AMTRAK introduced significant changes on July 10 to NortheastDirect services on the Boston – Washington DC – Newport News corridor. Improvements included the relaunch of the Night Owl as the Twilight Shoreliner, an overnight Boston – Washington DC service now including a new Viewliner sleeping car and a first class lounge. The relaunch included schedule changes better to meet the needs of sleeping car customers. With their passengers now accommodated on the Twilight Shoreliner, three evening trains serving portions of the Boston – Washington route were discontinued. Other changes included the introduction of the Capitol Sunrise, a southbound Philadelphia – Washington service departing weekdays at 06.10 and arriving at 08.10. The Evening Metropolitan, which departs Boston daily at 1810, now terminates in Philadelphia on weekdays instead of Washington. H Under an agreement with the state of Wisconsin, Amtrak is to run Hiawatha services on the Chicago – Milwaukee route on a fixed-price basis for three years. Six return trips Monday-Saturday and five on Sundays are covered by the contract, which includes targets for punctuality, train cleanliness and staff courtesy. oAmtrak California opened an unstaffed station serving the desert resort city of Palm Springs on June 3. Built with state and city funding, it is served by the thrice-weekly Los Angeles – Orlando Sunset Limited. A new stop for San Diegan services opened on June 22 at Carpentaria, between Santa Barbara and Los Angeles.
Deficits at UK defined benefit pension (DB) schemes narrowed further last month as higher bond returns shaved 1.8% off liabilities, according to the Pension Protection Fund (PPF).The aggregate deficit of the 6,150 schemes in the rescue fund’s PPF 7800 index fell to £59.7bn (€71.4bn) at the end of November from £75.6bn a month before, the fund estimated.At the end of November 2012, the total deficit of the schemes had been £230.5bn.On a section 179 basis, the schemes’ funding ratio rose to 95% from 93.8%, and was up from the 82.2% recorded in November 2012. Equity markets and Gilt yields were the main drivers of funding levels, the PPF said.During the month of November, the DB pension scheme assets fell by 0.6% mainly as a result of falling UK equity markets and Gilt prices.Liabilities, on the other hand, fell by 1.8% over same period.This decline reflected higher nominal and index-linked Gilt yields, the PPF said.It said movements in the PPF 7800 index illustrated the change in its exposure to the deficits in its universe of eligible schemes as a result of financial market movements.It pointed out that the index did not take account of schemes’ use of derivatives to hedge market changes.Looking at only those schemes in deficit, the aggregate shortfall was estimated to have fallen to £128.4bn at the end of November this year from £140.1bn a month before, and from £259.6bn at the end of November 2012.The total surpluses of schemes in surplus rose to £68.7bn at the end of November from £64.5bn at the end of October, and from £29.1bn at the end of November 2012.The number of schemes in deficit fell to 3,952 at the end of November from 4,063 a month earlier, and from 4,944 at the end of November 2012.Meanwhile, consultants Barnett Waddingham said pension schemes were worried about whether they would be able to iron out mistakes in Experian data before the company replaced Dunn & Bradstreet (D&B) as the PPF’s rating provider next year.In a survey, the consultancy found 90% of respondents either worried or were very concerned about the likelihood of companies successfully correcting errors or omissions in time for the change in April 2014.The firm said its 2014 PPF Levy survey focused on the increase in the benefits cap for longer-serving members, as well as the D&B failure scores.Nick Griggs, head of corporate consulting, said: “Our latest PPF survey findings highlight the real concerns trustees, employers and advisers have about the upcoming shift from D&B to Experian’s credit rating service.”There will be winners and losers from the change, he said.Companies have to act now to tackle any holes in their Experian data to make sure they are accurately rated and avoid an unjustified hike in their PPF levy, Griggs said.Nearly half – 48% – of respondents support the increase in the benefits cap, while 28% do not, according to the study.Some 49% of trustees and employers responding disagree or strongly disagree when asked if their company’s D&B score accurately reflects its risk of insolvency in the next 12 months.Barnett Waddingham said many respondents thought the current model used by D&B was too rigid, with 64% saying they would be happy for Experian to use more judgement in adjusting the failure score, as long as the process was transparent.
