulatory arbitrage” from Brussels-based industry association PensionsEurope. The Dutch government rejected the standardised PEPP idea, while the Dutch Pensions Federation questioned the added value of a PEPP.However, Hans van Meerten, a professor of international pensions law at Utrecht University, flagged new opportunities arising from PEPPs for Dutch pension providers, pension funds and insurers.More recently, investment fund association ICI Global made the development of a pan-European PPP one of its key recommendations in its response to the EC’s call for evidence on the regulatory framework for financial services.It said it was “fully supportive” of the Commission’s work to develop such a product, highlighting the benefits of pooling assets on a cross-border basis for “EU savers and the EU’s capital markets”.EIOPA addressed concerns about regulatory arbitrage in its new consultation paper, noting that avoiding it is one of the reasons why it settled on a standardised PEPP regulated by a complementary second regime rather than harmonising existing Directives.“To achieve a true Single Market for pensions,” it said, “and to overcome barriers to use the efficiency gains of the Single Market and ensuring a high level of consumer protection, it is therefore EIOPA’s view that only a second regime PEPP will be capable of realistically tackling the currently under-developed EU market for cross-border pensions.”Proposed PEPP characteristicsThe supervisory body said research it had conducted, including last summer’s consultation, confirmed its view that a standardised PEPP with a defined set of regulated, flexible elements would be the best way forward. Default “core” investment option It also developed its views on the product, however.It is now proposing PEPP features such as standardised information provision based on the proposals of a key information document (KID) within the PRIIPs (Packaged Retail and Insurance-based Investment Products) framework, and standardised limited investment choices and a single default “core” investment option. The investment elements would be to take into account the link between accumulation and decumulation, according to the consultation document.Industry group Insurance Europe said it welcomed EIOPA’s acknowledgement that a PEPP should be “a true pension product” but questioned the proposed treatment of minimum investment periods and the decumulation phase – “the main characteristics of a pension product”.It said the product envisaged by EIOPA needs to feature minimum investment periods, and the decumulation phase given “appropriate consideration” in the product design.“Otherwise, the PEPP could end up being more like a short-term investment, rather than a long-term pension product,” it said. “Of concern is the link that EIOPA’s advice makes between packaged retail and insurance-based investment products and the proposed PEPP, given that the two are not easily compatible.”Consultation: From PEPP to PPPsEIOPA is now seeking views on whether and how its PEPP recommendations could be applied to personal pension products (PPPs) in general.The aim, it said, was to identify how PPPs – and possible EU-wide frameworks for these – could be developed “so they can contribute to meeting the challenges of an ageing economy, the sustainability of public finances and the provision of adequate retirement incomes and foster increased long-term investment”.EIOPA is asking for feedback particularly in relation to:Governance standards for providersHarmonised basis for product governance rulesHarmonised basis for distribution rulesHarmonised disclosure rulesPossible specific additional capital requirementFurther powers for national supervisorsEIOPA noted that PPPs were one of the priority measures for the European Commission’s Capital Markets Union action plan.,WebsitesWe are not responsible for the content of external sitesLink to “Consultation Paper on EIOPA’s advice on the development of an EU Single Market for personal pension products (PPP)” Pan-European Personal Pension Product (PEPP) Standardised ElementsInformation provisioncenter_img Limited investment choices Switching Cap on cost and charges The European Insurance and Occupational Pensions Authority (EIOPA) has published its final advice on the development of a so-called 2nd regime for pan-European personal pension products (PEPPs) and launched a fresh consultation on the back of the recommendations.The new consultation is on how a standardised PEPP could serve as the basis for an EU market for personal pensions products in general.The advice and related questions for stakeholders are set out in a ‘Consultation Paper on EIOPA’s advice on the development of an EU Single Market for personal pension products’, released yesterday.It marks the first time EIOPA has consulted on its advice, according to a spokesperson.last_img read more

