Rethink on ‘asset ceiling’ requirements could have impact on UK schemes

first_imgThe International Financial Reporting Standards Interpretations Committee (IFRS IC) has instructed its staff to look again at the drafting of a proposal to amend its guidance on the so-called asset ceiling requirement.That guidance is set out in IFRIC 14, “The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction”.It interprets the requirements of International Accounting Standard 19 (IAS 19), Employee Benefits.The issue is believed to be of particular relevance to plans in the UK.  Summing up their approach to the issue, IFRS IC staff argued at a 13 May meeting that the committee should amend IFRIC 14 to clarify that a trustee’s “power to augment benefits, to wind up the plan or to buy annuities is not directly relevant to recognition of an asset”.Under discussion by the committee is whether a defined benefit (DB) plan sponsor can recognise a right to access a plan surplus as a balance-sheet asset in circumstances where trustees can restrict in some way the sponsor’s right to that asset.Aon Hewitt pensions-accounting specialist Simon Robinson told IPE that it was “the right to a refund at some point that is paramount”.He added that uncertain future events not wholly within the control of the entity “could affect the amount of the surplus but do not affect the right to a refund of that surplus”.Robinson added that he expected the committee to struggle to finalise the drafting of the amendment within the confines of IAS 19.“Personally, I think it would be hard within IFRIC 14 – which is, after all, just an interpretation of IAS 19 rather than a standard in its own right – to change this approach,” he said.Paragraph 64 of IAS 19 limits the net defined benefit asset an entity can recognise in its accounts to the lower of the plan surplus or the asset ceiling.The standard goes on to define the asset ceiling as “the present value of any economic benefits available in the form of refunds from the plan or reductions in future contributions to the plan”.And paragraphs 11 and 12 of IFRIC 14 clarify that a refund is available if the sponsor has “an unconditional right” to a refund. Earlier this year, the IFRS IC received a request to clarify whether the right of pension plan trustees to increase member benefits or wind up a plan affected an employer’s unconditional right to a refund of plan contributions.Experts familiar with the issue noted that the problem had arisen because the IFRIC 14 deals with recognition of a refund rather than the measurement of the amount of refund to which an entity might ultimately be entitled. Speaking during the 13 May meeting, committee member Tony de Bell said: “What you need to think about is whether or not the trustees have the ability to say you can’t have the surplus. Because, if the trustees don’t have that ability, then I think you have the right to that surplus as it exists today.”PwC’s audit partner noted that IAS 19 was about accounting for the surplus as it exists today, not what it might be at some stage in future.The IFRS Interpretations Committee published IFRIC 14 in 2007.The committee is responsible for interpreting the requirements of IFRSs. It can also recommend the IASB make an amendment to a standard to clarify its requirements.last_img read more

German pension fund laments IORP II Directive’s impact on costs

first_imgThe pension fund for German construction workers has expressed growing concerns over the cost of reforms in the revised IORP Directive.Under the IORP II Directive, published earlier this year, pension funds must provide members with additional information on their benefits with a standardised annual pension benefit statement (PBS) on two pages.Peter Gramke, head of Internal Audit at SOKA-BAU, a supplementary pension plan for construction workers, said: “This could cause problems and increase costs significantly.”He said it was still unclear whether all prior employers would have to be listed on the PBS, which could “take up a lot of space” considering the mobility of workers in his industry. “And the European Commission still has to set the font size for the information,” he noted jokingly.According to Gramke, the information requirements are too geared towards pure defined contribution schemes and fail to allow EU member states to adjust them to their national specifics.“It is unlikely the additional information is really ‘value for money’ for the members,” he said.The PBS was drafted by the European Commission to support worker mobility. In the explanatory memorandum of its IORP II proposal, it stated that the common template would be “a basis to feed information into a potential (EU-wide) pension tracking service”.Regarding pillar II of the new Directive on risk assessment regulations, Gramke said he was less worried, as in Germany, the MARisk (Minimum Requirements for Risk Management) has been in place for several years now.“But it remains to be seen how much EIOPA will be interfering with national supervision,” he said.He argued that the pillar II risk assessment was a “kind of ORSA”, but only qualitatively not quantitatively as the Own Risk and Solvency Assessment required from insurers under pillar I of Solvency II.“What might, however, be a problem is the assessment of the Directive four years after its entry into force already when quantitative elements might be introduced after all,” Gramke said.This fear has been voiced by others in the German pensions industry since publication of the IORP II Directive.last_img read more

