Corrigan, whose NTMA oversees the reserve fund, also confirmed that the NPRF was referred to as client A in a recent report by the UK’s Financial Conduct Authority, published alongside the regulator’s decision to fine the transition management business £23m (€28m) for its failings.Following the announcement of the fine, the Commission announced that State Street Global Advisors (SSgA) had also been dropped as manager of equity mandates worth a total of €700m.In the FCA’s report, the regulator detailed how staff within State Street’s transition management business discussed how best to “get more revenue” from a deal tendered by the NPRF – which saw the fund liquidate close to €5bn of its portfolio due to the need to contribute toward’s Ireland’s €85bn bailout.One suggestion was to levy a 1-basis-point management fee “or something to that nature”, excluding any further commission, but to then take a spread of the deal.“We need to charge a fee, then – otherwise, they get suspicious,” the FCA report further quoted internal exchanges.Other exchanges discussed the possibility of raising further income after the fixed management fee levied on the third tranche of the transition was lowered from 1.65 basis points to 1.25bps.One employee said there was a “need to be very creative” in generating other sources of revenue.The unnamed employee then went on to outline what he believed should be done with “our new best friends”, adding the charge should be 1.65bps “for the privilege of working with us”.The employee later concluded: “We HAVE (sic) to show revenue in our numbers.”Corrigan said during the committee hearing that the overcharging had turned out to be “rogue behaviour”.When the FCA fine was announced, State Street noted it had self-reported the incident to the regulator and “dismissed individuals centrally involved in the overcharging” in 2011.“Also in 2011, we notified all transition management clients about the overcharging, only six of whom were directly affected,” the statement added.State Street declined to comment on the potential for legal action, instead referring IPE to a previous statement issued in the wake of the NPRF’s termination of the mandates overseen by SSgA. The National Pensions Reserve Fund (NPRF) has not ruled out legal action against State Street following an investigation that found the asset manager’s UK transition management service had “deliberately” overcharged the fund and five other clients.Paul Carty, chairman of the NPRF Commission, told a parliamentary committee that it was still considering “what detriment was suffered and if there is any further action that has to be considered”.However, speaking during the same Oireachtas committee of public accounts, National Treasury Management Agency (NTMA) chief executive John Corrigan confirmed that, while the Commission would “look at” legal action, he was uncertain if the route would be pursued.“The legal advice we are getting is that it could be problematic,” he said. “Perhaps I should say no more, lest I prejudice a case if it is decided to take one.”
Czech third-pillar funds registered a further fall in membership as the new system enters its second year.According to figures from the Association of Pension Funds of the Czech Republic (APF CR), as of the end of March 2014, the number of participants totalled 4.92m, a fall of 0.8% since the start of the year.The number of members of the so-called “transformed” funds, which were closed to new entrants in November 2012, declined by nearly 70,000 as retirees cashed in their benefits.The replacement “participation” funds increased their membership by nearly 29,000 to 1.2m. So far, the participation funds, which require a higher contribution to qualify for an additional state contribution, have not proved as popular as the transformed ones.In addition, unlike the one-size-fits-all transformed funds, the participation funds, with their range of risk profiles, do not offer a guaranteed return.Assets under management in the transformed funds grew by 2.9% year to date in Czech koruna terms to CZK289bn (€10.5bn), and those in the participation funds by 43.7% to CZK1.8bn.The transformed fund investment strategies remained extremely conservative, with Czech government bonds accounting for nearly 70% of aggregate portfolios, a further 22% in other bonds and money market instruments, and only 1.5% in shares and participation certificates.Membership of the second-pillar funds also grew, 0.8% to 82,630, which is surprising given that the current government intends to abolish it by 2016, while assets increased by 88.9% to CZK654m.Despite their wider investment horizons, around a half of second pillar and participation fund assets were placed in bank deposits and similar accounts.A pension reform commission appointed by the government to produce a plan for dismantling the system while safeguarding individual members’ accumulated assets started work in mid May.