The finance ministers from the largest supporters of the tax, France and Germany, followed yesterday’s fringe event with a meeting in Paris today, with FTT high on the agenda.This follows criticism from European tax commissioner, Algirdas Šemeta, who in a speech to the European Parliament bemoaned vested interest groups blocking the tax’s progress.He called on MEPs to fully back the proposals to convince ministers in the supporting countries to push forward with implementation.The FTT – known as a Tobin Tax after Nobel economist James Tobin – will see derivatives transactions taxed at 0.01% and 0.1% on equity and bond purchases, respectively.However, today, coinciding with the German and French meeting, several asset managers sent a letter the Council, Parliament and Commission pillars of the EU, and finance ministers in the EU11.It calls for the immediate removal of the proposals, citing the expected effect on savings and detrimental impact on economic growth.The letter, seen by IPE, said the impact of the FTT would make European citizens’ aims to take greater control of their financial wellbeing more of a challenge.The asset managers said the tax would not be one on financial services but rather on citizens’ savings, and eventual retirement incomes.The letter – signed by Allianz GI, BlackRock, Capital International, Eumedion, Fidelity, M&G PIMCO, Robeco, Schroders, State Street, UBS and Dutch pension fund managers PGGM and APG – joins other research and consultation against the FTT.The UK, which, along with Luxembourg, refused to support proposals at its initial discussion, launched a legal challenge to the tax.It argued that its implementation would encroach on its sovereign status to determine tax with its borders.This followed a report from the City of London Corporation that said the tax would raise the cost of UK Gilt issuance by £4bn, hitting pension schemes significantly.Research in the Netherlands also highlighted a significant impact on institutional investors.Finance minister Jeroen Dijsselbloem said the FTT would hit Dutch funds by €250m a year, despite the country not being part of the EU11.However, Šemeta argued in Parliament that the tax was supported by EU citizens and was in line with the founding principles of the union.The 11 countries – Austria, Belgium, Estonia, France, Germany, Italy, Greece, Portugal, Slovakia, Slovenia and Spain – formed a enhanced cooperation agreement to implement the FTT.This allows the EU11 to formulate policy, under the EU framework, for implementation solely in their respective countries. The 11 countries backing the implementation of a tax on financial transactions have begun the push forward, after delays and hesitancy took hold of negotiations.Yesterday’s European Economic and Financial Affairs Council meeting in Brussels was supplemented by a fringe meeting between the representatives from the backers of the financial transactions tax (FTT).Finance ministers met in the EU hub to discuss growth and macroeconomic imbalances within the union, with the 11 countries, known as the EU11, meeting beforehand.While no formal agreement on implementation was reached at the fringe meeting, the countries agreed to continue the push for implementation.
France’s ERAFP has awarded an active US-dollar SRI bond mandate to AXA Investment Managers Paris, with a view to investing around €400m over three years via the portfolio.The French public service additional pension scheme also awarded two stand-by mandates as part of the process, to Natixis Asset Management and CCR Asset Management.AXA Investment Managers Paris will delegate financial management to AXA Investment Managers Inc.ERAFP said the two stand-by mandates gave it the option of diversifying risk at a later date by activating them. The pension fund launched the call for tenders for management of a US-dollar-denominated bond portfolio back in April this year.It said the award was part of its policy to broaden its investment universe, as well as in keeping with the values of its SRI charter.The mandates have an initial term of five years, the pension fund said, adding that it had the option of extending them by three successive one-year periods.The portfolios will be invested mainly in dollar-denominated bonds from issuers registered in OECD countries, and will be hedged against foreign exchange risk.ERAFP said the mandate-holders would mainly use a fundamental analysis of issuers and a technical analysis of the bonds to build the portfolios, in order to diversify broadly across sectors.They will also have to comply to ERAFP’s SRI requirements, it said.
