first_imgThere will be a greater number of properties than in the UK segment because lot sizes are smaller.Per Sjoberg, chief executive at Cityhold Property, said there was no timetable for the acquisition programme because they were looking for the right opportunities and strategies.“We are looking primarily for offices in markets that are transparent and liquid, with modern buildings in good locations with good transportation links,” he said. “And we are looking for high-calibre tenants.”The Munich office is located at Nymphenburger Strasse 3, 80335 and is multi-let to a diverse mix of strong covenant tenants.Completed in 2003, the property provides an average unexpired term certain of around seven years.Cityhold is looking to get a running yield from the property approaching 5% a year, the average target for the whole fund.“Munich – and Germany as a whole – is a very stable and low-risk real estate investment because of the low volatility, which fits in perfectly with our investment criteria,” Sjoberg said.“Moreover, finance costs in Germany are much lower than elsewhere – for example, the UK.”He said an additional attraction was the stability of the German economy generally and its lower levels of debt.Cityhold’s owners are providing full equity funding for the acquisition.Jones Lang LaSalle acted as Cityhold’s real estate adviser, with legal advice from Mannheimer Swartling.The vendors were represented by Colliers for the sales process and GSK Stockmann as legal adviser.The deal is expected to complete in February. Cityhold Property, the wholly owned subsidiary of Sweden’s AP Funds 1 and 2, has acquired its first property in Germany, a centrally located freehold office building in Munich providing 15,000sqm of space.The property was purchased for an undisclosed sum from a special real estate fund of IVG Institutional Funds.Cityhold was set up in 2011 specifically to invest in core European office buildings worth about €50m and above, to add diversification to its parents’ real estate allocation, now worth £40bn (€48bn) in total.Having invested half its current allocation of €1.2bn in three London properties in 2012, Cityhold is now looking to diversify geographically by using the other €600m to buy buildings in Munich, Hamburg and Paris.last_img read more

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first_imgProgress, the €4.6bn Dutch pension fund of Unilever, has said it plans to increase its socially responsible investments due to previous good results. Following its initial 1% investment in an ESG mandate for best-in-class companies, it decided to extend its ESG policy to high-yield bonds and intensify the application of ESG criteria to its internally managed euro credit portfolio, according to its 2013 annual report.Last year, the pension fund saw its nominal coverage increase from 133% to 139% – equating to a real funding of 106% – making Progress one of the best performing schemes in the Netherlands.Its strong financial position allowed it to grant its participants full indexation, including a compensation for the indexation that could not be paid for 2009. Previously, the pension fund attributed its high funding to the continuous finetuning of its investment and hedging policy, aimed at limiting downside risk.The Unilever scheme said it made its investment policy partly subject to its real funding.If the coverage drops, the pension fund will increase its focus on extra returns, while it will aim for taking profits and protection if funding improves.Last year, it decided to reduce its strategic equity weighting by almost 9% to 30.5%, while raising its strategic fixed income allocation by more than 11% to 50%.As part of its adjustments – “in order to increase the number of revenue sources” – it reallocated 10% of its equity stake to less volatile risk-based equity, it said.It also added a 5% allocation to Dutch mortgages at the expense of property and existing fixed income investments.The pension fund cited the rise of interest rates – causing a reduction of its liabilities – for its improved funding. However, the interest change impacted negatively on its 49.7% fixed income portfolio, which incurred a 1.5% loss.Moreover, the rise in rates contributed to a loss of 6.2 percentage points due to a 60% interest hedge on liabilities, resulting in a net overall return of 1.9%.The pension fund returned 18.1% on investments the previous year.As a response to the loss on its hedge, the pension decided to improve its policy for interest risk and develop a short-term internal risk model that aims to respond to market movements.With a return of 24.1% – an outperformance of 3 percentage points – equity was the best performing asset class.Property, commodities and private equity returned 3.9%, 0% and 15%, respectively.Its board also expressed concerns about ongoing changes to the proposed financial assessment framework (FTK) and protracted regulatory uncertainty.last_img read more