Studies on German pensions ignore unfunded liabilities, says Mercer

first_imgThe consultant noted that unfunded pension obligations still accounted for half of all liabilities in the German occupational pension system and said the issue should be included in any future reform proposal.It said it was “unconvinced” the German government had “the strength” to act on the proposals contained within the two studies this year, and that the issue of pensions could play a significant role in next year’s federal election campaign in the run-up to the general elections in the autumn of 2017.“In the end, there might be a postponement into the next legislative period and a more comprehensive reform of the pension system including all three pillars,” it said. Regarding the outcome of the studies, Mercer said many of the proposals were “to be welcomed”, including a mandatory employer contribution to defined benefit plans.The consultancy also thinks a “pure” defined contribution (DC) plan could bolster occupational pensions, as “past evidence suggests guarantees have cut in on returns”.However, it emphasised that any shift to pure DC would require greater public education, as would the auto-enrolment proposal, which Mercer welcomed as a “means to increase participation in company pension plans”. Fidelity also supported the introduction of a mandatory element in the German system. Drawing on its experience with auto-enrolment in the UK, it estimated occupational pensions could cover 80-90% of the workforce within two years after its introduction. Mercer has criticised two recent studies commissioned by the German government, with the first concerning industry-wide pension funds and the second second-pillar tax incentives. The consultancy cited the failure to note reforms involving the valuation of unfunded pension promises on German companies’ books as one of the studies’ major faults.It said the studies neglect to address the “discrimination against unfunded pension liabilities”, or Direktzusage, for which a 6% valuation rate on the balance sheet must be applied.Uwe Buchem, retirement market business leader at Mercer for Germany, Austria and Switzerland, said: “In light of continuously falling discount rates applied under HGB and IFRS, this is unacceptable.”last_img read more

CEE roundup: Romania slashes second-pillar contributions

first_imgCurrently the 39.25% contribution is split equally between the two; in future employers will pay 2.25% and employees 35%.While the government assumes that the lower rate paid by employers will enable them to compensate their employees with higher wages, recent trade union protests suggested that not everyone was convinced.The Romanian Pension Funds Association (APAPR) stated on its website that, while it welcomed the maintenance of the existing mandatory architecture, cutting the rate – instead of increasing it to 6% in accordance with the 2008 law – would affect the long-term viability of the private pensions system.The APAPR said the decision would shrink second-pillar pensions payouts for future beneficiaries by at least 20%, while lowering capital-market financing possibilities for Romanian businesses.Financial independence for Bulgarian regulatorBulgaria’s Financial Supervision Commission (FSC), the country’s regulator for pensions and other non-banking financial services, looks set to become financially independent after the Parliamentary Committee on Budget and Finance adopted a series of amendments to the FSC Act.Currently the FSC is financed from the state budget, as well as licence fees and fines from supervised entities.The pensions industry has complained in the past that the fines levied on its sector have been disproportionately high compared with those paid by insurance and investment companies.In the future, the commission will become independent of the state budget, offsetting the loss through higher licence fees.Financial independence for the regulator was one of the key recommendations in a World Bank report published earlier this year.Other adopted recommendations included raising the salaries of FSC staff to the levels earned by supervised entities, and providing statutory indemnity so that FSC staff would no longer be held financially liable for decisions made in good faith.Legislation begins for Poland’s Employee Capital PlansThe Polish government is set to start working on draft legislation for Employee Capital Plans (PPKs), one of the two strands of the pension overhaul announced last year by finance and economic development minister Mateusz Morawiecki.The new law, envisaged to start in 2019, would oblige all employers with 20 or more employees to set up a PPK for staff, although employee participation will be voluntary.The contribution rates have been set at a minimum 1.5% for employers and 2% and for employees, with the option to increase the levels to 2.5% and 3% respectively.The pension fund management fee has been capped at 0.6% of net assets, with investment management co-ordinated by the state-owned Polish Development Fund.Paweł Borys, the fund’s head, recently estimated that the PPKs would inject PLN15bn-20bn (€3.5bn-4.7bn) a year into the local capital markets.In order to boost participation, the government intends to contribute PLN250 a year to each employee’s PPK pension pot, alongside a one-off sweetener of PLN240 when they join the scheme. The Romanian government has cut the contribution rate to the mandatory second-pillar pension system from next year, from 5.1% of gross wages to 3.75% – the first cut since the system’s inception in 2008.At the same time prime minister Mihai Tudose’s earlier proposal to make the system voluntary has been dropped.The government has justified the cut by stating that, as a result of next year’s increase in public sector gross wages of around 20%, contributions to the funds will remain unchanged in real terms.The wage rises came from a package of amendments to the fiscal code pushed through by emergency decree. Most controversially, these included shifting the bulk of social security contributions from employer to employee.last_img read more