The heated discussions over whether Greece should be allowed to write off its debt and what precedent that would set for the rest of peripheral Europe ignore a far bigger danger than just economic disruption. The alternative for Greece of EU support is quite simple. It has a thousand years of cultural linkage with Russia (and the Ukraine). At a time when the EU is struggling to contain Russian president Vladimir Putin and faces the very real possibility of getting sucked into a proxy war with Russia over the Ukraine, the EU needs to beware of bearing Greeks as gifts! A Greek exit from the euro would inevitably lead to an exit of the EU itself by a desperate Greece, led by a far left leadership that has strong sympathies with Russia at a time when Russian nationalism itself has become buttressed by its commonality with Greece through Orthodox Christianity. Moscow was known as the ‘third Rome’ – the bastion of Orthodox Christianity – after the fall of Greek-speaking Constantinople in 1453. Greece moving into Russia’s sphere of influence supplied with appropriate economic support would be a rational response by both Greece and Russia in the wake of a chaotic Grexit.The focus by Northern Europe, led by Germany, on the necessity of Greece’s sticking to austerity and debt repayment, come what may, is both misguided and hypocritical. To ‘extend and pretend’ that debt write-offs are not required and will not be tolerated is particularly bizarre given that West Germany had 50% of its debt written off in 1953. This was at the height of the Cold War, on the insistence of the US as it tried to develop a prosperous and stable Western Europe, strong enough to be able to stand up to the Soviet Union. As Europe faces a new existential crisis over Greece, that need to create a prosperous and stable EU strong enough to stand up to a post-Soviet Union Russia has become greater than ever. That idea should be the primary factor guiding EU decision-making over Greece and trumps concerns over the precedent it could set for Portugal, Italy and so on. Moreover, the years of austerity have led to real change in Greece. The corollary to the story of the Greek American millionaire is that, whilst he was unwilling to invest in Greece for many years, in 2014, he was more positive than he had ever been and was active in both private equity and real estate.Joseph Mariathasan is a contributing editor at IPE The ongoing Greek saga is not simply about debt – it’s about the raison d’etre of the EU itself, says Joseph MariathasanI can remember asking a Greek American millionaire at the height of the euro-zone crisis what he thought about lending more to Greece. He thought briefly and then said that, for the European Union (EU), it was like it would be for him if his son were to ask him for a $100,000 loan. As he explained, he would have been willing to lend the money if his son were spending it on an MBA or starting a business. However, if his son had said he wanted it so he could spend the next three years boozing with his buddies, he would have been somewhat more reluctant!That attitude has pervaded the discussions in Europe on what to do about Greece. There appears to be a generally held view that Greece falsified its statistics to join the euro, and that its politicians then used the access to cheap debt not to rebuild its infrastructure or invest in new industries but to bribe voters by spending lavishly on a bloated public sector and an unsustainable welfare system. But that dismissal of addressing Greece’s ongoing debt burden misses a far more fundamental issue that strikes at the heart of the raison d’etre of the EU itself.The EU is a direct development of the European Coal and Steel Community (ECSC) established in 1951, just a few years after World War II, whose prime purpose was to prevent another European war. That rationale appears to have been forgotten in the debate over Greece. With hindsight, few would disagree with the notion that both Greece and the EU would have been better off now had Greece not joined the euro. But the past is the past, and the issue now is what to do next.