The UK’s Lancashire County Pension Fund is looking to hire several transition managers to handle mandates worth as much as £5bn (€6.2bn).The local authority scheme said the tender, which aimed to set up a framework with several managers, was being put in place as it reviewed “various aspects of the investment arrangements” at the fund.“As a result, [the fund] expects to make significant changes to its strategic asset allocation, and also potentially its stable of investment managers,” the tender said.The framework would then allow the local authority fund to conduct a “lowest-price mini-competition exercise” when it required transition management services. It said the two-year contract could see several transition mandates tendered, with the fund estimating the value of mandates starting at £50m, but potentially covering nearly all of the fund’s £5.1bn in assets under management.Interested managers have until 21 October to express interest through the council’s procurement department.Lancashire currently manages around one-third, or £1.9bn, of its assets internally, nearly doubling the percentage of in-house assets over the course of the most recent financial year. Until last year, it managed nearly £220m of emerging market ETFs in-house, and it continues to oversee some fixed income, equity and property, as well as £172m in infrastructure funds, from Preston.At the end of March, it employed nine external managers, including Baillie Gifford, Robeco and MFS Investment Management.Magellan, Morgan Stanley, Natixis Global Asset Management and AGF Management were also in charge of parts of the fund’s equity holdings, while Capital Dynamics oversaw its private equity and infrastructure fund and Knight Frank its property portfolio.According to a portfolio breakdown, the fund also had £85m in assets overseen by Nomura and BNY Mellon’s transition management services, with the latter firm claiming the lion’s share as it handled the transition of £1bn in credit and fixed income holdings since March 2013.A large amount of this may have been diverted to Lancashire’s in-house team, with assets within its credit strategies portfolio increasing by £360m, to £784m, over the course of the last financial year.Over the same period, the bonds and cash portfolio managed in-house increased by £491m, according to figures from March 2014.According to minutes from its 6 June pensions committee, the holdings could also form part of a shift in its strategic asset allocation, first agreed in 2010.The minutes said: “Whist the fund continues to reallocate its investments in line with the revised investment strategy, amounts earmarked for future investments are held in transition accounts, cash, liquid bonds and directly held investment grade bonds.”The committee also said it would explore greater collaboration with neighbouring local authority schemes in future.
The UK’s Local Government Pension Scheme (LGPS) grew its asset base by more than 20% in the 2016-17 financial year, according to its latest annual report.Over the course of the period the combined assets for the 91 local authority pension schemes in England and Wales increased to £263bn (€299bn).It was a marked increase compared to the LGPS’ last formal actuarial valuation in March 2016, when the scheme was valued at £216bn.The LGPS’ Advisory Board said the increase was largely due to “favourable financial market conditions”. In commentary accompanying the annual report Pensions & Investment Research Consultants (PIRC) said the returns recorded by individual underlying local authority funds ranged from 13.9% to 26.8%.“Generally funds with a higher equity component were towards the top of the range, with those that had a higher commitment to absolute return strategies towards the bottom,” PIRC said.However, the consultancy said many active equity managers “struggled to add value in the peculiar market conditions”. Most global equity managers underperformed during 2016-17 “and some quite significantly”.PIRC added: “Local authority funds still retain a high commitment to active management with the average fund having just under a quarter of its assets managed passively.“The increased focus on cost reduction may promote a further move towards index-tracking, however this may be balanced by the asset allocation decisions being made, with funds continuing to increase exposure to assets for which there is no passive alternative.”Aggregate asset allocation did not change substantially over the 12-month period, but the LGPS’ figures showed a 2.9% fall in equity exposure. Investment in “pooled equity vehicles” increased by 3.7%.While the report did not give a reason for the shift, the 2016-17 period was the first in which there was substantial activity regarding the pooling of investments.Less than 1% of total assets were invested directly in infrastructure, the LGPS reported. One of the main aims of pooling investments is to increase the schemes’ ability to invest in large-scale infrastructure projects.During the year, total membership increased from 5.3m to 5.7m, an increase of 7.5%. The number of employers contributing to the LGPS rose by 8.5% to just over 14,000.