UK work and pensions minister resigns over Brexit deal

first_imgEsther McVey, the UK’s work and pensions minister, has tendered her resignation after prime minister Theresa May presented a draft Brexit agreement last night. “It will trap us in a customs union, despite you specifically promising the British people we would not be. It will bind the hands of not only this, but future governments in pursuing genuine free trade policies.“We wouldn’t be taking back control, we would be handing over control to the EU and even to a third country for arbitration. It also threatens the integrity of the United Kingdom, which as a Unionist is a risk I cannot be party to.”She added: “I cannot defend this, and I cannot vote for this deal. I could not look my constituents in the eye were I to do that.” McVey was appointed work and pensions minister at the start of this year, having been elected to office in the 2017 general election.She previously served in the UK’s Department for Work and Pensions (DWP) as part of the Conservative-Liberal Democrat coalition government from 2010 to 2015, when she lost her seat.In July the Times newspaper reported that McVey was considering pulling government support for the proposed pensions dashboard, but pensions minister Guy Opperman has since confirmed that the DWP backed the concept.In her resignation letter, McVey stated: “It has been a huge honour to serve as Secretary of State for Work and Pensions, and I am immensely proud of the part I have played in the record levels of employment we have seen in all parts of the UK.”Steve Webb, who worked with McVey when he was pensions minister from 2010-15, said her successor would likely “have little time to shape pensions policy”.Webb – now director of policy at Royal London – added: “With this in mind, the key people shaping pensions policy will remain [the] Treasury and the DWP’s pension minister.”Alex Hutton-Mills, managing director at covenant adviser Lincoln Pensions, warned that disruption within the DWP could affect an expected consultation paper about defined benefit scheme consolidation. “Given the potential for consolidation to improve member security in certain circumstances, any further delay would be unfortunate,” he said.center_img In a letter to May , McVey said she did not feel the agreement – which was presented to government ministers yesterday – honoured the result of the 2016 referendum on EU membership or the “tests” set out by the prime minister for a successful Brexit deal.“The proposals put before [ministers], which will soon be judged by the entire country, means handing over around £39bn [€44.2bn] to the EU without anything in return,” McVey wrote.last_img read more

EIOPA confirms ESG risk assessment in 2019 pension fund stress tests

first_imgThe European Insurance and Occupational Pensions Authority (EIOPA) will analyse European pension funds’ exposure to “ESG” in next year’s biennial stress test of the sector, a spokeswoman has confirmed.The two-part analysis will involve a qualitative assessment of how occupational pension funds incorporate environmental, social and corporate governance (ESG) factors into their processes and assess the exposures of their investment portfolio, the spokeswoman said.This will be complemented by a quantitative exercise, with a focus on identifying business activities that are prone to being exposed to risks related to a transition to a low-carbon environment.Speaking about the stress tests at a conference in Brussels on Monday, Matti Leppälä, CEO of PensionsEurope, said the qualitative ESG-related section would include questions about pension funds’ policies, for example in relation to voting and engagement, and the impact of the Shareholder Voting Rights Directive on pension funds. The quantitative part would involve asking pension funds how much of their portfolio is exposed to the most emissions-intensive business sectors, he said.Leppälä said EIOPA was engaging with stakeholders such as PensionsEurope and emphasised that the plan for the stress test had not yet been adopted.The EIOPA spokeswoman said the supervisory authority was taking “its first steps to get a more tangible understanding of IORPs’ exposure to ESG”.A recent study of the impact of climate change on Dutch pension funds’ coverage ratios found that these could drop by up to 80% if global temperatures rose by 4°C, and 20% if global average temperatures only rose by 1.5°C above pre-industrial levels.ESG risk move well trailedIn 2016, the European Systemic Risk Board proposed that stress tests of the financial sector by European supervisory authorities (ESAs) should include risks stemming from a late low-carbon transition. EIOPA last year indicated that it would probably include ESG aspects in the 2019 pension fund stress tests.At the time, EIOPA said: “ESG aspects including climate change will be of growing importance for the pensions sector and will require cautious assessment of any financial stability implications.”This was in line with a proposal from the European Commission for EIOPA and its counterparts to incorporate sustainability considerations into their work, from the perspective of ensuring financial stability and “thereby making financial markets activity more consistent with sustainable objectives”.Enhancing the ESAs’ role in assessing ESG-related risks was one of the recommendations made by the High Level Expert Group on sustainable finance.Sustainable finance is very clearly on EIOPA’s agenda, not least because it dedicated a significant part of its recent annual conference to the topic.last_img read more