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first_imgThe UK’s Department for Work and Pensions (DWP) wants to streamline rules governing defined contribution (DC) bulk transfers to remove barriers to consolidation.The DWP published a consultation paper yesterday calling for industry feedback on current arrangements, which are based on defined benefit bulk transfer rules.The consultation reflects a growing desire from the government and regulators to consolidate small pension funds in an effort to improve governance and efficiency.The government wants to make it easier for employers to consolidate multiple DC pension schemes into one, or to transfer schemes into a master trust arrangement. In the consultation document, the DWP said: “Our main objectives are to reduce unnecessary burdens while ensuring members are adequately protected, and modernise the provisions so they reflect the current pensions landscape.”Bulk transfers without member consent are only permitted if the schemes involved have a “certain relationship” – either the same sponsoring employer, or a relationship between sponsoring employers.The current rules make it difficult for transfers in some situations, such as when a company ceases to exist, leaving a DC fund without a sponsor, the DWP said.The consultation is also seeking views on the future role of actuaries in DC bulk transfers.The current rules require an actuary to sign off on any transfer, but the DWP suggested other professionals might be better suited.The DWP’s consultation document is available here.The deadline for responses is 21 February.last_img read more

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first_imgPME, the €45bn pension fund for the metal and electro-technical engineering industry, has invested €25m in starting technology firms in its own sector.It said that the investment – through a new fund which co-operates with local technical universities – was designed to boost the industry it represented.The fund, Innovation Industries, targets investments in Dutch companies specialising in areas such as semi-conductors, ICT and cybersecurity, nanotechnology, healthcare, and food production.A number of these companies are expected to be spawned by research from universities in Delft, Twente, Eindhoven, and Wageningen, as well as the research institutes TNO (technology), ECN (energy and transport), and DLO (agriculture). Other investors have already committed €75m to Innovation Industries, which is to issue risk-bearing capital – in particular equity – to approximately 20 firms.So far, PME and the European Investment Bank (EIB) are the largest investors, with the universities of Eindhoven, Twente, and Wageningen contributing €1.5m each.Other investors include TNO, innovation funds of the Dutch counties of Overijssel and Gelderland, and some private investors.This is the first time PME has invested in start-up companies or companies in its own sector. However, it changed this policy as part of its new environmental, social, and governance policy introduced last April.In a clarification of its new position, the metal scheme described investing in the future of its sector as “an important additional motivation”, adding that its participants were keen on such a policy.It added that the investment fund was supported by several high-tech firms that had placed their pensions with PME. The scheme did not provide details about the companies.According to PME, the relatively limited scale of the investment was not unusual for a niche destination. The scheme emphasised that the investment was nevertheless useful, as it was beneficial for the industry, innovation, and the local economy.Innovation Industries was selected following consultations with the Dutch Investment Institution (NII) about the options for local investment.The metal pension fund said it expected a solid return proportional to the relatively high risk of investing in start-ups.However, it put the risk into perspective by explaining that it would be limited because of knowledge-sharing between the universities and research institutes. It added that the new firms would also be coached while growing.PME further said that costs incurred by the investment fund would be “at the lower end of the spectrum” compared to other similar funds in Europe.last_img read more

