UK roundup: Merchant Navy, Pirelli schemes agree derisking deals

first_imgDerisking transactions covering some £590m (€670m) of pensioner benefits at four schemes have been announced.The £3bn Merchant Navy Officers Pension Fund (MNOPF) sealed a £490m buy-in with Legal & General Group, covering all members that retired since it completed a £1.5bn longevity insurance transaction in 2014.Andy Waring, chief executive of the MNOPF, said: “Securing the benefits of our members has always been a significant part of the MNOPF journey plan. Our next milestone is to promote and grow the [defined contribution] Ensign Retirement Plan, so that we can provide the same security in retirement for the next generation of maritime employees.”Separately, three defined benefit (DB) pension schemes linked to Italian tyre company Pirelli Group concluded a buy-in with Pension Insurance Corporation (PIC), covering around £100m of benefits. The transaction means that the three schemes are completely de-risked, according to a statement from PIC.  Last year Pirelli’s main UK DB schemes completed longevity swaps worth £600m with Zurich Assurance.LGPS launches investment management consultancy procurement frameworkUK local authority pension funds and their fledgling asset pools have finalised a new framework for the procurement of investment management consultancy services.It is a restructuring of the first national framework of its kind, launched in 2013. According to a statement, since then 27 local government pension scheme (LGPS) funds from across the UK had joined the original seven founder authorities participating in the framework. A total of 34 contracts have been agreed under the framework with savings estimated to reach over £3.6m.The organisation overseeing national LGPS frameworks said the 2013 concept was “fully refreshed and restructured” to meet the current and future needs of the LGPS, including the pooling arrangements.Nigel Keogh, National LGPS Frameworks operations and development manager, told IPE that the new framework included different “lots” because the asset pools would have different requirements to individual funds. The previous framework only had one lot. The new framework is split into lots for investment consultancy services; manager search, selection, monitoring and review services; and investment management consultancy-related specialist services. The new framework was the outcome of collaboration between Brunel Pension Partnership, Cambridgeshire County Council, Cheshire Pension Fund, the London Boroughs of Hackney and Tower Hamlets, Merseyside Pension Fund, Norfolk Pension Fund, Northamptonshire County Council and West Sussex Pension Fund.It was supported by the National LGPS Frameworks team, and procurement and legal specialists from Norfolk County Council.Frameworks for transition management and implementation services are due to be ready soon. Minimum standards for professional trustees New standards outlining what is expected of professional trustees were published for consultation today.They have been drawn up by the industry-led Professional Trustee Standards Working Group (PTSWG) to establish minimum requirements for professional trustees of occupational pension schemes.The group has set out standards in six areas that all professional trustees are expected to meet:Fitness and propriety;Integrity;Expertise and care;Impartiality and conflicts of interest;Professional behaviour;Systems and controls.Specific guidelines were set out for professional trustees who were also the chair of a scheme, and for those who were the sole trustee of a scheme. Topics range from having the skills to lead, negotiate and reach a consensus to providing strategic direction and actively challenging advice.Andrew Bradshaw, chair of PTSWG, said: “With the growing influence of professional trustees, it is important that the industry adopts a recognised set of professional standards. ”The challenge for the PTSWG has been to produce a set of universal standards which recognise the wide range of business structures and services that professional trustees and their firms now provide.  We very much hope that the standards strike the right balance and look forward to hearing the views of professional trustees and the wider industry during the consultation period.”The consultation will run until 2 March 2018. After the standards have been published the PTSWG will develop an accreditation framework, which professional trustees will be expected to meet.last_img read more

Trade war rhetoric should prompt equity rethink, say advisers

first_imgEuropean pension funds should re-evaluate their equity holdings in the light of US president Donald Trump’s escalating war of words with China over trade tariffs, commentators have warned.Markets around the world tumbled earlier this week following president Trump’s announcement that he was considering adding tariffs on a further $200bn (€170bn) of Chinese goods following China’s retaliatory imposition of levies on $34bn of US goods.On Tuesday, the Dow Jones closed down by almost 300 points – wiping out any gains over the year. Asian markets rallied on positive US housing data, having seen the main markets in Singapore and Japan fall by 1% and 0.8% respectively a day earlier.“This is certainly something that pension fund investors should be aware of and concerned about,” said Alastair George, chief investment strategist at Edison Investment Research. George has advised caution “for some time”, he said, not just because of the burgeoning trade dispute but because markets were likely to trade sideways following moves by the US and Europe to wind down monetary stimulus programmes.“At this stage you’re talking about running a defensive portfolio position – not that you fear a calamity, but because you have relatively little upside,” he said. How US, Chinese and European equities have performed this year. (Total return, priced in dollars)Source: FE Analytics“If the markets trade sideways, then whether you are worried about a trade war or a peak in the economic cycle your response would be broadly similar in terms of your equity allocation: avoid globally traded commodities, the resources sector and emerging markets.”Last week, the US president announced a 25% tariff on $50bn of Chinese products ranging from cars to agricultural products, taking effect from 6 July. The US has also threatened imposing tariffs on products imported from Canada and the European Union.China, meanwhile, has threatened a 25% tariff on imports of US coal, oil and gas.“Europe is very exposed as it is very open [to trade],” said Tapan Datta, head of global asset allocation at Aon. “There are a lot of European industrials that would be impacted – but at the margin the move will boost some US stocks.“Over the course of these things, there will always be some winners and it is likely that some US stocks will win [over the short term].”Datta added a note of optimism, however: “It is still too early to get alarmist that the markets will tank.”In a note published on Wednesday, State Street Global Advisors lauded the “stellar first quarter results” of S&P 500 companies, which were now on track to “post a nearly 25% increase in earnings compared to last year”.The S&P 500 is approximately 4% up year to date.Pal Sarai, managing director and head of client consulting for EMEA, Australia and Asia at consultancy Bfinance, said the events unfolding in Washington and Beijing could prove to be a “major geopolitical risk that may derail the nascent global economic recovery”.Insuring against equity risk has come to the fore recently, he added: “There has been a trend in recent months towards strategies that may protect against equity market falls, and this could support the continuing appetite for such strategies.”Two UK public sector schemes – for the counties of South Yorkshire and Worcestershire – have employed significant equity protection strategies in recent weeks.Ultimately, the escalation of the trade dispute between the US and China should “have investors worried”, added Seema Shah, senior global investment strategist at Principal Global Investors.“Recall that the original tariffs on about $50bn-worth of Chinese imports motivated sharp declines in equity markets, despite not being expected to have a meaningful impact on the global economy,” she said. “The latest ratcheting up in the trade dispute may trigger even more severe market turmoil.”Trading blows: Who said what, and when, in the war of wordscenter_img US president Donald Trump and Canadian prime minister Justin Trudeau at the G7 gathering earlier this monthJanuary: US imposes tariffs on steel products from India and ChinaFebruary: Anti-dumping duties levied on iron and aluminium from ChinaMarch: US adds to tariffs on Chinese steel and aluminiumApril: China retaliates, imposing tariffs on US products such as cars and aircraft; Donald Trump threatens more tariffs on $100bn of goodsMay: “Ceasefire” announced by China and US8 June: Trump criticises France and Canada over trade ahead of G7 meeting in Quebec15 June: US imposes 25% tariff on $50bn of Chinese goods; China retaliates with levies on $34bn of US products19 June: Trump threatens 10% tariff on additional $200bn of US goods; China said to consider levying oil, gas and coal importslast_img read more