Dutch metal industry scheme PME failed to pay pensions on time to 40,000 of its 167,000 pensioners last Monday.It blamed the mishap on an IT glitch, and said the mistake was rectified by the next day.According to the €47bn pension fund for metalworking and electro-technical engineering, something went wrong when its provider MN sent a batch of payment orders to ING Bank.“The batch had become stuck somewhere in the system,” said Ellen van Amersfoort, the scheme’s spokeswoman. As a consequence, the payments weren’t transferred on PME’s fixed payment day, the 24th of the month. This led to phone calls from worried pensioners.The pension fund said it didn’t know exactly yet what had gone wrong, but emphasised that it would launch a thorough investigation to find the cause, “as this is not allowed to happen again”.Van Amersfoort, who joined PME five years ago, said she couldn’t remember any similar incident. “We are always very conscientious when it is about payments,” she said.Michel Cleij, spokesman for MN, which also serves the €72bn metal sector scheme PMT, also said he wasn’t aware of any such payment incidents during the past five years.“The payment process consists of several checks, ahead of as well as after the payments, with a statement showing whether payments have been successful,” he said.“Therefore, on Tuesday morning we already knew about the mistake. But around the same time, pensioners started to get in touch with us.”Problems with benefits payments are rare in the Dutch pensions sector.Administrative problems are usually about mistakes in granting pension rights, sending mandatory letters for new and leaving participants too late, or mistakes in invoices.Last year, MN abandoned an innovation project aimed at reducing costs and decreasing the number of administrative errors.
The financial position of Dutch pension funds deteriorated in the second quarter, according to the country’s regulator De Nederlandsche Bank (DNB).Combined liabilities across the country’s 229 schemes rose by €96bn to €1,463bn, which DNB said was largely down to declining interest rates – the main criterion for discounting liabilities.Based on reporting by Dutch pension schemes, the supervisor said that combined assets rose by €55bn to €1,488bn.Since March, the proportion of pension rights managed by pension funds with a funding level below 104.2% has increased from 56% to 60%. Until recently, 104.2% was the minimum required funding level. Pension funds with a shortfall for a continuous period of five years had to cut benefits.However, as part of the pensions agreement struck between the social partners and the cabinet in June, the government decided to temporarily lower the minimum required funding level to 100%, in order to reduce the chance of cuts.DNB said that pension funds’ coverage ratio dropped by 1.3 percentage point to 106% on average in the second quarter of 2019.The funding level of 51 schemes fell short of 104.2%, while 53 pension funds – representing 20% of all pension entitlements – were more than 104.2% funded.110 pension funds had a funding level exceeding 110%, which would allow them to grant at least partial inflation compensation. Full indexation is allowed only when a scheme reaches a coverage ratio of more than 125%.Despite the government lowering the minimum required funding level to 100%, many of the Dutch pension funds – including four of the five largest – face imminent benefit cuts following the introduction of lower assumptions for future returns.As a consequence, pension funds’ “critical funding level” is to increase. Schemes with a shortfall relative to this critical coverage level must cut pension rights immediately.This has put the €442bn civil service scheme and the €217bn healthcare scheme PFZW in the danger zone. Under the old rules, their funding level at the end of 2020 would have been the criterion for rights discounts in 2021.The large metal industry schemes PMT (€77bn) and PME (€50bn) still facing cuts in 2020, as their funding ratio at the end of the second quarter was below 100%.