The mayor of Amsterdam has written to Dutch pensions giant ABP calling on it to stop investing in companies with links to fossil-fuel activities.In a letter to the board of the €363bn pension fund, which covers municipal employees in the Netherlands, the city’s mayor Eberhard van der Laan wrote: “If ABP does not end investments in the fossil fuel industry within a reasonable timeframe, pensions of participants will be at serious risk.”Van der Laan said his call was a response to the campaign by the group Amsterdam Fossielvrij (Fossil Free Amsterdam) and the city’s decision to rid itself of investments incompatible with its aim of speeding up the transition to a “circular economy” to prevent irreversible climate impacts.A circular economy describes an industrial economy that produces no waste and pollution. Van der Laan acknowledged that the pension fund had already terminated some of its fossil fuel-related investments in 2015 in response to requests by ABP members.But he wrote: “Despite these positive steps, you still invest in fossil-fuel businesses.“We therefore ask you to sharpen your ambition and to evaluate the investment portfolio, considering the interests and links companies have with the fossil fuel industry, and where these links are confirmed as existing, not to invest and to put an end to existing investments in the fossil fuel industry, starting with coal, nuclear power and shale gas.”If direct divestment were not possible, the mayor asked the pension fund to establish itself as an activist shareholder and encourage companies to make sustainable investments, keeping an eye on the European ambitions to reduce CO2 emissions by 80-90% from 1990 levels by the year 2050.In response to the letter, a spokesman for ABP told IPE it was also concerned about climate change.“The fund therefore has set ambitious goals in its investment policy to contribute to a better environment and a sustainable world,” he said.For example, ABP plans to reduce CO2 emissions in its portfolio in 2020 by 25% and expand its investments in renewable energy significantly, he said. “ABP expects a decline of fossil fuels and an increase in renewable energy in its investments in the coming decades,” he added.He said this would happen in a gradual way because, as independent surveys showed, fossil fuel would be needed in the next few decades.He said ABP believes acute divestment from fossil companies right now would not help the climate.“The fund prefers to use – during the long transition period – its role as a shareholder to influence fossil fuel businesses,” the spokesman said.Sven Jense of Amsterdam Fossielvrij said: “Cutting our financial ties to the fossil fuel industry will make our city and our pensions fit for the future.”However, he said “an ambitious timeframe” also needed to be set to drop these investments and to effect a transition of the city’s harbour activities away from fossil fuels. “We don’t want our city to make money out of climate destruction,” he said.Last October, ABP outlined its new socially responsible investment policy.Apart from its aim of shrinking the portfolio’s carbon footprint, the pension fund said it was to double investments in such things as renewable energy, clean technology and commodity recycling to more than €58bn over the next five years.It also said it aimed to increase its investments in renewable energy by five times to more than €5bn.
The first request, IN-2318, involves an internationally renowned company seeking suggestions for investing the assets of a newly formed DC plan. Based in Luxembourg, the scheme will start with an intake of at least 10 members a year, with salaries well within market range and an expected accrual of €110,000 a year. The investor is searching for the best management platform from an asset manager or insurer, and would be particularly interested to hear about any innovative ideas for the investment of these assets.The DC plan will be launched later in 2017. For more information, please log in to IPE Quest.The IPE news team is unable to answer any further questions about IPE Quest or Innovation tender notices to protect the interests of clients conducting the search. To obtain information directly from IPE Quest, please contact Jayna Vishram on +44 (0) 20 3465 9330 or email email@example.com. A European company is seeking investment ideas for a defined contribution (DC) pension scheme via a new service from IPE Quest.IPE Quest Innovation enables investors to request proposals from asset managers when looking for new investment ideas or innovative solutions to their investment problems or queries, without requiring it to be within a traditional asset class.Innovation can also be used to request advice on technical or other issues within a portfolio.The service is free for investors and asset managers.
