SEB’s investment subsidiary in Germany is hoping the dissolution of former open-ended funds will serve to strengthen its real estate institutional business, while the country’s new KAGB regulation enables it to make its first foray into closed-end funds.SEB Investment, the local investment division of Swedish bank SEB, is one of several asset managers that had to dissolve former open-ended real estate funds (GOEFs), forced to close in the wake of the financial crisis due to liquidity problems.Over the last year, the manager has withdrawn from every asset class apart from real estate, where it now aims to strengthen its institutional business. SEB Investment has said it is confident the dissolution process can actually help generate new institutional business. Christian Hanke, head of institutional real estate clients at SEB Investment, said: “Sales have been facilitated by the currently high demand for core properties, which we can satisfy.”He pointed out that other providers had been forced to sell in more difficult markets 2-3 years ago.“Institutional investors do not want to cut their real estate allocation, and they need returns in a low interest rate environment,” he added.Hanke said SEB Investment was now looking to sell off assets from formerly open-ended funds in “themed packages” – such as ‘European core’, ‘US retail’ or ‘European logistics’ – and other assets to investors, possibly in club deals.One of the markets SEB Investment is currently targeting is Austria, where several Pensionskassen are invested in SEB real estate funds, including the SEB Asia real estate fund.“We could even imagine creating a single themed fund for Austrian institutional investors,” Hanke said.Another area SEB Investment will explore is the closed-end fund business, which has been restructured in Germany through new KAGB regulations.SEB Investment confirmed it included this area of business under its application for a KVG license, which all KAG must receive from German regulator Bafin as part of the new regulations, by which the country implemented the Alternative Investment Fund Managers Directive.Hanke said offering closed-end funds would be “no problem” for SEB Investment, as it had people on its board with a background in the sector, and “the structures are in place as well”.
Some 60 UK local authority pension funds are set to vote against the bonus share scheme in sports and leisure retailer Sports Direct.The company, which will hold an extraordinary general meeting (EGM) tomorrow, could see around 4.2% of shares awarded solely to vice-chairman and founder Mike Ashley.The Pension funds argue the company has to yet meet the threshold targets to approve such an award.Tomorrow’s EGM is the third attempt for the company to get shareholders to approve the remuneration policy. Councillor Kieran Quinn, chair of the Local Authority Pension Fund Forum (LAPFF), said incentive plans should not be created solely for one individual.“This arrangement creates a bias in favour of Mr Ashley, as well as the impression he is creating the scheme for himself,” he added.“The company states that it has performed very well over the year, so Mr Ashley should be adequately compensated through dividends on his shares in the company.”In other news, the proposed takeover of Ignis Asset Management by Standard Life Investments (SLI) has been completed after receiving regulatory approval.The £390m (€487m) deal will see Ignis’s ownership transfer from Phoenix Group Holdings to the Edinburgh-based SLI.Chief executive of SLI, Keith Skeoch, said the main priority post acquisition was to continue delivery of investment performance.“The acquisition of Ignis is another step in Standard Life Investments’ growth story, reinforcing our strong foundations,” he said.