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first_imgThe International Financial Reporting Standards (IFRS) Foundation has rejected an anonymous whistleblower’s claim that an international rulemaker broke due process rules when making changes to one of its standards.The claim alleged that the International Accounting Standards Board (IASB) made changes to its new financial instruments standard, IFRS 9, without following the proper processes for such changes.Of particular concern to the whistleblower, according to the claim, was that the change amounted to a change in practice.The chair of the Foundation’s due process oversight committee, James Quigley, said: “We as a committee are comfortable that due process has been followed. “What we are really saying is that, when the board decides that standard setting isn’t needed, there is not any due process for us to oversee in reality.”He added that his contact with the IFRS leaders at the leading six audit firms had revealed they did not view the board’s actions as a breach of due process.“They agree with the conclusion of the board that standard setting was not required,” he added.Quigley also noted that auditors believed that allowing differences in practice would have proved far worse than any action the board had taken.The complaint under discussion on 7 November arose out of work done by the IFRS Interpretations Committee and the IASB on IFRS 9, which details how financial assets and liabilities should be classified and measured.Specifically, the work dealt with the accounting under IFRS 9 for a modification or exchange of a financial liability measured at amortised cost that did not result in the de-recognition of the financial liability.The matter started out life as a question to the interpretations committee.At its July meeting, the IASB refused to sanction an interpretation, saying the requirements in IFRS 9 were clear and that no formal standard-setting activity was necessary.Instead, the board decided to include it as a note in its “basis for conclusions” to the standard at the same time as it made other amendments on a separate project. This section contains extra accompanying material for the standards, and there are no specific requirements as to what must go in it.IASB director Henry Rees told the trustees: “At all stages of the process, the board and the interpretations committee have agreed and have been clear about what IFRS 9 requires people to do in accounting for these transactions.“So, we don’t think the board is establishing new requirements in the basis for conclusions.”He said the board was merely recording the conclusion that standard setting was not required for companies to determine what appropriate accounting is.Rees also noted that it was an appropriate use of the basis for conclusions, in that the board had used it to set out the rationale for its decision.This is not the first time that the IASB has been accused of amending accounting requirements without going through its formal processes.In June 2010, IPE reported that former IASB member Robert Garnett had delivered a stern rebuke to staff over potentially controversial ad hoc drafting changes. Then in 2011, reviewers of the board’s IAS 19 fatal-flaw review draft flagged up a last-minute change involving the treatment of plan administration costs.The IFRS Foundation’s trustees have also signalled that they plan to review how they deal with anonymous complaints.However, as a recipient of European Union funds, the IFRS Foundation would have to comply with developments within the bloc around whistleblower protections.People with concerns about the board’s due process and its decisions have in the past been reluctant to bring complaints for fear of jeopardising their clients’ interests.last_img read more

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first_imgCompanies’ annual financial reports are to be made machine-readable under new rules proposed by the European Securities and Markets Authority (ESMA).From 2020, companies with securities trading on a regulated market are to prepare their annual financial reports in a new electronic format, XHTML.This format can be opened with standard web browsers and can be prepared and displayed depending on the preferences of an individual issuer.Where a company’s annual financial report contains IFRS consolidated financial statements, these are to be labelled with XBRL tags. These make the labelled disclosures structured and machine-readable, according to an ESMA statement. Source: ESMASteven Maijoor, chair, ESMA“The introduction of the new reporting format in 2020 will make financial statements more accessible and more easily comparable for investors across the EU, supporting transparency and contributing to increased investor protection.”The rules are not yet final, as the European Commission has to decide whether or not to endorse the standards proposed by ESMA.Jonathan Labrey, chief strategy officer at the International Integrated Reporting Council (IIRC), suggested the new reporting format could be beneficial by making it easier for investors to use financial information to gain insight into a company’s strategy and business model.Investors were having to spend too much time mining financial data and the notes to financial statements to find strategically important information, he said, which limited the time they had to “probe and test” a company’s strategy or scenario planning.“If this can improve connectivity of information from data to strategy and ease the burden on investors so they can focus on strategy then I think this is a good development,” he told IPE. The IIRC is a multi-stakeholder coalition promoting change in the thinking and communication about corporate value creation.Some people have expressed doubts about investor demand for the type of financial reporting ESMA’s rules would require.The supervisory authority said most accounting bodies, auditors, regulators and service providers were overall supportive of the mandatory introduction of structured reporting for annual financial reports, but many report preparers and their representative bodies raised objections, considering that not sufficient evidence of the need for electronic reporting had been provided.“A considerable number of these respondents hold the opinion that the [European Single Electronic Format (ESEF)] should require the use of PDF [format] only,” ESMA relayed.Summarising the feedback it received from its stakeholder group, the supervisory authority said that its members were divided in their views about whether the ultimate benefits of structured financial reporting to users, including the issuers, would outweigh the costs. This was considering the absence of a full impact analysis having been carried out.In coming up with rules for structured financial reporting, ESMA has followed through with a requirement of the 2013 EU Transparency Directive. Recital 26 of the legislation says that “a harmonised electronic reporting format would be very beneficial for issuers, investors and competent authorities, since it would make since it would make reporting easier and facilitate accessibility, analysis and comparability of annual financial reports”.Key terms (or, help!)XHTML – Extensible Hypertext Markup LanguageXHTML is a freely usable electronic reporting format that is human-readable without specialised software. A reporting format that may be more familiar to readers is PDF (Portable Document Format), or perhaps HTML (HyperText Markup Language).  XBRL – eXtensible Business Reporting LanguageXBRL is a language used to mark-up, or tag, financial statements. By marking-up the information with XBRL it can be processed by software for analysis and thus becomes machine-readable and ‘structured’.According to ESMA, XBRL is well-established and in use in a number of jurisdictions and is currently the only appropriate markup language to mark up financial statements. An “extensible” XBRL report significantly decreases the comparability of automated data, it noted. iXBRL – Inline XBRLA freely licensed technology used to embed XBRL data into XHTML documents. An Inline XBRL document is a XHTML document in which XBRL data is embedded, which means machine readable XBRL tags and the human readable representation are encapsulated within a single document. Because an iXBRL file is human-readable in the XHTML format, it is said to offer the features and functionalities of the PDF format, but some that a pure PDF file might not be able to provide, for example search functions that are not available for many PDF documents that were only scanned. ESMA said this would facilitate software-supported analysis and comparison of different reports, granting investors a key tool to support their investment decisions.Steven Maijoor, chair of ESMA, said publication of the rules marked “a significant step forward in the digitalisation of financial information of European issuers”.last_img read more

