The UK Financial Reporting Council (FRC) has released proposals to set up joint disciplinary tribunals for professional misconduct hearings involving actuaries and accountants.The proposed changes affect the actuarial disciplinary scheme that deals with complaints about actuaries that give rise to a point of public interest.The FRC is proposing that, where a complaint arising out of a single set of facts involves both actuaries and accountants, the complaint should be heard by a single tribunal.The Institute and Faculty of Actuaries has said it broadly welcomes the move. In a statement, the IFoA’s general counsel Ben Kemp said: “We welcome the FRC’s consultation, which aims to improve the efficiency and effectiveness of its public interest tribunal process.“We remain committed to working in partnership with the FRC to ensure the smooth and efficient introduction of any proposed changes.”The FRC and the IFoA are charged with oversight of the actuarial profession.The FRC sets and maintains the profession’s rulebook, the Technical Actuarial Standards, as well as the Actuarial Standard Technical Memorandum.In addition, the council oversees the regulation of actuaries by the Institute and Faculty of Actuaries.The FRC also operates two disciplinary schemes covering both actuaries and accountants, the Accountancy Scheme and the Actuarial Scheme.Broadly speaking, the two schemes deal with serious allegations of misconduct by a member of the two professions that give rise to a point of public interest.Although the schemes share many common features, they are nonetheless separate disciplinary processes.The proposed amendments, however, could lead to the introduction of new joint tribunals that would hear complaints arising out of the same set of facts under the two schemes.In its consultation document, the FRC said the aim of the change is to “enhance the efficiency and effectiveness of the disciplinary arrangements, to promote consistency and, where possible, to reduce duplication of costs by providing for one hearing rather than two”.Joint tribunal hearings, the FRC added, will “promote consistency of regulation and co-ordinated resolution of disciplinary cases”.In the longer term, the FRC expects the shift to combined hearings “to reduce rather than increase the costs associated with a disciplinary case involving both accountants and actuaries” Interested parties have until 16 July to comment on the proposals.The FRC has signalled it will publish its formal response later this year.The text of the consultation document is available here.
Swiss private bank Pictet has published a financial report for the first time in more than 200 years.According to the half-year financial statement, the banking group generates 85% of its operating income from service income relating to wealth and asset management.Assets under management (AUM) at Pictet Asset Management amounted to CHF144bn (€117bn) after the first six months.Pictet, founded in 1805, began to operate as an institutional asset manager in 1967, when it became the founding member of the first independent investment foundation in Switzerland. As of the end of June, assets under management or custody in the whole banking group totalled CHF404bn, excluding double counting, which is CHF13bn more than at year-end 2013.“Taking double counting into account, amounts are split between wealth management (34%), asset management (33%) and asset servicing (33%),” the bank said.For previous years, the banking group reported assets under management or custody of CHF391bn for 2013, CHF374bn for 2012 and CHF337bn for 2011.The consolidated profit in the group for the first six months of 2014 stood at CHF203m. The banking group was forced to disclose its financial status publicly for the first time as – in line with other Swiss private banks – as it changed its legal status as of January 2014.Both Pictet and Lombard Odier have changed to partnerships limited by shares according to Swiss law (“Kommanditgesellschaft auf Aktien nach Schweizer Recht”).This step was taken to limit the liability of owners in the event of losses or claims for damages.The eight partners in the Pictet Kommanditgesellschaft, as well as their eight counterparts at Lombard Odier, keep control over the banking groups as shareholders, and all operating business are now run as listed stock companies.As of the end of June, Lombard Odier, founded in 1796, managed CHF47.8bn for asset management clients.For the first six months of 2014, it reported CHF62.5m in consolidated net profit.
In other news, the Pension Protection Fund (PPF) has acquired a 10% share in airline Monarch as part of a deal to rescue the company.The airline has attracted a £125m investment from Greybull Capital, granting the private equity company a 90% stake.The agreement will also see the underfunded Monarch Airlines Retirement Benefit Plan fall into the UK lifeboat scheme, which the company said had a deficit of £158m.Alan Rubenstein, chief executive at the PPF, welcomed the deal, which has been signed off by the Pensions Regulator.“We have been in lengthy and detailed negotiations with the numerous interested stakeholders for some time to ensure the interests of members and levy payers are protected,” he said.“It is very important to us that pensions liabilities are treated seriously and properly on any restructuring. We are pleased that those involved with the Monarch case understood this fundamental point.” UK retailer Tesco is being sued by a US pension plan after an accounting error caused it to overstate its profit.The supermarket chain, which disclosed last week that it had overstated profits by £263m (€334m), is being sued by the $181m (€143m) Irving Firemen’s Relief and Retirement Fund over “significant losses” incurred due to the error.The Texan pension fund claimed in a filing seen by Bloomberg that it acquired the retailer’s shares at artificially inflated prices.Tesco’s share price has been in gradual decline over the last year, standing at more than 371 pence in late October last year, but falling to 168 pence by Friday closing.