Regarding ABCs, the PPF had previously suggested it would only accept the inclusion of these arrangements if the structures were backed by UK property.The inclusion of ABC models by trustees and sponsors in levy calculations is commonplace to demonstrate added security and, in turn, a reduced levy.However, after formal consultation from May this year, the PPF has said it will now accept bids from trustees on ABCs backed by any kind of asset.David Taylor, the PPF’s head of strategy, told IPE the fund’s previous stance was due to the ease of including UK property into risk calculations – as well as because the majority of ABCs used the asset. “This was never about ABCs themselves but about the way they show up in accounts for valuation purposes,” he said.He said the fund was not looking to impose any restriction on what the asset would be but did argue that trustees should be able to seek independent valuation – and for a level they deem appropriate.“We will ask schemes to certify to us a valuation that properly reflects what would happen if the employer became insolvent,” he said.“To give this teeth, we will require that the independent valuation recognises a legal duty of care to the PPF, meaning it can legally be relied upon.”The scheme will also require legal opinion on the structure of the ABC, and the “step-in rights” trustees have in the event of insolvency.“We know ABCs are complicated and trustees take strong legal advice when setting them up,” he said.“We hope much of the required information is out there, but we just need to ensure this information comes to us.”The PPF also settled another contentious issue regarding the use of independent and external credit ratings for sponsors, over a PPF-specific insolvency risk score calculated by Experian.It said it would not recognise these scores, and all sponsors must submit data to Experian for an insolvency risk score to be calculated.Taylor said the idea was discussed with the industry-working group, and he understood the attraction of using credit ratings as they look deeper into the performance of companies more than the PPF could.“There are a number of limitations, a practical one being the entity with a credit rating might not be the actual sponsoring employer – you would have to find a way to connect the two,” he said. “There are also complications on how to translate a credit rating into an insolvency measure – you are mixing two concepts.”However, the Confederation of British Industry, an industry group for UK employers, said some businesses would pay more based on changes to insolvency scores, and that overseas-headquartered companies would be concerned if credit score overrides were not used.However, it did accept that changes to the levy calculation were positive overall and welcomed the reduced levy intake.Joanne Segars, chief executive at the National Association of Pension Funds, also welcomed the reduced levy, as well as the new calculation. “While we recognise that applying transitional relief is not a simple task, we would have liked to see the PPF providing some transitional support for the minority of schemes that will face significant increases to the levy,” she said.The lifeboat fund said it would consider providing support for schemes when it published its initial proposals in May this year, which the NAPF fully supported.The PPF’s consultation of mortgage age and ABCs – as well as other secondary matters – will run until mid-November, with final structures expected before 2015. The UK Pension Protection Fund (PPF) has published amended plans over the introduction of its new levy calculation, while launching a final consultation on changes to asset-backed contributions (ABC) and mortgage age calculations.The lifeboat fund also said its levy intake for the next 2015-16 valuation year would fall by 10% to £635m (€809m) – a reflection of falling risk at the employer and scheme levels.It will now run a “second-order” consultation determining the proposed changes in levy and insolvency score calculation.This includes changes to ABCs and the mortgage age variable – the latter a contentious issue in previous consultation over the inclusion of mortgage holdings by sponsors in risk calculations.
If correct, the decision would mean a victory for the so-called ‘social bloc’ in the government, headed by Olga Golodets, deputy prime minister for social affairs, which remains hostile to the funded part of the Russian pensions system.Golodets recently claimed the second-pillar system lost RUB200bn (€2.6bn) in 2015, a charge denied by the CBR, a strong supporter of the privately managed system.Since 2014 the Russian pension fund sector has faced an undeniably challenging period, including the obligation to convert to joint-stock status, receive CBR authorisation to sign up to the Deposit Insurance Agency (DIA) guarantee scheme, implement risk-management systems, generate returns in an investment-unfriendly climate and compete for new clients.For many pension fund members themselves, the changes have proved confusing, as shown by the results of last year’s NPF campaign to win new clients from each other, and from the PFR – those whose contributions were being managed by state-owned Vnesheconombank (VEB) or private asset managers.The campaign targets included the molchani – ‘silent ones’ who failed to choose an NPF or asset manager themselves and thus defaulted to VEB’s management.The molchani had been given until the end of 2015 to switch or remain with VEB.According to the PFR, in total, 13.42m fund-switching statements were sent, of which 5.48m were rejected.Of these, 2.46m were multiple applications from individual citizens.A further 1.3m applied to switch to an NPF not registered with the DIA.The number of DIA-registered funds, the only ones allowed to accept new members and also receive contributions frozen for the second half of 2013, grew to 33 by the end of 2015.A further four have signed up since.In addition, some 1.1m applied to join a fund that ended up being liquidated by the CBR for regulatory violations.Of the successful applications, 4.09m moved from the PFR system to an NPF, while 149,100 did the reverse.Some 3.14m switched from one fund to another, while 201,200 switched asset management companies.As of the end of 2015, VEB still acted for the largest share of insured (49.3m), while the number of NPF clients had grown by some 8.8m to 30.9m.A relatively small number – 460,000 – were signed up with private asset managers. Russia’s second-pillar pension funds (NPFs) may be facing another year of reduced inflows.In March, the Russian news daily Vedomosti reported that the finance ministry planned to extend the contributions moratorium, in place since 2014, into 2017.As in the case of the previous moratoria, the contributions will be diverted into the first-pillar Pension Fund of the Russian Federation (PFR) to help finance existing pensions benefits.Separately, Reuters reported that Bank of Russia (CBR) – the pensions regulator – and the finance ministry were now considering making the mandatory system voluntary.