APF pitched as alternative to full merger for small Dutch sector schemes

first_imgSeveral small sector schemes are assessing their future viability, for example because their industry is shrinking.Recently, the €198m pension fund for the cigar-making sector joined BPL Pensioen, the €16.3bn pension fund for the agricultural sector. As the cigar scheme’s funding was higher than that of BPL Pensioen, its participants received an additional indexation.Versteegt said a merger could be difficult if a funding of a smaller scheme were lower.“It would be difficult to explain to participants that a merger would come with a rights discount,” he said. “This would often be a reason to refrain from joining another pension fund.”In Versteegt’s opinion, placing existing pension rights with an APF is legally possible, as accrued rights are no longer subject to the mandatory participation in sector schemes.“Further accrual can take place in the merger scheme, which has to extend its scope,” he said.According the director of Centraal Beheer APF, joining an APF could also be beneficial because, in the alternative case of a merger, the financial position of the “incoming scheme” could be negatively affected if the receiving pension fund had a larger proportion of women – who have a higher life expectancy – among its participants.“An APF pays a lot of attention to preventing such perverse solidarity,” he said.Another advantage of placing existing rights with an APF, according to Versteegt, would be that a pension fund does not have to sell assets straightaway, as is often the case when joining a sector scheme. “In particular with illiquid holdings, waiting for the right moment is often more in participants’ interest,” he noted.Versteegt acknowledged that pensions rights at different providers would complicate communication, but underlined that a better pension would offset this.“Many workers have accrued pension rights with several providers anyway,” he said.More than €4bn of Dutch pension assets have been transferred to the new general pension funds since July 2016, according to the Dutch regulator, De Nederlandsche Bank (DNB). APFs were introduced on 1 January 2016. DNB recently said it expected the number of Dutch schemes will drop to just over 200 following more consolidation. So far most of the consolidation has involved pension rights transferring to insurers or industry-wide schemes rather than pension funds joining APFs. The new Dutch pensions vehicle general pension fund (APF) could be an alternative for smaller sector schemes that are currently hesitating to join a larger industry scheme because of rights cuts in case of a funding difference, an APF director has argued.In a note, Yop Versteegt, director of business development at Centraal Beheer APF, suggested that existing rights could be placed with an APF, while new pensions accrual could take place at the merger scheme.“Industry-wide pension funds should look into this option as an alternative to a full merger,” said Versteegt.Splitting existing and future rights across an APF and a sector scheme, respectively, has not happened so far in the Netherlands.last_img read more

Ex-MP McClymont takes policy role at top master trust provider

first_imgMcClymont served as an MP from 2010 to 2015. He is currently a member of the UK regulator’s Institutional Disclosure Working Group, which is developing a cost reporting standard for asset managers, and is a board member at the Tax-Incentivised Savings Association. Source: PLSAGregg McClymont (centre) appears on a panel at a PLSA conference with Graham Vidler (left) and Sir Steve WebbHe has also co-edited two books comparing pension systems from around the world, with Andy Tarrant, a former adviser to the Labour party who became head of Policy and government relations at The People’s Pension in 2016.At B&CE, McClymont will take charge of policy and external affairs when he joins at the end of this month. He said he would also be working on the development of an “occupational health solution that will improve the lives of workers by treating health equally to safety, catching symptoms of ill health in the workplace early and helping them to stay in work longer”.B&CE – originally founded as an industry-wide pension and health benefits provider for construction workers – launched The People’s Pension in 2011 in response to the UK’s automatic enrolment legislation. It now caters for nearly 4m workers from multiple industries. B&CE, provider of The People’s Pension, the UK’s biggest defined contribution (DC) master trust, has hired former Labour party pensions spokesman Gregg McClymont as director of policy and external affairs.McClymont joins from Aberdeen Standard Investments where he was head of retirement, a role he held since losing his parliamentary seat in 2015.Patrick Heath-Lay, B&CE’s chief executive officer, said: “Gregg’s commitment to delivering better retirement savings outcomes for working people is well recognised throughout the industry and in parliament.“He has been a tireless supporter of automatic enrolment and a vocal campaigner for improved pensions options for UK workers. As a not-for-profit organisation, this aligns with B&CE’s aims and values and we are thrilled to be able to benefit from his extensive policy experience and industry expertise.”last_img read more