​PFA launches climate pensions option to ‘set new standard’

first_imgPFA, Denmark’s biggest commercial pension fund, says it is launching a new market-rate investment option for pension customers, in which the underlying investments will be carbon negative in 10 years’ time.The DKK576bn (€77bn) mutual pensions giant warned of potential short-term volatility in the product, but said long-term risk levels would be the same as those of its main product.Allan Polack, PFA chief executive officer, said: “With PFA Climate Plus, we wish to set a new standard for sustainable pension investments to counteract the vast climate changes, which are a cause for concern for many of our customers.”The pension fund said asset selection for its new product would be a two-step process. Potential investments would first be examined against PFA’s existing criteria – potential for strong returns and its policy on responsible investment and active ownership – and secondly, using climate-focused criteria, assessing an investment’s contribution to the green transition. “The investment of pension savings is one of most significant ways in which an individual can make a difference,” said Polack.In the long term, PFA Climate Plus will have the same level of risk and return expectations as the market-rate product PFA Plus, the firm said. But because the climate-focused selection criteria reduced the availability of potential investments, it said returns might fluctuate more in isolated periods.The move follows the launch last June by Danish mutual pensions provider AP Pension of a sustainable pension investment option, which allows customers to use their money to contribute to the UN’s Sustainable Development Goals (SDGs) and the green energy transition.AP Pension said at the time that all bonds within the product – AP Sustainable – would be green bonds, while the option’s equity mix would only contain firms generating at least 60% of revenue from activities associated with one or more of the United Nations’ Sustainable Development Goals.PFA said its new sustainable pensions product is to emit 60% less CO2 than the MSCI World Index and be completely carbon neutral by 2025 at the latest.“The ambition is a CO2-negative portfolio by 2030, meaning that it will pull more CO2 from the atmosphere than the investments emit,” the Copenhagen-based firm said. PFA also said it expects a segment of the new fund to be dedicated to venture capital, focusing particularly on tech companies whose activities could potentially speed up the green transition.The pension fund said PFA Climate Plus will be available to customers from this summer.last_img read more

Top 1000: European pension assets top €8trn

first_imgAs editor Liam Kennedy writes in the introduction to IPE’s dedicated guide, the effect of the coronavirus market crash this year, and subsequent rebound, may be captured in this year’s sample, but only to a limited extent – most often the latest data that was available was as at the end of the previous calendar year. Total assets recorded in IPE’s 2020 Top 1000 European Pension Funds universe amount to €8.3trn, up 7.25% on the previous year’s sample.By country, the top three jurisdictions are the UK, the Netherlands, with the Norwegian sovereign wealth fund’s €1trn-plus making that jurisdiction the third largest.The top 10 pension institutions in our 2020 sample accounted for nearly two-thirds (61.1%) of total assets, and the top 10 for 27.8%.Last year IPE’s Top 1000 sample recorded assets totalling €7.7trn, up 6.93% on the year before. For the first time, IPE’s Top 1000 guide has been extended with the inclusion of an asset allocation breakdown for the top 10 institutions, from Norway’s Global Pension Fund Global (GPFG) to the UK’s Universities Superannuation Scheme.This feature showcases the variety of asset allocation models out there, including GPFG’s traditional benchmark-led approach and ATP’s risk-parity inspired model – although major changes may be forthcoming at the Danish pension fund.To read more of the IPE’s Top 1000 guide, including country overviews, click here.#*#*Show Fullscreen*#*#last_img read more