The move came in response to calls for the board to reduce complexity in financial reporting and also to fix impairment.Critics of the board’s existing impairment rules argue that, because they measure incurred losses rather than an expected loss, they lead to too-little-too-late recognition of losses on impaired assets.The 6 October vote was not, however, an unqualified endorsement of the new standard, which will replace International Accounting Standard 39, Financial Instruments: Recognition and Measurement.In a strongly worded resolution, the Parliament reiterated the call of its Committee on Economic and Monetary Affairs for the ESRB to analyse the financial stability implications of the introduction of IFRS 9.In September 2015, IPE reported that well-placed sources close to the issue had said they did not expect the Parliament to block IFRS 9 – despite recent sabre rattling.In March, IPE revealed that ECB chairman Mario Draghi had conceded that the European Systemic Risk Board had yet to conduct an analysis of the financial stability implications of the new standard.In a letter dated 29 February addressed to the Parliament’s ECON committee, Draghi wrote that the impact of IFRS 9 was as yet unknown.A study by academics from Mannheim Business School subsequently endorsed the standard as an improvement over IAS 39.In an email response dated 21 March, the authors of that report told IPE: “We agree the assessment of the full impact of IFRS 9 on individual banks, and the financial system as a whole, is not fully possible to simulate ex-ante.“Note that, for an individual large bank, a team of 200-300 people will be involved in managing the transition process.“So, even individual banks cannot assess the impact with full certainty, let alone the regulator, which would have to accumulate the information of all relevant banks under their supervision. This is simply not feasible given the data/systems currently in place.”Meanwhile, German Green Party MEP Sven Giegold, a long-standing IFRS 9 critic, said this latest resolution showed the European Parliament was no longer prepared to rubber stamp accounting standards.In a 29 September blog posting, he wrote: “The message of the MEPs is clear: Accounting standards are a public good.“For the first time, the European Parliament does not simply rubber-stamp a new financial reporting standard but expresses concerns and demands follow-up action.”Once formally adopted by the European Commission, IFRS 9 will apply for annual reporting periods beginning on or after 1 January 2018. The International Accounting Standards Board’s (IASB) proposed new rulebook for financial instruments accounting, International Financial Reporting Standard 9, Financial Instruments (IFRS 9), has cleared its last major hurdle in the European Parliament.In a plenary session held on 6 October, the Parliament confirmed it would not veto IFRS 9.The Parliament’s resolution instructs its president, Martin Schulz, to advise the European Commission that it has approved the new standard.The IASB launched its project to develop IFRS 9 in 2009.
