Dutch pensions accrual ‘often insufficient’, professor warns

first_imgRecently, the Dutch Cabinet withdrew proposals to reduce the annual tax-facilitated pensions accrual to 1.75% – meant to save several billions for the national budget – after the Senate rejected the proposal.It is reviewing its plans at the moment.Goudswaard said his conclusions were based on the outcome of joint studies in Leiden, pensions research network Netspar and the Organisation for Economic Co-operation and Development (OECD).The studies have also revealed that the assets of over-65s were significantly higher on average than those of younger people, and that this would be unlikely to change over the next 12 years, Goudswaard said.In his opinion, this would be a reason to consider solidarity from older workers with their younger colleagues, including the option of an increased pensions accrual for younger workers, rather than the current average contribution-based accrual.He also suggested that the often-disputed value transfer from younger to older workers, implicit in the current system, was not a problem.“When younger workers grow old, they automatically assume the role of receiver,” he said.Also during the seminar, Dick Sluimers, APG’s chief executive, warned the pensions sector against “going too far” in seeking solidarity solutions.“There are many more kinds of solidarity, such as between men and women, poor and rich workers and smokers and non-smokers, who all have different life expectancies,” he said.In his opinion, solidarity is a matter of give and take, and pension funds should refrain from trying to accommodate all these different solidarity elements into a single pensions plan.“This will never work,” he said. “There will also be open ends. Therefore, we should focus on the kind of solidarity we really want to keep.” The current tax-facilitated pensions accrual of 2.15% a year in the Netherlands is in many cases “insufficient”, even without taking into account the Cabinet’s mooted accrual decrease, an economics professor has argued.Kees Goudswaard, professor of applied economics at Leiden University, said almost 30% of Dutch workers over 35 years of age would fail to achieve the level of 70% of their average salary if they only depended on their state pensions AOW and second-pillar scheme.Speaking at a recent seminar held by asset manager APG on generational issues, he added that 12% of over 35s would fail to achieve even 70% if third-pillar arrangements, private assets or owned property were taken into account.On average, self-employed workers, divorced women and first-generation immigrants will end up with even less, he warned.last_img read more

​State Street fined £23m over ‘significant failings’ in transition management

first_imgState Street’s UK transition management business has been handed a nearly £23m (€27.9m) fine by the Financial Conduct Authority (FCA) for “deliberately” overcharging six institutions $20m (€14.6m) using its services.The regulator criticised that inadequate internal controls meant the overcharging only came to light when a client informed the firm of “mark-ups on certain trades that had not been agreed”, with later press reports of the matter resulting in Ireland’s National Pensions Reserve Fund (NPRF) discovering it had been charged €2.65m in non-contractual fees.The FCA said: “Those responsible then incorrectly claimed both to the client and later to State Street UK’s compliance department that the charging was an inadvertent error, and arranged for a substantial rebate to be paid on that false basis.“They deliberately failed to disclose the existence of further mark-ups on other trades conducted as part of the same transition.” Tracey McDermott, director of enforcement and financial crime at the FCA, said State Street had allowed a culture to develop that prioritised “revenue generation over the interests of its customers”.“State Street UK’s significant failings in culture and controls allowed deliberate overcharging to take place and to continue undetected,” she said.“Their conduct has fallen far short of our expectations. Firms should be in no doubt that the spotlight will remain on wholesale conduct.”The regulator said the overcharging accounted for more than one-quarter of its revenue from its transition management services.As State Street UK agreed to settle the case “at an early stage”, it was granted a discount from an initial fine of £32.7m, only paying £22.8m for breaching three of the FCA’s guidelines.The regulator said it failed to treat its customers fairly, failed to communicate with clients in a way that was clear and not misleading and failed to take reasonable care to organise and control its affairs responsibly, with adequate risk systems.In a statement, State Street said it deeply regretted the matter and that it had been working hard to improve controls to address the “unacceptable” situation.“In 2011, we dismissed individuals centrally involved in the overcharging of transition management clients,” the statement continued.“We have fully cooperated with the FCA during their investigation and appreciate that the FCA’s notice acknowledges the overcharging identified in the settlement relates only to our UK transition management business, that we have implemented a comprehensive remediation programme in relation to the controls around the UK TM business, and that we have bolstered our control functions, governance and culture across all of our UK businesses.”The NPRF used the firm in 2011 to dispose of €4.7bn of its portfolio, a sale triggered by the fund’s contribution toward the €85bn IMF/EU bailout of Ireland.In late 2012, the fund revealed that it had been charged €2.65m in non-contractual fees that were eventually recovered.The situation led to State Street’s suspension from the NPRF’s transition management panel.The National Treasury Management Agency’s chief executive and former NPRF investment director John Corrigan said in January last year that while the agency had concerns about governance within State Street, it would not make any further decision on its relationship with the company until the UK regulator concluded its investigation.He told a parliamentary commitee: “Before we make any decision on the future basis of the relationship – if any – with State Street, we would wish to see the report from the regulator in the UK.”In a statement sent to IPE, the debt management agency, in charge of the NPRF’s management, said: “The NTMA is studying the Final Notice published by the FCA today and will report to the NPRF Commission very shortly.”It also noted that it was still supporting an ongoing investigation by the City of London Police into the matter.According to the most recent annual report, State Street Global Advisors Ireland managed four mandates worth €861m at the end of December 2012 – three passive equity mandates and one passive global infrastructure mandate.,WebsitesWe are not responsible for the content of external sitesFCA’s note on State Street finelast_img read more