Siemens insures £1.3bn of liabilities with Pension Corporation

first_imgTechnology group Siemens has completed a £1.3bn (€1.5bn) buy-in of UK pension liabilities with Pension Insurance Corporation (PIC).The deal covers 6,000 members of the Siemens Benefits Scheme and is the third time PIC has insured defined benefit (DB) scheme liabilities for Siemens in the UK.John Smith, head of pensions at Siemens, said: “We are proud of what we have achieved with this latest buy-in, which is part of Siemens’ long-term pension de-risking strategy. This is one of a number of UK DB pension schemes sponsored by Siemens and achieving this is a significant milestone for the company.”Joanna Matthews, chair of the scheme’s trustee board, highlighted the “speed and efficiency” of the transaction. The deal accounted for more than a third of PIC’s total new business flows in the first half of 2018, the insurer said.On Monday it reported the completion of an £850m buyout with PA Consulting’s DB scheme, and also recently backed a £200m buy-in for the Kingfisher pension fund.PIC’s previous work with Siemens included a £300m buy-in in 2016, using a captive insurer model.‘Unprecedented’ de-risking activityInsurers and advisers have been talking up the potential of the UK’s de-risking market for some time. PIC actuary Matt Richards said the market had become “increasingly bouyant” as companies sought to secure their balance sheets.Stuart O’Brien, partner at Sackers, which advised on the Siemens deal, added that his firm was seeing “an unprecedented level of buy-in and buyout activity”.Data published today by consultancy group Hymans Robertson showed that the combined value of buy-in and buyouts so far this year exceeded the value for the whole year in each year up until 2013.The company cited “very attractive pricing” from insurers and strong recent equity market performance that has encouraged pension funds to lock in gains.James Mullins, head of risk transfer solutions at Hymans Robertson, said 2018 could see as much as £35bn worth of transactions, including insurers transferring legacy annuity business to other insurers. He added: “The end of the 2018 is shaping up to be very interesting. In the current busy market, insurers have more choice than ever regarding which schemes they wish to engage with and use their best pricing on.”last_img read more

​MP Pension to divest DKK400m of assets after excluding 14 countries

first_imgIran (new) Rwanda (new) North Korea South Sudan Equatorial Guinea Congo (new) Burundi (new) Bahrain (new) Guinea-Bissau Ethiopia (new) Syria Eritrea Yemen Haiti Thailand (new) Democratic Republic of the Congo  Swaziland (new) Somalia Turkmenistan Central African Republic Saudi Arabia (new) Papua New Guinea (new) Tajikistan (new) Comoros (new) Around DKK400m (€53.6m) of investments would be reinvested over the next two years as a result of the change, MP Pension said.“It really is no easy task, but we will try to do it in the best possible way by being very methodical and basing our decisions on a broad information base,” Schelde said.The pension fund said it had screened countries quarterly for many years in relation their approach to the environment, human rights, good governance and corruption, but now it was toughening its stance.The decision also meant companies controlled by the blacklisted countries were included in the investment.Schelde said the pension fund placed a lot of importance on trends, and would “support a country that is going in a positive direction, but on the other hand we will withdraw more quickly if the level is low and the trend points downwards”.Schelde told IPE back in March about the relatively high level of resources the pension fund dedicates to ESG.Since then, MP Pension’s chief executive has spoken out several times regarding Danske Bank’s response to its money-laundering scandal. Sudan Afghanistan MP’s banned country list Libya Denmark’s MP Pension has cut Saudia Arabia and 13 other countries from its investment universe on the grounds of systematic human rights violations.As a result, the Danish labour-market fund for academics has blacklisted a total of 30 countries.Anders Schelde, MP Pension’s CIO, said: “With this step, we are getting the most consistent criteria for responsibility in the financial sector, when it comes to investment in government bonds.“This is an area we have been working on for a long time, but now the time has come to redouble our efforts to promote respect for human rights.” Mozambique (new) Chad Benin (new)last_img read more