Sweden’s AP funds and the UK’s Environment Agency Pension Fund (EAPF) have called on some of the world’s largest car manufacturers to disclose any lobbying undertaken over forthcoming emissions legislation.Coming in the wake of Volkswagen’s admission it used software to beat emissions tests, institutional investors worth £625bn (€842bn) wrote to nine automobile companies – including Volkswagen, BMW and Daimler – asking for the disclosures.Catherine Howarth, whose responsible investment charity ShareAction coordinated the letter, said she was pleased her organisation was helping investors acquire “risk-relevant” information on manufacturers’ relationships with regulators and politicians.“The share price carnage brought on by the defeat-devices scandal has focused the minds of shareholders of automobile firms,” she said. VW’s share price has fallen by 32.6% since the US Environmental Protection Agency raised questions about how its diesel engines behaved during emissions testing.The letter – signed by AP2, AP3, AP4 and AP7, as well as the EAPF, Finland’s Ilmarinen and AXA Investment Managers – calls on the nine companies to disclose their position on EU legislation on CO2 and the US Corporate Average Fuel Economy (CAFÉ) regulations.Volkswagen, BMW, Honda, Daimler, General Motors, Ford, Fiat, Peugeot and Toyota have also been asked to disclose their contributions to industry associations, and detail work undertaken with the European Automobile Manufacturers’ Association (EAMA), which ShareAction alleges was “obstructing” the EU legislation.The letter follows similar efforts by ShareAction for fossil fuel companies to be more transparent on lobbying done on their behalf by oil and gas industry groups.A separate letter has been sent to Nissan and Renault, whose chief executive Carlos Ghosn is currently chair of EAMA, asking for him to engage with investors.In the wake of the Volkswagen scandal, third-party litigation funder Bentham Europe said it was in discussions with institutional investors to bring a lawsuit against the German car firm.
Anders Svennesen, CIO at Danica Pension, told IPE: “We really believe it’s a much better product, as we can target investments with the most attractive risk/reward to all risk profiles, and because we now have much more investment flexibility.”The product contains a defensive fund (bonds), a middle risk fund (mix of bonds and equities) and an aggressive fund (equities), and offers customers three risk profiles, which are a combination of the three.Danica Pension – Denmark’s second-largest commercial pension provider, with approximately DKK327bn (€43.8bn) in assets under management – has been particularly busy over the last year in hiring investment staff and re-designing its investment strategy in a bid to improve returns and win customers.Svennesen said he had no doubt the new products would be better performers.“Because in this new set-up, we are able to make sure that, no matter what risk profile you have, you get the best return for the risk, and we couldn’t do that before,” he said.When he took up his post at Danica Pension a year ago, having been co-CIO at statutory pension fund ATP, Svennesen said he tried to work out why Danica Pension had been underperforming in the Danish pensions sector, and identified some “systematic issues”.“Some of the profiles of Danica had much lower risk than competitors in the market, so, when markets were rising, we were lagging behind,” he said. “When markets were falling, then we would actually do better, but it was not because of the internal management – it was a matter of how much risk we had.”One of problems he saw was the way the Danica Balance product was implemented.“It was implemented in the mutual funds division, Danske Invest, and with mutual funds, it is very limited what you can do,” he said. “You can’t trade financial instruments such as derivatives, for example.”To have the investment flexibility necessary in the current environment, the Danica Balance funds had to be on Danica Pension’s own balance sheet, he said.“Then we have flexibility, we have all the agreements, all the documentation for trading all these instruments, and we can share alternative investments agreements between our different pension accounts such as the market products and the guaranteed products,” he said. Danica Pension has redesigned the basis of its key unguaranteed market-rate pension product to enable it to broaden the range of investment instruments it can use.The Danske-bank subsidiary said the move would result in higher returns and boost the company’s own competitive position in the pensions market.It added that the new version of its Danica Balance pension product, called Danica Balance Mix, was first made available to customers in the middle of January.It is based on funds held on Danica Pension’s own books rather than on mutual funds, as was the case with the old product, which means it can be invested in instruments such as derivatives, as well as traditional investments like bonds and shares.