Ireland promises road-map for ‘comprehensive’ pension scheme

first_imgThe changes will see the Pensions Board from today rebranded as the Pensions Authority, retaining Brendan Kennedy in the newly titled role of pensions regulator.The board’s current chair, Jane Williams, will oversee the three-person Pensions Commission within the new Authority, tasked with monitoring the industry’s adherence with existing regulation.The Department of Social Protection (DSP) said the Commission would also include Orlaigh Quinn and Ann Nolan, senior officials from the DSP and Department of Finance, respectively.Burton said: “These structural governance changes provide a clearer landscape and correspond with the longer-term changes I will be bringing forward in relation to pensions policy in Ireland.”Noting concern that only half of Irish workers are currently covered by occupational pensions, the minister said: “I will publish a road-map in the coming months for the introduction of a new and comprehensive scheme to drive up pensions coverage for workers, with a go-live date that will depend on certain criteria of economic recovery and stability.”She said a new scheme to improve coverage of occupational provision was “essential”.Previous governments have suggested the introduction of an auto-enrolment system would be dependant on economic factors, although the pre-bailout Fianna Fáil coalition had suggested a system should be in place by 2014.Burton also reiterated that the new Council, once fully staffed, would be tasked with tackling “excessive” management fees by implementing recommendations on a report on pension charges that the Irish Association of Pension Funds previously criticised for putting the “worst charges possible” front and centre. The Irish government will soon publish a road-map detailing how it would introduce “a new and comprehensive scheme to drive up pensions coverage” in the country, according to the minister for Social Protection.Joan Burton said the proposal would set out how the introduction of the new scheme – which she previously revealed would be called MySaver – would be dependent on pre-agreed economic targets being met.The Labour TD made the announcement as she unveiled the former director of the European Consumers Organisation, Jim Murray, as the head of the Pensions Council, a new body charged with reforming the Irish pensions system in the interest of the consumer.The council, which will consist of up to 12 members, is to be launched as part of a shake-up of the Irish regulatory system to address concerns of “regulatory capture”, according to Burton.last_img read more