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first_imgUBS declined to comment further, but in relation to his appointment the bank said Hill’s experience in both Brussels and the UK meant he was able to speak “with authority on the challenges and opportunities for business arising from recent political and economic developments in Europe”.“That in turn means we will be able to offer richer advice in relation to Brexit and the wider political and economic environment to our… clients,” UBS added. Jonathan HillHe resigned in 2016 in the wake of the UK’s decision to leave the European Union, saying at the time he was “very disappointed” with the result of the referendum.Hill also served as leader of the House of Lords, the UK parliament’s upper chamber, under then-prime minister David Cameron.However, critics were quick to note comparisons with the furore that greeted former EC president José Manuel Barroso’s appointment to US investment bank Goldman Sachs in 2016. Former European commissioner Jonathan Hill has joined global investment bank UBS as a senior client adviser.A former lobbyist and public relations executive, Hill served as commissioner for financial stability, financial services and the capital markets union between 2014 and 2016.UBS said the former Conservative Cabinet member was “one of the very few people who can interpret politics in both the EU and the UK at a moment when businesses around the world are keen to know what recent developments might mean for them”.Hill was at the Commission when IORP II, the revised EU pension fund legislation, was being negotiated, and was reportedly well-liked in Brussels.center_img At an industry conference shortly before his resignation as commissioner, Hill uttered what were then welcome words for pension fund delegates, reassuring them that the Commission had no plans to harmonise solvency rules for occupational pensions and that, once IORP II was finalised, “that will be it. We don’t have any more changes up our sleeve.” last_img read more

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first_imgJerry Moriarty: ‘Things are going in the right direction’Over the 12-month period, 197 schemes reported their status as frozen – a rise from 181 the year before. Sixteen DB plans were in wind-up over the past year – a fall from 25 in 2016.Yet questions remain over the appropriateness of the current funding standard. Conor Daly, partner at Lane Clark & Peacock in Ireland, said it remained “a concern”.He added: “It’s a very prudent standard for mature pension schemes… In the statistics, pensioners account for 16% of the member numbers, but make up 59% of the funding standard liabilities – what that reflects is the very prudent basis used under the funding standard for pensioners.“That standard becomes a much more difficult standard to satisfy, the more mature a plan becomes.“As all these plans are closing to future accruals, it could become a real issue in the future – unless there is some reform of funding standard.” Of the 627 DB schemes governed by the Irish regulator’s minimum funding standard, 414 remain active – a fall of roughly 7% from the 447 current last year. Irish pension funds have taken a step closer to being fully funded, as statistics published this week by Ireland’s Pension Authority revealed almost 80% of defined benefit (DB) schemes met the regulator’s funding standards.Last year, a little more than 70% of DB plans matched the minimum funding standards – itself a marked improvement from the estimated 20% 10 years ago, industry experts said.The recovery has been driven mainly by strong asset growth over the period, over the past 12 months and over the longer term as well, according to Jerry Moriarty, CEO of the Irish Association of Pension Funds.“Over last 10 years there has been a major turnaround,” he said. “Things are going in the right direction and it’s down to improving investment returns, interest rates and a lot of extra funding of schemes put in by the employers – so it’s good news from that perspective.”last_img read more