Webb, now director of policy at Royal London Asset Management, dismissed a renewed consideration of smoothing out of hand.“If it turns out that low interest rates really are the new normal, then pretending they are not low to ease short-term funding pressures is pretty risky,” he said.He also defended the flexibility granted TPR during his tenure and emphasised that valuations were not rigid but tailored to an individual DB fund’s needs.“The argument is still ‘you don’t kill the goose that lays the golden egg’,” he said.“And you don’t expect such high pension contributions that it would actually reduce the chance of the company’s being there in 10 years’ time to pay the pension liabilities.”Consultancy PwC noted that many sponsors and trustees had constructed the most recent valuations around a scenario anticipating improved Gilt yields.Instead, the UK Debt Management Office this week issued £1.25bn of 10-year Gilts at a yield of -1.58%.Jeremy May, pensions partner at PwC, said the challenge now facing trustees was weathering continued investment volatility.“An alternative strategy would be to recognise that repairing the deficit needs to be done over a longer time frame,” he said.“This would allow trustees to reduce the investment risk within the scheme by moving to more cash-generative assets while increasing liability hedging with the sponsor, thereby benefiting from the reduced volatility in future contribution calculations.”While TPR no longer limits recovery plans to 10-year timeframes, it has recently come in for criticism for the 23-year recovery period set out by trustees at the pension fund for insolvent retailer BHS, now set to enter the Pension Protection Fund. The UK government should ignore calls to change the way defined benefit (DB) pension deficits are calculated, the country’s former pensions minister has said, after the impact of the UK’s vote to leave the European Union damaged funding.Steve Webb, responsible for pensions policy for five years until 2015, said the temptation to “fiddle the numbers” should be resisted after the most authoritative deficit figures for UK DB funds saw a £89bn (€105bn) increase in underfunding in the immediate aftermath of the vote.Since the referendum, his successor, Ros Altmann, has repeatedly warned of the economic impact of increasing deficits and said it must not be allowed damage the economy. Webb noted that, during his tenure, the Pensions Regulator (TPR) was granted a further objective to consider the growth prospects of sponsoring companies when agreeing deficit-reduction payments – a decision reached at the same time the government rejected a call to allow for smoothing of pension liabilities.
ASIP represents 935 Swiss Pensionskassen, who in turn represent around two-thirds of the country’s population covered by workplace pension plans. Of the 188 members that participated in ASIP’s survey, 159 were in favour of the reform package and 29 against. Of those registering their support, 60 did so with reservations, mainly because of concerns about a CHF70 (€64) monthly top-up of statutory pensions for future pensioners.“On the basis of these results and after weighing the pros and cons, ASIP says ‘yes’ to the compromise,” the industry association said in a statement.Given the different structures of ASIP’s member schemes, the association said it was up to each individual pension fund to decide how to position itself in the campaign and how it wanted to inform its members.ASIP said it would not join any campaign committee, but it would still be involved in the referendum campaign, mainly by running a digital education and fact-checking campaign.This would highlight the pros and cons of the proposed reform and the consequences of a ‘Yes’ and ‘No’ vote, it said.ASIP’s goal was to improve understanding of pensions-related matters and counter false information, it said.ASIP has already been running a website pressing the case for reform. Its public position had been to argue that reform was necessary and urgent, and that all stakeholders needed to compromise. After the parliamentary vote in March it said the second pillar amendments should be accepted.The Swiss general trade union association came out in favour of the reform package, saying that, on balance, it was positive for employees. Employer and commercial federations have come out against the reform. The insurance association has not said backed either side, instead choosing to communicate that it has reservations and considers the proposed reform package “unsatisfactory”.See IPE’s May magazine for more views about the upcoming referendum Switzerland’s occupational pensions association has decided to back the country’s reform package, AV2020.At its general assembly today, ASIP announced its support for the proposals agreed in parliament earlier this year, after seeking its members’ opinions on the Altersvorsorge 2020/Prévoyance vieillesse 2020 (AV2020/PV2020) reform package.After considerable back-and-forth, the reform was approved in March. It will go to a referendum, to be held on 24 September.ASIP said it would focus its referendum campaign efforts on “fact-checking”.