The fund launch follows LGPS Central’s launch of a £2bn global active equity fund last year, run by Harris Associates, Schroders and Union Investment.The pool also launched a search for investment grade corporate bond managers late last year, with the fund expected to attract a similar amount from LGPS Central’s nine local authority schemes across the Midlands region of England.Jason Fletcher, chief investment officer at LGPS Central, said: “We look forward to building a long-term working partnership with [the managers] so that we can deliver our partner funds’ investment objectives effectively.”LGPS Central aims to pool roughly £44bn of assets from its nine member funds, saving roughly £250m over the course of its first 15 years of operation. It has already taken on more than £14bn in assets under management and advice.Brunel launches global high alpha equities searchSeparately, the Brunel Pension Partnership – which is pooling the assets of 10 local authority pension funds from south and south-west England – has begun its process for launching a high-alpha global equities fund.In the first stage, launched today, it has requested that managers send in “strategic research and thought pieces that contribute to the debate on delivering excellent performance in global equities”. It does not want proposals or strategy presentations.A formal search process for managers to run the portfolio – estimated to be worth roughly £2bn – will start in March, and managers can register for updates through Brunel’s website . The fund is slated for launch in the fourth quarter of 2019.Mark Mansley, Brunel’s CIO, said: “Put simply, we are seeking the best global equity fund managers in the world. We expect to spread the portfolio between four or five managers with diverse and complementary approaches.“The individual mandates will be fairly unconstrained, but will be long only. We will generally be looking for a long-term approach, innovation and originality in managers’ processes, and high return expectations of 3% or more over benchmark.”LGPS pooling acceleratesBorder to Coast searches for multi-manager for global equities fund ACCESS pool readies double global equity launch Brunel backs renewables fund, begins EM equity search Brunel appoints manager trio for UK equities LGPS Central, one of the UK’s eight asset pools for local authority pension funds, has named a trio of managers to run a £1.5bn (€1.7bn) emerging markets portfolio.LGM Investments (a subsidiary of BMO Global Asset Management), UBS Asset Management and Vontobel Asset Management will each run a third of the assets of the Emerging Markets Equity Active Multi-Manager fund when it launches later this year, the pool said in a statement.Several other managers currently run emerging market portfolios for LGPS Central’s local authority clients, and are therefore set to lose mandates as the schemes begin transferring assets to the pool.These include Schroders and JP Morgan Asset Management – which ran more than £150m each for the Worcestershire Pension Fund as of 31 March 2018 – and Russell Investments, which ran £122m for the Staffordshire Pension Fund, according to the scheme’s latest annual report. In addition, Macquarie had a £177.5m emerging markets equity mandate with the Leicestershire Pension Fund at the end of March last year.
ABP and PFZW – the pension funds for the civil service and the healthcare sector, respectively – are facing discounts in 2021 if their coverage ratio is short of the required minimum by the end of December next year.The CPB forecast is based on August-end figures; as funding has risen slightly since then, pension cuts could be lower.It said that underfunded pension funds in the market sector were expected to apply cuts of 0.8% on average.ContributionsThe CPB further forecasted rising pension contributions, and said that ABP would draw the increase on the prescribed lower assumptions for future returns.PFZW would raise its premiums by using the levy of 2.5 percentage points, as provided in its regulations, in case of rights cuts, it added.The CPB estimated that the contribution rise in the market sector woud be 0.5 percentage point in 2021, citing the low interest rates and new return parameters.However, the Bureau’s forecast didn’t mention the effects of a limited premium rise on annual pensions acrrual.Recently, several pension funds have warned that either contributions had to rise significantly or accrual had to be reduced in similar measure.In its forecast, the CPB further assumed that pension funds would use premiums for early retirement plans, that would become available as many of these schemes would expire, for regular and surviving relatives pensions.Pension contributions are likely to rise further as of 2022, when a levy is to be introduced to finance the transition from the current average pensions accrual to an – actuarially fairer – degressive one as part of the Dutch pensions reform. ABP, PFZW, PMT and PME – the four largest underfunded schemes in the Netherlands – are likely to apply rights cuts over three consecutive years as of 2021, the Netherlands Bureau for Economic Policy Analysis (CPB) said.In a prognosis for the mid-term, it is expected that the four pension funds would reduce pension rights and benefits by approximately 2.5% per annum on average.The discounts are expected to be applied over a three-year period rather than the legally allowed 10 years, because metal schemes PMT and PME prefer a three-stage process to save costs.Both metal schemes must already start cutting pensions in 2020 if they are still underfunded at the end of this year.