Tallinn, EstoniaThe previous classification of second-pillar funds on the basis of equity risk (25%, 50%, 75% funds) has been abandoned, as it was considered inaccurate. Instead, each management company must determine and publish the risk level of each of its funds.Further new rules are intended to accelerate the current decline in management fees.The maximum basic management fee for second-pillar pension funds has been lowered from 2% to 1.2%. The government estimated that this measure would reduce the average basic management fee to 0.62% this month, from its previous level of 0.96%.However, fund managers will, for the first time, and under certain conditions, be able to charge an additional performance fee, provided that the fund’s performance exceeds the benchmark index – the increase in the social security pension component. The maximum fee allowed is yet to be determined.According to Kristjan Tamla, chairman of the board at Swedbank Investment Funds, Estonian pension funds have been criticised because of the small percentage of portfolios allocated to local investments. Tamla told IPE: “As the Estonian economy and local financial market are very small and shallow, most companies do not raise capital from listed markets, and are instead leaning towards direct borrowing or private equity. The new rules should enable better matching of the corporate sector’s funding needs with pension fund investment limits.”Meanwhile, following parliamentary elections in March this year, Estonia’s new coalition government has been working on a new law to allow individuals to cash in all their pension savings, from the start of 2021.Joel Kukemelk, member of the management board at LHV Asset Management, warned: “While this law has not yet been passed, it is likely to be approved by the end of this year, as long as there are no changes in the current government structure.“This will result in a significantly lower appetite from local pension funds for all low-liquidity investments, where the exit process takes longer than a couple of months.” New investment rules came into force for Estonian second pillar pension funds earlier this month, relaxing some restrictions on riskier investments in order to improve performance and promote investment in local companies. Under the Investment Funds Act, the 75% limit on equity-based assets within portfolios has been removed altogether, except for funds with a conservative risk profile.Conservative funds will now be able to take on some equity risk and make other, previously banned, investments, to the value of 10% of their portfolios. Pension funds may also now make loans of up to 10% of the value of their portfolio. For real estate, the limit for mandatory pension scheme investment in single properties has been increased from 5% to 10% of the portfolio. However, the overall 40% cap on real estate and real estate funds remains for these funds, as does the 70% cap for voluntary third-pillar funds.The limit for investment in derivatives has been raised from 10% to 50% of a fund’s assets, while the limit for unquoted securities also rose to 50%, from 30% previously. This is intended to allow funds to invest more in Estonian companies.Meanwhile, currency restrictions have been lifted, except for conservative funds.
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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 Rate1xFullscreen2018: What is negative gearing?01:55IT will be standing room only at the Whitfield chapel tonight as eight properties go under the hammer.RE/MAX Cairns principal Tony Williamson said it was the biggest number of properties to be auctioned at one time since the business moved into the 47 Heavey Cr address at the beginning of last year.More than 80 people are expected to pack the former chapel. 47 Terminalia St, Redlynch 9 Melaleuca St, Manunda 4/12-14 Ireland Cr, Whitfield RE/MAX agent Ray Murphy has received a lot of interest in 20 Irene St, Mooroobool 108/2 Oliva St, Palm Cove 20 Irene St, Earlville 9-11 Evergreen St, Clifton Beach is up for auction.“I have got some people coming tonight looking to buy but who have not experienced an auction. It will be great for them to have a look, see what happens, what’s required, have a look at the process.”Mr Williamson said even if homes didn’t sell tonight, the auction was a step in the right direction to getting the best price for a property.“I always say to people if you die your things will be sold at a deceased estate auction, if you go broke it will be a mortgagee in possession auction — it is the first method of sale, no one can question a sale by auction,” he said. 12 Leftwich St, White Rock 9-11 Evergreen St, Clifton Beach 59 Charles St, Innisfail SOLD BEFORE AUCTION 47 Terminalia St, RedlynchMore from newsCairns home ticks popular internet search terms2 days agoTen auction results from ‘active’ weekend in Cairns2 days ago“It’s a good chance for the sellers to have the sales settled by Christmas.”But those hoping to bid on 47 Terminalia St, a spacious Redlynch home nestled in the rainforest with views over the mountains, are out of luck.The home sold today.Agent Cathy Ratcliffe said the buyers had shown interest in it the past few weeks and made a cash offer.“The owners bought it from me over two years ago and sold it for not far off what they paid for it which is great in this market which has certainly contracted a bit in that time frame,” she said. 9 Melaleuca St Manunda. Supplied by RE/MAX Real Estate Services“The house had been on the market with a price on it and it had two offers early on, before the vendors had moved south, which they weren’t keen on. But once the vendors moved south, they were great, they listened to what we were saying, and we got it staged, and talked about going to auction, so that’s what we did. “Since we made that decision it went off like a frog in a sock. From the beginning it was in a location that is popular with buyers. The outcome we got was really good. Agent Ray Murphy said 20 Irene St, Mooroobool, had attracted plenty of inquiries leading up to today.Mr Murphy has five properties up for sale tonight.“20 Irene St is in the right price bracket, it is on a big block, with a big shed, I expect there to be a fair bit of active bidding on that this afternoon,” he said.“This would have to be one of the biggest auctions in the chapel. It’s encouraging and a sign the market has more confidence. 22 Denver St, White Rock HOMES UP FOR AUCTION TONIGHT It is a tough market for the Cassowary Coast but agent Ray Murphy said 59 Charles St, Innisfail will sell.“In Sydney and Melbourne 90 per cent of houses on the market go to auction, Cairns has always had about 20 per cent. It’s a bit of an up and down market at the moment so it’s worth trying an auction. At worst all it does is delay pricing the property for three weeks.“What really annoys me is when agents list a property and sell it the same day, I always think, ‘did it go too cheap?’, ‘hang on did the owner undersell the property?’.“We want to make sure we get the right price for the sellers.”