Investec launches environment strategy to target decarbonisation trend

first_imgInvestec – which runs $142.4bn (€125.3bn) globally – claimed the investable universe of companies for the new strategy opened up a “$2.5trn growth opportunity” for investors who were “exploring investment around long-term portfolio decarbonisation”. Investec Asset Management is to target investment in companies supporting the drive for decarbonisation with a new strategy launching today.The Investec Global Environment Fund will buy stakes in companies with “carbon avoided” scores, calculated using the EU’s emissions trading scheme methodology, which assesses how companies offset and reduce their carbon emissions.Deirdre Cooper, co-manager of the fund with Graeme Baker, said the data incorporated “Scope 3” emissions alongside environmental revenues. These are indirect carbon effects from a company’s value chain that are often omitted from common measures of carbon footprints.“The world has embarked on its third energy transition: a relatively rapid shift in favour of low-carbon energy,” Cooper said. “Electricity needs to take market share from all other forms of energy, as we electrify transportation and heating… Investment is required in all the related value chain.” Deirdre Cooper, Investec Asset ManagementThe estimated universe of funds was more than 700 companies, the asset manager said, with a total market capitalisation in excess of $5trn.Cooper said less than a third of the companies were in the MSCI ACWI index and none were in the FTSE 100.“They will grow a lot faster than the rest of the market,” she added.Pension funds, asset managers and other institutional investors have been placing greater emphasis on cutting the carbon footprints of their investments in recent years. More than 400 institutions have backed the Global Investor Statement to Governments on Climate Change since it was launched last year, calling for policy intervention on carbon pricing and other climate change policies. John Green, co-CEO of Investec Asset Management, said the new strategy emerged from a review of the group’s natural resources capabilities, which concluded that the future of the sector was set to change “radically”.“There’s an overwhelming sense that so much ESG investing is only about disinvestment and exclusion,” Green said. “There’s been very little discussion about what we do on the positive end – how does the pension fund community take positive steps on climate change?”While exclusion was an important part of climate change investing, Green argued that the same was true for portfolios that “positively and consistently invest in companies that impact and benefit from the energy transition”.“It surprises me that so little has been invested in this space: we estimate $15-20bn has been put to work. In context that’s a very small sum.”The fund launches today and “will be made available to both institutional and retail clients in key markets globally”, Investec said. Institutional share classes are priced at a 0.75% annual management charge.Further readingClean energy investment needs policy clarity on carbon price, say MPs A committee of MPs last year urged the UK government to extend carbon pricing to cover the whole economy to accelerate decarbonisation Energy transition ‘could seriously hit funding of Dutch schemes’ Dutch pension funds could lose up to 17 percentage points of their funding as a result of the energy transition, according to research by consultancy Sprenkels & VerschurenWorld leaders must do their bit in climate change fight, say investors Institutional investors active in the fight against climate change turned the spotlight on governments ahead of last year’s G7 summit in Canadalast_img read more

Gold Coast trophy home sells days after hitting the market

first_imgThe perfect spot to watch the world go by.The master bedroom upstairs has a balcony and is separated from the other bedrooms by a second living area and study.Mr Dowker was confident it would have generated a lot of interest if it was on the market longer.“It would have definitely got strong interest,” he said.Property records show Mr Dowker sold the property to Shelley Fowke in February last year for $3.53 million.He said the market was strong in the Coast’s southern suburbs with several million-dollar sales settling over the past few weeks. The Palm Beach property sold after only five days on the market.A BEACHFRONT trophy home has been snapped up for a multimillion-dollar price after five days on the market.The Palm Beach property on Jefferson Lane was due to go under the hammer this weekend but it went under contract last week.Marketing agent Troy Dowker, of Ray White Mermaid Beach, said it sold to a local buyer for around $4 million. A refurbishment has breathed new life into the property.“I got the deal done in five days,” he said.More from news02:37International architect Desmond Brooks selling luxury beach villa16 hours ago02:37Gold Coast property: Sovereign Islands mega mansion hits market with $16m price tag2 days agoThe sale is due to settle in early September.Mr Dowker said it received two offers, both of which were from Coast residents who liked its position and contemporary style.“(The home) was pretty much completely refurbished,” he said.“It provides a really good view — you get a really good vantage point looking south and north.”The four-bedroom, three-bathroom home has an open kitchen, living and dining area that flows onto a beachfront deck. The kitchen is modern and versatile.center_img Take a bubble bath and enjoy the view. The ultimate beach house.last_img read more