EIOPA committee chairman confirms 2015 ‘stress tests’ for IORPs

first_imgThe European Insurance and Occupational Pensions Authority (EIOPA) is preparing stress tests for institutions for occupational retirement provision (IORPs) as early as next year, according to Patrick Darlap, chairman of EIOPA’s Financial Stability Committee.Addressing delegates at a recent meeting of the Austrian Actuarial Society in Vienna, Darlap also argued that the “biggest problem” for the European pension system was a lack of unified regulation. Also speaking at the Austrian Actuarial Society meeting, Falco Valkenburg, chairman of the pensions committee at the Actuarial Association of Europe (formerly Groupe Consultatif), said EIOPA was now working on “open issues” from the first quantitative impact study (QIS) for IORPs such as sponsor support valuation, the supervisory response to and definition of “underfunding” and the reduction of benefits, among other things.Valkenburg said a second QIS was likely to be combined with a stress test next year. He argued that actuaries would support risk-based capital requirements for IORPs because, “if you have some form of guarantee, you should make sure you have a valuation best estimate”.However, the consultant and actuary also stressed that certain aspects of pension funds – such as demographic developments and the nature of the contract between employer and employee – also had to be taken into account.The European Commission, in its proposal for a revised IORP II Directive, did not include risk-based capital requirements akin to those found in the first pillar of Solvency II and pledged that no further capital requirements “beyond those foreseen” in the Directive would be introduced.Valkenburg was uncertain if this would remain the case.“Listening to the Commission and EIOPA,” Valkenburg told IPE, “it is very likely that some form of capital-requirement mechanisms will be introduced to the IORP Directive in future.”He said this would “make a lot of things clearer”, if capital requirements were “adjusted to pension funds’ needs” and took into consideration “national specifics”.Taking Germany as an example, he pointed out that there was “practically no risk” for IORPs, as the plan sponsor was obliged to make additional contributions if needed.“That means there is actually no need for higher capital requirements for those IORPs,” Valkenburg said.He said it was much more important to identify where the risks in a pension contract were and to convey this information to members.What’s more, he called on the industry to admit that, “very often, too much is promised”, and said this problem needed to be addressed.Respecting the valuation of liabilities, he warned against applying counter-cyclical or matching premiums to “artificially shrink the value of liabilities”, arguing instead for the use of these premiums in a fund’s assessment of measures to be taken.The Actuarial Association of Europe has proposed the introduction of a “continuity test” for IORPs in addition to a point-in-time valuation.“It is basically an ALM test looking at how a pension fund will develop, and it will show whether the contribution level is still efficient, whether there is a risk of benefit cuts, etc.,” Valkenburg said.His main criticism regarding IORP II was the fact the full-funding requirement for new cross-border pension plans was re-introduced after it had been removed in a previously leaked draft.“In the directive, there is a provision for underfunded IORPs to set up a recovery plan – so why not start with such a recovery plan straightaway?” he asked.”This would help increase cross-border activity.”last_img read more

PKA steps up engagement with companies over exposure to coal

first_imgPKA is to step up its engagement with heavy users of coal and will divest companies – where coal is responsible for as little as 25% of their revenues – if plans to reduce reliance are not put in place.The DKK235bn (€31.5bn) Danish pension provider said the new policy was an escalation of an approach, announced last year, which saw it engage with companies drawing 50-90% of revenue from coal.In a complementary approach, PKA will also begin engaging with companies drawing more than half their revenue from tar sand projects.Peter Damgaard Jensen, chief executive at PFA, said the provider’s decision to divest 31 coal companies had already boosted returns, as the stocks in question declined 70% since divestment. He compared this with a 7% return from offshore wind holdings over the same period.“It clearly shows our climate strategy to increase green investment while phasing out coal investments has been right from both an economic and a climate point of view,” he said.The fund has invested in wind farms since 2011 and recently was joined by Kirkbi, parent company of LEGO Group, in acquiring a stake in a wind farm from Dong Energy.The decision to expand the engagement criteria below the 50% coal revenue threshold will see an additional 53 companies added to PKA’s list.Of the new additions, the majority are utilities providers, while eight are mining firms.PKA has already launched a dialogue with nine of the 23 companies identified in 2015 and said four had already put in place policies to reduce reliance on coal.One company has been placed on a watch list, while a further four have been divested.Damgaard Jensen said the success with four of the nine companies proved the value of active ownership, and the provider said it would now start engaging with the remaining companies it had identified.Peabody Energy bankruptcyThe pension provider’s announcement coincided with the world’s largest listed coal company, Peabody Energy, filing for chapter 11 bankruptcy in the US.A statement by the firm cited the “unprecedented industry downturn” as its reason for the filing, but investors seized on the bankruptcy to argue that carbon-intensive industries would no longer be viable if the increase in global temperatures were to be limited to 2° C.Adam Swersky, chair of the £670m (€915m) London Borough of Harrow Pension Fund, said the bankruptcy was a reminder that environmental, social and governance risks needed to be taken into account.“We have known for some time that some carbon-intensive assets are unlikely to be viable in a 2 degree climate change scenario,” he said.“Trustees must challenge fund managers to put this type of assessment at the heart of their investment strategies.”Luke Sussams, senior analyst at the Carbon Tracker Initiative, added that the bankruptcy was the most significant signal to date that the coal market was “nearing a structural decline”, while Julian Poulter of the Asset Owners Disclosure Project argued that investors for too long had ignored warnings over coal holdings.“Whilst commodity prices played a major role in Peabody’s demise, so too did the climate stigma,” he said.“There can be no excuse for investors now not to reshape their entire industry to account for the systemic risk posed by climate change.”However, Tom Sanzillo, director of finance at the US-based Institute for Energy Economics and Financial Analysis, said the bankruptcy was down to Peabody’s inability to adapt to energy markets where coal was being disrupted by newer energy sources.He argued that the coal industry was not “dead” but needed to focus on greater innovation through smaller markets and fewer mines.last_img read more