Mark Mobius, Franklin TempletonFranklin Templeton – Mark Mobius, the famed emerging markets investor, is to retire from the US asset management giant at the end of this month after more than 30 years with the firm. He led Franklin Templeton’s emerging markets team from 1987 until stepping back in 2016. Mobius is currently a named co-manager on a listed investment trust having relinquished most of his other management responsibilities over the past two years.Mobius said: “I feel very fortunate to have spent most of my career at Franklin Templeton Investments. I have had the great privilege of working with an emerging markets team that includes some of the most talented and passionate people in the business, a number of whom have been with me for decades. I leave with great confidence in the Templeton Emerging Markets team and leadership at Franklin Templeton.”Chairman and CEO Greg Johnson added: “There is no single individual who is more synonymous with emerging markets investing than Mark Mobius. My colleagues and I are deeply grateful to have had the opportunity to work alongside a legend, and we thank Mark for his many years of dedicated service and tremendous contributions to the firm.”UK Department for Work and Pensions – The UK government has appointed its fifth different work and pensions secretary in two years as part of a reshuffle of roles within the cabinet. Esther McVey was named Secretary of State in charge of the Department of Work and Pensions, replacing David Gauke, who held the role since June last year. Gauke has been reassigned to the Department of Justice. Guy Opperman, minister for pensions and financial inclusion, has retained his role.McVey, a former TV presenter, was previously deputy chief whip for the ruling Conservative Party, a role that involves ensuring as many MPs as possible vote with the party line.Esther McVey MP becomes Secretary of State for Work and Pensions @DWP #CabinetReshuffle pic.twitter.com/nmZaPQfAzu— UK Prime Minister (@Number10gov) January 8, 2018Malcolm McLean, senior consultant at actuarial consultancy Barnett Waddingham, criticised the decision to move Gauke after just six months in the role, arguing that the government was “not giving ministers enough time in the post to get to grips with the issues”.“His background and experience in the Treasury was widely seen as a valuable addition to a department desperately in need of consolidation and respite after several years of upheaval and turbulence, especially in the pensions sphere,” McLean added.Hoogovens – Jack Buckens has started as temporary independent chairman of the €8.4bn pension fund of Dutch steelworks Hoogovens. Buckens succeeded independent chair Rita van Ewijk, who was appointed in September 2016 but left her position in August last year. The scheme indicated that it expected to appoint a permanent chair later this year. Buckens has previously worked as chief executive at former insurer Interpolis.Af2i – Philippe Haudeville has left the French institutional investor association to return to investment litigation specialist Grant & Eishofer. Haudeville had been secretary general of Af2i for eight years. As part of a new strategic plan the association is expanding its permanent staff, which will consist of two vice presidents, a treasurer, and a secretary. Volo – Juliette Tesselhoff has started as senior business development manager at the general pension fund Volo, established by PGGM, the €206bn asset manager of healthcare scheme PFZW. Tesselhoff joined from KAS Bank, where she was in a similar position. Prior to this, she worked as account manager at Blue Sky Group and as consultant for corporate clients at Delta Lloyd.Ballast Nedam – Norma van den Berg has been named as board member, representing the pensioners, of the €958m pension fund of construction firm Ballast Nedam. Van den Berg was already an independent board member of the scheme.Total – Alex van Schaik is to step down as chairman of the €410m Dutch pension fund of energy company Total following the completion of his term. After the appointment of a successor, Van Schaik will continue as a board member.Thinking Ahead Institute/Willis Towers Watson – Bob Collie has joined the Thinking Ahead Institute, a not-for-profit research institute set up by consultancy giant Willis Towers Watson. Collie started at the institute on 1 January as head of research. He was previously chief research strategist at Russell Investments, and has also led the group’s London-based consultancy team. Achmea – Lenneke Roodenburg is to start as director of the €5.6bn pension fund of Dutch insurer Achmea as of mid-February. She will succeed Sybrand Nauta, who left in October and is now senior executive at pensions adviser Fidado. Roodenburg has been account CIO at Achmea Investment Management since February 2017. Prior to this, she was manager for asset-liability management and actuarial advice at Syntrus Achmea and an actuary at asset manager PGGM.BNP Paribas Asset Management – The French fund manager has appointed Matthieu Lucchesi to the newly created role of head of public affairs. He joins from the country’s financial regulator, AMF, where he worked since 2012, latterly as director of its asset management division. The Pensions Regulator – Mark Boyle has been appointed to a second term as non-executive chair of the UK’s pensions watchdog. He has held the role since 2014, and will now chair the regulator until March 2021. Boyle has worked in a number of sectors including banking, corporate development and central government.BMO Global Asset Management – BMO has appointed Bart van Merriënboer as senior manager in its fiduciary management team in the Netherlands. His tasks include the selection of managers for private