Rental demand spike: Tenants are fleeing Sydney for Brisbane

first_imgBrisbane’s rental vacancy rate has tightened for the fifth straight month, new data shows.BRISBANE rentals are filling up fast as fed-up southerners flee Sydney for the sunshine state, new data shows.While the nation’s biggest property market becomes littered with empty homes and desperate landlords slash rents to try to hold on to tenants, the Queensland capital’s rental vacancy rate is shrinking as rising demand eats up surplus stock. GET THE LATEST REAL ESTATE NEWS DIRECT TO YOUR INBOX HERE The latest figures from property valuation firm SQM Research reveal rental vacancies in Brisbane fell to 2.9 per cent in July — down from 3 per cent in June — marking the fifth straight monthly decline this year. Sydney’s vacancy rate is now the highest in 13 years.Sydney’s vacancy rate is now the highest in 13 years, with 2.8 per cent of the city’s units and houses unoccupied, yet the asking rent for a three-bedroom house in the city is still the highest in the country at $707 a week.SQM Research managing director Louis Christopher said the data showed many residents were leaving Sydney and heading north in search of more affordable housing and a better standard of living. A SLICE OF THE CARIBBEAN IN QLD Mr Christopher said the gap between Brisbane and Sydney house prices was the largest it had been in at least 15 years.“For southerners, there’s definitely a standard of living benefit through doing the move — provided they can find a job in Brisbane or thereabouts,” Mr Christopher said.“Up until two years ago that was the problem, but the Brisbane economy has been rebounding thanks to the end of the mining downturn and so job creation has increased and it’s become a little bit easier to do that move and find a job that goes with it.”More from newsParks and wildlife the new lust-haves post coronavirus17 hours agoNoosa’s best beachfront penthouse is about to hit the market17 hours agoSQM Research managing director Louis Christopher.Mr Christopher said he expected surplus rental supply in Brisbane to continue to be absorbed in the next 12 to 18 months.“Two years from now, the market will signficantly favour landlords,” he chief economist Nerida Conisbee said the online portal had recorded a 12 per cent rise in demand for rental properties in Brisbane in the past 12 months.Demand for houses was up 7.2 per cent and views per apartment listings were 16 per cent higher than a year ago. NO TOILET, NO KITCHEN, ALREADY LANDING OFFERS In Sydney, demand for units and houses had fallen 25 per cent over the same period.“We track rental demand on views per listing and Brisbane is well up, so it’s not surprising we’re seeing this drop in the vacancy rate,” Ms Conisbee said.“There just seems to be this recovery occurring in the Queensland economy and renters are often a better indicator of what’s happening than buyers, because they can be driven by speculation.” A house for rent in Stafford, Brisbane. Image: AAP/Glenn Hunt.An estimated 9886 residential rentals are sitting vacant in Brisbane, compared with nearly 20,000 in Sydney.Despite vacancy rates tightening, rents in Brisbane are holding firm, with surplus stock being absorbed by rising demand, easing concerns about the inner city’s apartment oversupply.The asking rent for a house in Queensland rose 0.1 per cent in July to $452 a week, while unit rents held steady at $370 a week. BRISBANE DEFIES PROPERTY DOWNTURN center_img REA Group chief economist Nerida Conisbee.Ms Conisbee said the inner suburbs of Newmarket and Windsor in Brisbane’s north and Camp Hill and Holland Park in Brisbane’s south were the most popular among prospective tenants, along with Greenbank in Logan.TOP 5 BRISBANE SUBURBS FOR RENTAL DEMAND1. Holland Park 2. Newmarket 3. Greenbank 4. Camp Hill 5. Windsor (Source:, based on views per listing)last_img read more

Channel 9 presenter Eva Milic lists Gold Coast home for $1m

first_imgNadia Milic and Eva Milic. The pair are selling a house on the Gold Coast that they own together.A WATERFRONT home owned by Channel 9 news presenter Eva Milic and her mother and sister has hit the market on the Gold Coast.The four-bedroom, three-bathroom house in Sorrento is listed for sale for $1.09 million. This house on the waterfront in Sorrento is for sale.Described as being positioned in a quiet cul-de-sac, the property has wide, water views and sits on a 720 sqm block.The living and kitchen areas look out over the pool and waterways. The views from the swimming pool are beautiful.There’s even a boat ramp to store your jet ski and other watercraft.More from newsParks and wildlife the new lust-haves post coronavirus10 hours agoNoosa’s best beachfront penthouse is about to hit the market10 hours agoMilic is also an MC, and in 2001 was crowned Miss World Australia. Channel 9 news presenter Eva Milic.She lives in Mermaid Beach with her husband and two children.Milic has previously told The Courier-Mail that she is very close to her sister, Nadia, and mother, Nevenka.last_img read more