House 4km from Brisbane CBD: $485K

first_imgGreat little DIY project for the handy ones in the family.A THREE bedroom house just 4km from the Brisbane CBD has fetched $485,000, one of the cheapest prices seen in any inner-city capital in months.The timber home was built in 1940 and sits on a 400 sqm block that’s close to schools and parks — and even has a bus stop right across the road.The agent declined to comment but the listing on realestate.com.au described the property as “in need of some tender loving care”. Brisbane apartment slump over Checklist for buying at auction Entire town for less than one average house A couple of bi-fold doors here would take this to another level. The Brisbane City Council’s Floodwise Property Report has flagged that the property may be affected by a waterway corridor in the area through which flooding may occur.The Brisbane Creek runs behind the property.According to the report, the minimum habitable floor level for the property was 19.1 metres (above sea level), which was 2m below the maximum elevation on the property. But being so close to the city, the area has attracted strong interest over the years, and this home in particular has fetched rental of $360 a week in recent years though it has gone as high as $410 a week. More from newsParks and wildlife the new lust-haves post coronavirus18 hours agoNoosa’s best beachfront penthouse is about to hit the market18 hours agoThe Brisbane Creek runs behind the home. Another three bedroom house on a 430 sqm block next door sold for $472,500 in January 2014, while the other neighbour with a three bedder on a 586 sqm site sold for $600,000 in December 2015.A three bedder across the road on a 407 sqm site sold for $600,000 in June last year. FOLLOW SOPHIE FOSTER ON FACEBOOK Video Player is loading.Play VideoPlayNext playlist itemMuteCurrent Time 0:00/Duration 6:36Loaded: 0%Stream Type LIVESeek to live, currently playing liveLIVERemaining Time -6:36 Playback Rate1xChaptersChaptersDescriptionsdescriptions off, selectedCaptionscaptions settings, opens captions settings dialogcaptions off, selectedQuality Levels720p720pHD540p540p216p216p180p180pAutoA, 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 Rate1xFullscreenLiz Tilley’s prestige property wrap 06:36last_img read more

REIQ deliver flood forums in Townsville

first_imgREIQ CEO Antonia Mercorella. Picture: Shae Beplate.TOWNSVILLE real estate agents will now be better equipped to help flood affected vendors, tenants, land lords and buyers following the institute holding forums in the city.The REIQ held two flood forums at the Ville Resort and casino on Wednesday covering flood-related topics such as insurance, repairs, reopening for business, emergency funding support, settlements, contract negotiations and property management queries.Ms Mercorella said the forums had brought the Townsville real estate community together and they had heard directly from them about the issues they are facing.More from news01:21Buyer demand explodes in Townsville’s 2019 flood-affected suburbs12 Sep 202001:21‘Giant surge’ in new home sales lifts Townsville property market10 Sep 2020“It’s clear that there is a long road ahead. The clean-up will be difficult. But what really shone through was that the REIQ, the Government and real estate agents all want to work together to make sure anyone who was displaced can find alternative accommodation,” she said.“It’s so important that we work on a solution that helps locals find accommodation but also that the incoming tradespeople find accommodation so that they can get on with the job of repairing Townsville and getting everyone back to normal.”Some of the speakers at the free event included REIQ CEO Antonia Mercorella, Department Housing and Public Works Director-General of Housing and Public Works Liza Carroll and RTA CEO Jennifer Smith. Ms Mercorella said the response to the forums had been positive.“I think even just showing up and letting everyone here know that the people of Townsville are in our thoughts and that we want to do whatever we can to help has been well received,” she said.“This is not the end of the REIQ’s involvement. We will continue to help, offering advice through our Agency Advice Line and Property Management Support Service at 1300 MYREIQ, so it’s important that people know we’re still available and that they know where to go to find the answers.”last_img read more