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first_imgWhen Pension-Alandia’s current customers become Veritas customers on 1 January, there will be an increase of around 10% in the company’s insurance portfolio and investment portfolio, Veritas said.The firm said the improved cost ratio was partly due to more efficient administration, with the merger leading to about €1m in administrative savings annually. This would be transferred in full to customer repayments, Veritas said.“For our customers, the merger means, above all, that they pay lower premiums,” Pettersson said, adding that refunds were an important competitive factor.“We are already gaining the industry’s highest rating for our customer service and now becoming significantly stronger also in terms of refunds,” he said.Merger preparations were in full swing, the insurer said, and at the turn of the year Pension-Alandia’s three operations staff would be transferred to Veritas. The merger between Finnish pensions insurer Veritas and smaller pension fund Pensions-Alandia will increase the larger firm’s competitiveness, boost solvency and cut costs, Veritas has said.The pension provider announced that the Finnish Financial Supervisory Authority had approved the merger, which was initially announced earlier this year.Veritas chief executive Carl Pettersson said: “The merger is clearly increasing our competitiveness. Thanks to this we can improve our cost percentage by three to four percentage points.”“Our solvency ratio also rises by about one percentage point,” he added.last_img read more

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first_imgIt will continue to manage €1.4bn of defined benefit assets of 2,975 deferred members and 6,900 pensioners.Earlier, NPF had concluded that continuing the IDC plan would not benefit the pension fund or its active participants.According to Dooren, the initial expectation that more Dutch subsidiaries of employer Maersk Group would join the IDC plan had not materialised.“Because the limited number of participants, and the fact we are an ageing and shrinking scheme, the IDC arrangements didn’t offer sufficient perspectives,” he pointed out.When the IDC plan was launched in 2015, it was a ground-breaking initiative, as it enabled workers to converse their pension capital – accrued through a tailor-made life-cycle plan with Robeco – into pension rights ahead of retirement.New legislation for defined contribution plans also complicated matters for the pension fund.As the concept of a drawdown pension was also introduced by other providers, more alternatives became available to Maersk subsidiaries that hadn’t yet joined NPF, Dooren explained.He said the pension fund wanted to continue independently as long this was financially attractive, as it pays €60m in benefits annually.At the end of December, the scheme’s coverage ratio stood at 121.3%. NPF granted its participants and pensioners a 2% inflation compensation as of 1 January.A year ago, the scheme’s pensions administration – running on the program Lifetime – moved to RiskCo, after the IT firm had taken over pensions provision from Aon.The move was initially meant for a one-year period, as NPF first wanted to get familiar with RiskCo as well as the company’s own administration system.However, the pension fund has now decided that it would assess the situation annually. “We are not in hurry, because we are content so far,” said Dooren. The Dutch Nedlloyd Pensioenfonds (NPF) said it would transfer the pension rights accrued in its individual defined contribution plan as well as further accrual for its active participants to insurer ASR.Frans Dooren, the pension fund’s director, said he expected the collective value transfer of €17m of accrued IDC assets of 500 workers and 300 deferred members to be completed in May.He added that the transaction was subject to approval of pensions supervisor De Nederlandsche Bank (DNB) as well as the scheme’s participants on details of the transfer.The value transfer follows the scheme’s decision not to extend the contract for pensions provision, and to close to new entrants as of 1 January 2020.last_img read more

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