Natixis and La Banque Postale (LBP) have agreed to combine their fixed income and insurance-related asset management businesses within a new entity.According to a statement, the merger of the relevant businesses of Ostrum Asset Management and LBP Asset Management is expected to be completed in the fourth quarter of this year, subject to obtaining regulatory approvals.A spokesperson for Natixis confirmed that the new entity will be called Ostrum Asset Management, and said the businesses of the former Ostrum that aren’t being combined with LBP AM will be integrated into other Natixis investment affiliates.La Banque Postale said LBP AM and its subsidiary Tocqueville Finance, were “strengthening their position in predominantly SRI multi-specialist conviction management”. Natixis and La Banque Postale are to own 55% and 45%, respectively, of the new Ostrum Asset Management via their asset manager subsidiaries. The new entity will start with more than €415bn in assets under management, based on end-May figures.“The project was conceived in response to the evolution of the market and will be transformative for the asset management industry”NatixisNatixis said the merger project “was conceived in response to the evolution of the market and will be transformative for the asset management industry”.Ostrum Asset Management would seek to quickly grow its volumes and to play a central role in driving the consolidation of the European market in the coming years, it added.The new Ostrum Asset Management will offer investment management for fixed income and credit assets as well as “technological and operational services”, which a spokesperson for Natixis said could include outsourcing services for other asset managers.Philippe Setbon, chief executive officer of Ostrum, will lead the new company, while Mathieu Cheula, who will join LBP AM’s management board from 1 September, will be deputy CEO.Alongside Setbon and Cheula, the new firm’s executive committee will be comprised of asset management professionals drawn from both Ostrum AM and La Banque Postale Asset Management: Ibrahima Kobar, CIO; Guillaume Abel, head of business development; Valérie Derambure, head of finance, strategy and transformation; Julien Raimbault, head of operations and IT/technology; Emmanuelle Portelle, head of compliance and internal control; Rémi Ardaillou, head of risk; and Sylvie Soulère Guidat, head of human resources.Ostrum Asset Management is the former Natixis Asset Management, having been renamed in April 2018.Citigroup executive to take over from Skeoch at SLAStephen Bird has been chosen to succeed Keith Skeoch as chief executive officer of Standard Life Aberdeen (SLA).Bird, who was most recently CEO of global consumer banking at Citigroup, will start as CEO-designate on 1 July and take over fully from Skeoch after a handover period and subject to regulatory approvals.SLA said it envisaged the transition would take place by the end of the third quarter.At that point, Skeoch will be standing down from the board after some five years as group CEO and 14 years as a director. He will serve out the remainder of his contract as non-executive chairman of the Aberdeen Standard Investments Research Institute.Skeoch was originally co-CEO of SLA alongside Martin Gilbert, co-founder of Aberdeen Asset Management, following the latter’s merger with Standard Life, where Skeoch had been CEO. SLA then scrapped the co-CEO model.Bird had been at Citigroup for 21 years before retiring in November last year. He was CEO of global consumer banking from 2015, having been the CEO for all of Citigroup’s Asia Pacific business lines before then.Sir Douglas Flint, chair of SLA, said: “The transition from Keith Skeoch was always going to be a challenge to deliver, given the incredible scale and range of his contributions to the success of the company over many years. I am however extremely pleased to say we have found a truly worthy successor.“I am delighted to welcome Stephen to Standard Life Aberdeen and am looking forward to working with him. He is an inspiring leader with a great track record and experience in leading businesses to harness digital technology to improve both productivity and the client and customer experience.” Following the Bird-Skeoch handover, the SLA board will comprise two executive directors, eight non-executive directors and the chairman. The board will be made up of five women and six men.