investments. Prior to this, Van Merriënboer worked at Pensioenfonds ING and the asset managers ING Investment Management and MN. BMO also named Gerben Borkent as sales director for institutional distribution in Europe. Previously Borkent worked at TKP Investments, Russell Investments and ING Group. BMO said the appointments reflected its focus on developing and extending its fiduciary activities in the Netherlands.Investcorp – The alternatives fund management specialist has hired Phil Yeates as managing director in charge of its European credit business. The newly created department sits within Investcorp Credit Management. Yeates joins after a 24-year career at Rothschild & Co where he set up the company’s global credit management arm.Deutsche Asset Management – Daniel Green has been named head of private equity secondaries for Europe, the Middle East and Africa. He joins from Meketa Investment Group where he was in charge of its European investment activities in the private markets space. He was previously at Gorst Capital, where he was a founding partner. Deutsche hired Mark McDonald as global head of private equity secondaries in November 2017.Alcentra – The fixed income subsidiary of BNY Mellon Investment Management has hired Leland Hart as managing director and head of US loans and high yield. He will lead a 16-strong US-based team of investors and researchers. Hart joins from BlackRock where he was head of loans and CLOs. Prior to joining BlackRock he was a managing director in Lehman Brothers’ leveraged capital markets group.Style Research – Sebastien Roussotte has joined the factor investing analytics firm as CEO, succeeding Kirsten English. English has moved to a non-executive director role. Roussotte joins from software company Misys where he oversaw its investment management division. Brunel Pension Partnership, KLP, Folketrygdfondet, NBIM, Franklin Templeton, DWP, Hoogovens, Af2i, Volo, Ballast Nedam, Total, Thinking Ahead Institute, Willis Towers Watson, Achmea, BNP Paribas AM, TPR, BMO Global Asset Management, Investcorp, Deutsche AM, Alcentra, Style ResearchBrunel Pension Partnership – Brunel, the asset pool for 10 public pension funds in south-west England, has appointed Richard Fanshawe as head of private markets. He will join on 1 February from the Derbyshire Pension Fund where he was a fund manager working on several asset classes. He has worked in local government pensions since 2009, and has experience of corporate finance, mergers and acquisitions.Mark Mansley, CIO at Brunel, said: “With an excellent knowledge of private equity and infrastructure, and an excellent understanding of the LGPS, we are sure our private markets programme will be in great hands.” In a statement, Brunel said it was continuing to hire investment professionals for its growing team, which will eventually oversee more than £20bn (€22.6bn) in assets. KLP/Folketrygdfondet – Annie Bersagel has been appointed as senior analyst for ESG at Folketrygdfondet, the manager of the Government Pension Fund Norway (GPFN), the Nordic-invested portion of the country’s sovereign wealth fund. Bersagel is leaving KLP where she has been acting head of responsible investments since March, following the departure of Jeanett Bergan to PwC Norway. Anne Kvam took on the role of head of responsible investment at KLP in November, having moved to the pension fund from Norges Bank Investment Management (NBIM) – the manager of the larger, internationally invested Government Pension Fund Global – where she was global head of ownership policy. Bersagel is still working at KLP until the end of January, and will start her new job on 1 February. At Folketrygfondet, she will replace the manager’s current ESG senior analyst, who will move on to a different position within the organisation, a spokeswoman for Folketrygfondet said.
Communications with employees and employers were informed and advised on pensions have to be “completely rethought” under Germany’s new pensions model, the Betriebsrentenstärkungsgesetz (BRSG).Heribert Karch, managing director at the MetallRente pension fund, said communicating with beneficiaries was a top priority in the ongoing negotiations on the new pension model for the metal industry.The MetallRente pension fund, led by Karch, was one of the fiercest promoters of the new industry-wide pension plans which have to be set up jointly by employer and employee representatives.Karch said the scheme was already preparing an architecture under the new pension legislation, which could be presented before the unions’ day for the industry in autumn 2019 and implemented right after approval. Speaking at a meeting of the Pensions Akademie think tank, Karch and Peer-Michael Dick, managing director of the employer representative group Südwestmetall, said different degrees of consulting would be necessary depending on whether new pension funds utilised auto-enrolment and the levels of contributions.The BRSG model is a major shift in Germany’s pension system, as it marks the first time guaranteed pensions are forbidden. Instead, beneficiaries are to be promised a “target pension”, also called a “defined ambition” model.Dick said Germany’s existing Pensionsfonds vehicles were a good model to provide the new pensions, as they facilitated non-guaranteed benefits.No matter which vehicle was used, Karch pointed out it was yet to be decided whether a new one should be set up for the new model or whether certain services should be bought externally.MetallRente is not the only provider looking at the new model, however. German insurers Alte Leipziger-Hallesche and Provinzial Nordwest both noted in separate press releases that they would be bringing products to the market to match the new “target pension” principle.