Bexley at Wooloowin is proving popular with buyers who can’t afford a home in a million-dollar plus suburb.Buyers are taking advantage of homes being built close to million-dollar suburbs.Research from CoreLogic shows Brisbane’s inner north is home to the city’s most expensive real estate, with suburbs such as Ascot and Clayfield, both boasting median values above $1 million.Cedar Woods senior development manager Peter Starr said suburbs undergoing a revitalisation would become increasingly popular. He said Wooloowin was significantly more affordable, with the median home costing $792,500. An emerging restaurant and bar scene in nearby Albion was transforming the area into a cultural hub.Mr Starr said Cedar Woods had identified the trend when it hand-picked Wooloowin for its new luxury terrace home project, Bexley, set to take advantage of its position in inner Brisbane’s price growth corridor.More from newsParks and wildlife the new lust-haves post coronavirus13 hours agoNoosa’s best beachfront penthouse is about to hit the market13 hours ago Bexley at Wooloowin.The 14 terrace homes feature three and four bedrooms, with 144sq m to 195sq m of living space, and are priced from $795,000.The two and three-level terrace homes have been designed by the award-winning Rothelowman architects and are ideal for those who want the space and comfort of a home with the convenience of apartment living.Hutchinson Builders has been appointed to undertake early site works at Bexley, paving the way for civil works and construction of the first stage of terrace homes.Mr Starr said several prospective purchasers at Bexley who had been looking at Ascot and Clayfield had realised they could move a few minutes down the road to Wooloowin and be in a new home for much less. “We anticipate Wooloowin will join the list of Brisbane’s blue ribbon suburbs in future,’’ he said.
This house at 11 Eblin Dr, Hamilton, has sold for more than $4m.LUXURY car dealer Brad Emmerson and his wife Andrea have sold their lavish home in the exclusive Brisbane suburb of Hamilton for $4.05 million.It seems flogging flashy cars for a living has paid off for Emmerson, who is the dealer principal of Brisbane Prestige Cars. Brad Emmerson, dealer principal of Brisbane Prestige Cars.Built in 1930, the grand five-bedroom, three-bathroom house at 11 Eblin Drive has been extensively remodelled, but still oozes plenty of character.The couple had lived in the home for nearly 20 years and brought up their children there, but were looking to downsize.“One family lived here for 70 years, before selling to a buyer who only owned it for six months before we purchased the home,” Mr Emmerson said.“We completed a total renovation but it essentially still looks like the original house.” This home at 11 Eblin Dr, Hamilton, has sold for more than $4m.The house was last listed with an asking price of $4.35 million through Tom Lyne and Matt Lancashire of Ray White – New Farm.More from newsParks and wildlife the new lust-haves post coronavirus10 hours agoNoosa’s best beachfront penthouse is about to hit the market10 hours agoThe three-level home spans 660sq m and sits on a huge 1123sq m block in Hamilton’s dress circle, close to Ascot State School and Oriel Park. The home comes with a large, temperature-controlled wine cellar.The Emmersons raised the property, building in a third level underneath which includes a home theatre, four-car garage, multi-purpose room/gym, wine cellar and ample storage space.Other features include a master suite covering an entire floor with living area and dual walk-in robes, a pool, outdoor kitchen and barbecue, library and wet bar.Records show the Emmersons bought the property for $680,000 in 2000.