Philips and KLM schemes achieve 10% gains in 2016

first_imgIts fixed income holdings and equity portfolio yielded 7.4% and 8.7% respectively last year, the scheme said, while its real estate assets – which make up roughly 10% of the total portfolio – gained 5.2%.The €8.3bn pension fund for KLM’s pilots reported an annual gain of 7.6%, following a 0.2% fourth-quarter return. Its most recent funding ratio was 119.7%. KLM’s €8bn pension fund for ground staff posted an annual profit of 9.3%, after a quarterly loss of 1%. Its coverage ratio was 108% at the end of December.The scheme’s board said it had decided to cease its tactical asset allocation “as this had delivered insufficient returns”.The assets of the three large KLM schemes are managed by Blue Sky Group. The €19bn Philips Pensioenfonds gained 10.2% on investments over the course of 2016, despite a 2.8% loss in the last quarter.The fund also recorded a combined loss of 0.4 percentage points on its inflation and interest rate hedges. At year-end, the pension fund’s coverage ratio stood at 108%.With a predominantly older population, the Philips scheme has divided its investments across a 40% securities portfolio and a 60% matching portfolio. The securites portfolio mainly comprises equity (29%) and property (10%), while the matching section includes government bonds (35%), credit (10%), mortgages (5%), and emerging market debt (5%).Elsewhere, Dutch airline KLM’s €2.8bn scheme for cabin staff generated a 10% return during the year but lost 1% in the fourth quarter, resulting in funding level of 105.7%.last_img read more

Dutch €1bn Ballast Nedam pension fund divests property, high yield

first_imgThe €1bn Dutch pension fund of construction company Ballast Nedam has simplified its investment portfolio by divesting its direct property, emerging market debt and high yield holdings.In its annual report for 2016, it said the adjustment had increased liquidity in its portfolio and had made its investment policy more flexible as a result. The pension fund said it had reinvested the divestment proceeds across the remaining asset classes it invested in.It pointed out that its 2.7% stake in residential and retail property was too small to have enough of a real impact on its overall result, despite returns of 14.2% and 3%, respectively, last year. It also cited insufficient scale of its holdings of actively managed emerging market government bonds and high yield bonds as an issue. The holdings were 5% of its portfolio, and had gained 9% and 2.2%, respectively.Both asset classes had underperformed during the past five years, it noted.By replacing emerging market and high yield debt with investment grade credit, asset management costs had dropped from 0.6% to 0.1%, the pension fund said. According to its board, the adjustment to its portfolio had hardly affected returns or its legally required funding. Raising the risk profile of its investments would not be sensible, because of the pension fund’s relatively low coverage ratio, it said. This stood at 100.9% in March 2017. The company scheme, which has 710 active participants, 3,830 deferred members and 2,285 pensioners, posted an overall net return of 10.8% on investments.Its equity holdings (41.3%) gained 11.3%, while fixed income (58.6%) delivered a 8.3% return.It attributed two percentage points of its total result to the 55% hedge of the interest risk on its liabilities.In contrast, it lost 0.8 of a percentage point on its full cover of sterling, the dollar and the yen.The board indicated that it had not yet made a decision about the destination of the existing pension rights, which had remained in the pension fund since pensions accrual was last year transferred to the schemes for the building sector (BpfBOUW) and concrete industry (BpfBeton).In its latest newsletter, it indicated that a transfer to BpfBouw was not on for the time being, because it would mean a significant rights discount. As at the end of March, BpfBouw’s funding stood at 107.8%.The Ballast Nedam pension fund’s board also said that negotiations about joining one of the new general pension funds (APF) had not yielded results either, citing costs and continuity as obstacles.The pension fund’s accountibility body has indicated that it preferred continuing the current scheme.last_img read more