The company, which is listed on the London Stock Exchange, said it believed the operational impact of Brexit on its business would be manageable and the financial impact, including foreign exchange exposure, would be immaterial.Since the UK electorate voted to leave the European Union, most fund managers operating across both jurisdictions have announced plans to open a subsidiary elsewhere.Dublin, which for decades has been an operational centre for UK and international fund managers, has been a beneficiary of this move. Due to uncertainty around the passporting of products from outside the European Union and the imposition of third country status on the UK, many fund managers have moved significant operational and investment-focused teams from London and other UK fund centres. Luxembourg, a large international fund hub, has also been the choice for several fund managers.Asset managers’ Brexit preparations accelerateBaillie Gifford to open Dublin office to safeguard EU businessLegal & General sets up Irish base for post-Brexit businessFirst State to transfer up to £4.3bn to Ireland as part of Brexit prep Sustainable investment specialist Impax Asset Management has become the latest fund manager to reveal plans to open an office in Ireland to service international clients after Brexit.In its 2018 year-end report, published today, Impax said that, “to prepare for the Brexit scenarios that appear plausible at the time of writing, we are in advanced discussions with the Central Bank of Ireland to establish a locally-regulated, Irish subsidiary through which some of our EU business may be routed”.It became the third fund manager this week to unveil plans to open an Irish outpost. US giant Vanguard and equities specialist Merian Global Investors announced similar plans on Tuesday, according to the Financial Times.Impax said: “Post-Brexit we estimate that less than 10% of our assets under management would be recontracted through this subsidiary.” Kempen to close Edinburgh office, relocate small cap fundsSeparately, Kempen Capital Management has decided to centralise the management of its small cap investment management strategies in Amsterdam.As a result, its European small-cap funds and mandates would be transferred from the UK to the Netherlands, Kempen said, and its office in Edinburgh would close.According to Kempen, by bringing together the Dutch, European and global small-cap teams, it would be able to share existing knowledge and investment processes more effectively.Lars Dijkstra, Kempen’s chief investment officer, said that “augmenting our proven capabilities at a single location at Kempen will enhance team collaboration, investment decisions and performance for our clients”.Kempen manages €240m and €221m in its European small-cap fund and its European sustainable small-cap fund, respectively, as well as €329m in global small-caps.Combined assets of its 13 Netherlands-based small-cap funds amount to €1.2bn.Kempen said that the relocation would be implemented in December.
Swiss social security buffer fund Compenswiss has halted its asset sale programme and reviewed its investment strategy after Swiss voters last year gave the green light for an additional annual CHF2bn (€1.88bn) in financing for the state pension system.Announcing its investment results for 2019, the fund said the extra money, which is dispensed from this year, will plug the gap between benefit payments and income for around four years.As a result, it has been able to put a halt to its divestment programme, which had been running for about two years, initially at a monthly rate of CHF100m and then CHF125m.It also reviewed its investment strategy in light of the financing reprieve. A spokesperson for Compenswiss told IPE it had only adopted limited shifts for 2020, “reflecting a cautious approach in our overall risk assessment”, although the strategy asset allocation could still be amended in the future given the longer time horizon.For 2020 the fund had decided to switch 1% of its foreign fixed income allocation to real estate, “a market traditionally associated with higher returns but lesser liquidity than fixed income,” the spokesperson said.The allocation to real estate has risen to 10% as a result of the shift.Demographics are weighing on the Swiss state pension system. According to a study carried out in 2019 by UBS in conjunction with researchers at the University of Freiburg in Breisgau, pension promises from the state pension – AHV in short in German – exceed the system’s future income by about 170% of GDP (base year of 2016).The extra yearly cash injection of CHF2bn stems from a tax and AHV financing reform that was approved in a referendum in May last year, and according to the study it cuts the pension funding shortfall by about 20%.Solutions aimed at the long-term funding equilibrium are being discussed in parliament. The government’s reform proposal, known as AHV21/AVS21, aims to secure the financing of the state pension until 2030, which it has calculated as requiring an additional CHF26bn.10.22% gainCompenswiss’s investments gained a net 10.22% in 2019, with total assets going from CHF34.2bn to CHF36.4bn as at the end of the year. The return is the second highest since the first pillar pension system and the buffer fund were established in 1948.Operating and asset management costs amounted to 0.19% of total assets, in line with the previous year.
37 Alexandra St, North WardThe property is being marketed by Keyes & Co Property principal Damien Keyes, who said they had already had 30 groups inspect the home.“We’ve had quite a few families as well as local North Ward residents checking the market but there has also been plenty of genuine buyers,” Mr Keyes said.“We’ve had professional families looking at it along with some people who have relocated to Townsville.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 definitely in a location that commands attention – Alexandra St has a long established reputation as being one of Townsville’s most prestigious streets.” 37 Alexandra St, North Ward 37 Alexandra St, North WardThere is an outdoor shower facility and a powder room next to the in-ground pool and low-maintenance lawns and gardens.Inside the home there is multiple living zones with timber floors thought the main living area and ceramic tiled in the family room at the rear of the house.The property is within walking distance to Townsville Grammar School and Queens Gardens as well as tennis courts, parklands and touch football grounds. 37 Alexandra St, North WardMr Keyes said he was also expecting plenty of interest from upsizers taking advantage of Townsville’s affordable market.“In prime spots like these a lot of locals are looking to upgrade because the market is at such a good time to buy,” he said.The owners have added a pool and entertainment pavilion. The pavilion has a huge lounge and dining area with views of Castle Hill. 37 Alexandra St, North WardNESTLED at the base of Castle Hill in one of Townsville’s most prestigious streets, this North Ward home delivers a stand out entertaining area.37 Alexandra St has four bedrooms, three bathrooms, two car spaces and will go to auction on Saturday, August 11.The home is on the high side of Alexandra St on a 1012sq m elevated block and has views of Castle Hill.