Stefan Dunatov, chairman of the 300 Club, said: “Over the past seven years, our focus at The 300 Club has been to ask uncomfortable questions about behaviours within the industry, and our latest focus is to ensure that these questions promote the interest of asset owners themselves.“Changing economic and geopolitical circumstances combined with the looming threat of a pensions and savings crisis mean that we, as an industry, cannot afford to ignore the demands of those who at the very centre of our business.”Dunatov is also head of investment strategy, research and risk at $145.6bn (€97bn) British Colombia Investment Management Corporation, and was formerly CIO of the UK’s Coal Pension Trustees.The 300 Club’s membership includes PGGM’s Jaap van Dam, Amundi’s Pascal Blanqué, and CREATE-Research’s Amin Rajan, while its North American members include Ted Eliopoulos, CIO of CalPERS, and Chris Ailman, CIO of CalSTRS. The 300 Club, a group of investment professionals established to challenge industry behaviours, has warned that a pensions and savings crisis is approaching.The impending crisis was being fuelled by “a general misalignment between the goals of managers themselves and that of the investors they work on behalf of,” the group said.Combined with various other factors, this discrepancy threatened to leave many beneficiaries in a state of retirement that was barely above the poverty line unless attitudes within the investment industry changed, it added.The warning came as the group announced it was adjusting its focus to concentrate on asset owners.
PIMCO 1,451.71,462.4-0.7% Further readingTop 400 Asset Managers 2019: Cultures Change Is asset management a tech business, a people business, or both?Artificial intelligence: Let me tell you what you really think How are managers deploying natural language processing to analyse management sentiment in earnings calls? BlackRock5,251.25,315.4-1.2% Vanguard4,257.24,090.0+4.1% SSGA2,196.82,316.5-5.2% Fidelity Investments2.096.62,003.3+4.7% JP Morgan AM1,486.01,471.2+1% Most of the top 10 managers retained their ranking from last year’s survey. Only JP Morgan Asset Management managed to climb one spot to sixth place, overtaking Capital Group.Figures for the fiduciary AUM of both Mercer and Willis Towers Watson were included in IPE’s survey for the first time this year. Mercer was listed as the 82nd largest firm by assets, with €199.7bn under management, while Willis Towers Watson ranked 163rd with €77.5bn.The overall AUM of global managers grew by just over 1% to €66.4trn. The pace of growth is slowed significantly compared with the past three years: AUM grew by nearly 4% in 2018 and and more than 12% in 2017. Total global assets under managementChart MakerThis contrasts with the growth of assets managed on behalf of European institutional investors. European institutional assets grew 12% to €10.2trn in a significant reversal from last year’s survey, which reported a 2.2% fall in AUM.Total European institutional assets under managementChart MakerThe 2019 ranking of the 10 largest managers of European institutional assets is strikingly different from last year’s. BlackRock and Legal & General Investment Management maintained the top two spots, with €902bn and €808bn of AUM respectively.However, BNY Mellon IM replaced its subsidiary company Insight Investment in third place, having failed to report the figure in 2018 – although BNY’s €679bn figure includes Insight’s assets. PIMCO took fifth place, pushing APG Asset Management down one spot. Affiliated Managers Group entered the top 10, having reported European institutional assets as a separate figure for the first time.This article was updated on 6 June to clarify the relationship between Insight Investment and BNY Mellon IM.Click here to download the complete Top 400 table Capital Group1,467.31,504.4-2.5% Amundi 1,425.11,426.1-0.1% IPE Top 400 Asset Managers: Your source for institutional market intelligenceIPE offers unrivalled intelligence on over 400 global asset managers covering over 100 categories of products, strategies, asset classes, and key data areas. The data set is available to buy with a variety of purchase options.For more information please contact [email protected] . BNY Mellon IM1,498.21,585.9-5.5% Top 10 global asset managersIPE Top 400 Asset