IPE Conference: London CIV ‘suffering’ from lack of vision clarity

first_imgThis threw a spanner in the works, as Grover said it was not the model the London boroughs had signed up for when the London CIV was originally set up. “One of the tricks I now see we missed at that point was to sit the boroughs down properly and debate: what does that mean and how does that change the vision?” said Grover. “There are a lot of people out there who just don’t want to be a mercenary” – Stefan Lundbergh, Cardano“As an organisation you have think about what you can pay, as that will also determine what kind of structure you’re going to set up,” Lundbergh said. “If you’re over-optimistic and hope you can attract super talent, they might leave you.”Pension organisations should also bear in mind that not everyone was primarily motivated by money, he added.“There are a lot of people out there who just don’t want to be a mercenary,” Lundbergh said. “People who have a passion and want to be a part of something – and if you can find them, that’s great for organisations like this because you can offer something more than a commercial organisation can.” L-R: Stefan Lundbergh, Cardano; Hugh Grover; Susan Martin, LPPHe was clear about the implications and the board also understood what had changed, he added, but there was not enough engagement with the boroughs about what this meant for London CIV and its purpose.“And if I’m perfectly honest I think London CIV is still suffering from not doing that,” he said. “That lack of vision really does cause a major problem.”Borough council documents indicate that some funds have expressed reluctance to pool assets within the CIV.The other asset pools that are emerging in the LGPS had mandatory pooling as their starting point, Grover pointed out. Although this still posed challenges for them, they did not have to deal with the transition from a voluntary arrangement to a mandatory one, according to Grover.Grover resigned as CEO of London CIV in early November. He said that, with space to reflect, his concerns had crystallised in his mind in the past three weeks.The London CIV was the first fully authorised and regulated fund management company to be set up by a local government entity, according to its website.It has so far launched nine funds to help council pension schemes pool equity and multi-asset mandates. The pool has £5.6bn (€6.3bn) under management currently and has said it aims to grow its assets to “more than £20bn”.Talent management questionsThe panel also discussed talent management in the context of the new LGPS pension structures.Susan Martin, CEO of Local Pensions Partnership (LPP), said that as a non-profit pension services provider it was finding it easy to recruit “quite good people” at the moment .“They’re coming with a vision and it’s all new,” she said.Things could become more difficult when the other LGPS pools were up and running, she said, but at LPP the feeling was that it was not about the level of pay but “the other things around it that you give people”.LPP is a collaboration between the London Pensions Fund Authority and Lancashire County Pension Fund and has some £13bn of assets under management from its two founder pension funds. The Royal County of Berkshire Pension Fund is also set to pool resources with LPP.LPP and London CIV are the only two of eight LGPS pooling structures that are already operational.Grover said London CIV had also experienced a “capital value in the newness of what we’re doing”, with individuals willing to take a pay cut and miss out on other potential benefits because of the novelty of the project.That capital would run out at some point in the next few years, however, he added. London CIV’s members would then find themselves confronted with the need to offer market competitive remuneration packages, while across the wider local government sector there were budget cuts and staff shortages.The debates about this would be difficult, he said.A large recruitment programme had helped London CIV grow from one person to 12, with a goal of being 20-strong by the end of the financial year. However, it was already experiencing “that treadmill of people doing their time and then moving on”.Stefan Lundbergh, director at Cardano Insight, said organisations facing constraints on remuneration needed to figure out what roles they wanted to have in-house and what they should outsource.Many lower paid jobs were actually quite important in pensions, such as asset allocation decisions, he said, while most “action-oriented” jobs like security selection and trading were better paid.center_img The investment partnership set up by London’s borough pension funds is suffering after asset pooling became mandatory for its members, its former CEO has said.Speaking in Prague at IPE’s annual conference, Hugh Grover said London CIV – formed by the UK capital’s 33 public sector pension funds – began in 2014 as a defensive response to the threat of a full merger. At the outset, the participating funds were free to decide how much of their assets to pool.“Investing nothing was entirely OK,” he said. “Nobody was going to criticise a borough for paying their annual subscription and then investing nothing.”However, in 2015 the UK government announced that asset pooling would be mandatory across the entire local government pension scheme (LGPS). It has subsequently emphasised that there should be “minimal exceptions” to pooling and any assets held outside a collaborative structure should be continually justified.last_img read more