Managers survey 2019Company 2019 AUM (€bn)2018 AUM (€bn)Change Market volatility took a toll on several global asset managers last year, according to IPE’s Top 400 survey for 2019, with six of the top 10 groups reporting a lower AUM figure for 2019 compared with the previous year.BlackRock, State Street Global Advisors (SSGA), BNY Mellon Investment Management, Capital Group, PIMCO and Amundi all reported lower AUM at the end of 2018. Last year, four of the top 10 reported a year-on-year fall in AUM.However, the total AUM of the top 10 global asset managers in IPE’s annual ranking was roughly stable at €22.3trn. The share of assets managed by the top 10 managers was also stable compared with last year, at 33.7%.For the sixth year running, the top five biggest managers are BlackRock, with €5.3trn under management, Vanguard (€4.3trn), SSGA (€2.2trn), Fidelity Investments (€2.1trn) and BNY Mellon Investment Management (€1.5trn). BlackRock experienced the largest inflows out of the overall ranking during 2018, raising more than €100bn in assets. PGIM 1,204.81,160.6+3.8%
Businesses in the UK support the idea of extending the auto-enrolment occupational pensions regime to include lower-paid workers and the self-employed, according to a new survey.However, the Future Savings survey – conducted by the Confederation of British Industry (CBI) and Scottish Widows – also found that the majority of businesses did not believe that mandatory contribution levels should be increased yet.The survey revealed that 74% of companies wanted the current £10,000 (€11,141) earnings trigger to be reduced or removed so that automatic enrolment was extended to more workers, with the same proportion favouring provision being made available to the self-employed.In addition, 71% of businesses in the poll – which was carried out in February – said they believed employers would need to make higher contributions to auto-enrolment schemes at some point in the future in order for staff to have enough retirement income. More than 10m people have been auto-enrolled into a workplace pension scheme since 2012Matthew Fell, chief UK policy director at the CBI, said that while higher contributions would be needed in the future, now was not the time to raise mandatory contributions again.“The government must first be given the chance to deliver the findings of the automatic enrolment review and fully assess the impact of the increase to contributions in April 2019,” he said.The survey showed that UK company bosses were almost unanimous in supporting provision of a competitive workplace pension, with 98% saying there was a business case for it, and 95% agreeing there was a moral one.Engagement challengesFell said that increasing staff engagement with their savings was a must, but that there was also a growing concern among companies about the essential balance between funding defined benefit schemes and investing in the future.“It will be important for government to take steps to help firms who want to continue to sponsor these schemes. In the end, a strong solvent employer is the best security for a pension scheme,” he said.Some 76% of business leaders polled said they wanted the government to prioritise educating people about the importance of engaging with their savings, while 85% said they believed their firms should do more to engage staff with their pensions.Citing a July 2018 report from the Pensions and Lifetime Savings Association, the CBI and Scottish Widows said that 80% of workers were unsure of whether they were saving the right amount for retirement. Just over half (51%) believed the auto-enrolment minimum pension contribution level – 5% from the member, 3% from the employer from 6 April 2019 – was the government’s recommended amount they should save.“To unlock the full value of pension saving, business and government must each play their part,” the report said.Delivering the pensions dashboard was one way government could help, according to the report. The dashboard concept had strong support from business because of its potential to boost engagement, the report said, with 24% of respondents saying it should be a key priority for the government. However, only 27% of the survey’s 240 respondents supported increasing employers’ contributions now, with 40% backing higher employee contributions.