ESG roundup: UK public sector schemes to oppose Ryanair chairman

first_imgSchiphol airportThe €414bn Dutch civil service scheme ABP has emerged as another investor in a green bond issued by Schiphol Group to finance sustainability improvements at Amsterdam’s international airport.ABP invested €15m in the bond, while Dutch pension manager PGGM previously announced it had invested €10m. The investment is aimed at eliminating carbon emissions from Schiphol’s terminals and transport facilities, as well as making the airport “garbage-neutral” by 2030.ABP highlighted that the investment would achieve “attractive” returns while also improving the environment.It said it considered the green bond as a first step to increase the sustainability of the aviation sector, and added that the investment would comply with the strict international sustainability standards of the Green Bond Principles.The number of green bonds in ABP’s investment portfolio is rising fast. In 2016 it held 59 green bonds with a combined value of €1.4bn – a year later this had increased to 102 bonds worth €3.5bn in total.Recently, ABP invested more than €110m in the first Irish green bond.World Bank backs first ‘blue bond’The Seychelles has launched the world’s first sovereign “blue bond”, backed by the World Bank.The bond aims to raise funds to support sustainable marine and fisheries projects in the Indian Ocean and has attracted $15m (€13.2m) of capital from international investors Calvert Impact Capital, Nuveen and Prudential Financial in the US.Vincent Meriton, vice-president of the Republic of Seychelles, said at a conference in Indonesia: “The blue bond, which is part of an initiative that combines public and private investment to mobilise resources for empowering local communities and businesses, will greatly assist Seychelles in achieving a transition to sustainable fisheries and safeguarding our oceans while we sustainably develop our blue economy.”Laura Tuck, vice president of sustainable development at the World Bank, said the bank believed the bond could serve as a model for other small island states and coastal countries. “It is a powerful signal that investors are increasingly interested in supporting the sustainable management and development of our oceans for generations to come,” she said.The Seychelles blue bond was partially guaranteed by the World Bank up to $5m, and was also backed by a $5m concessional loan from the Global Environment Facility to partly cover interest payments for the bond. The forum stated that it “does not consider Mr Bonderman to be independent”.Bonderman has been Ryanair’s chairman for 22 years, but “has been unsuccessful in his oversight of Ryanair’s employment issues”, LAPFF said.“After 29.5% of [2018] AGM votes failed to back Mr Bonderman, Ryanair said it was listening to shareholder concerns,” LAPFF said. However, when Ryanair’s first half results were announced on 22 October, O’Leary said Bonderman could stay for another year or two.In a statement, a spokeswoman for Ryanair said: “Ryanair shareholders recently passed all AGM resolutions by a large majority, including the nomination of directors and chairman. They appreciate how fortunate we are to have an outstanding chairman like David Bonderman guide the board and the airline.”Ryanair has been affected by strike action in recent months, and at the beginning of October warned that its profits for 2019 would likely be 12% lower than previously forecast, because of the effects of industrial action as well as higher oil prices. ABP invests €15m in green bond for Schiphol airport Credit: Pascal OhlmannThe Seychelles in the Indian Oceancenter_img The Local Authority Pension Fund Forum (LAPFF), a £200bn (€227bn) association of UK public sector pension funds, is putting pressure on airline Ryanair to change its chairman.LAPFF said on Sunday it had told the company that it would file a resolution at the next annual general meeting (AGM) in 2019, recommending the replacement of David Bonderman with an independent chair by the end of next year.It said it also intended to file a separate resolution calling for the airline to publish succession plans for chief executive Michael O’Leary “as soon as is practical”.LAPFF chairman Ian Greenwood wrote to the chair of Ryanair’s nomination committee on 12 October setting out the forum’s intentions, but Ryanair has yet to reply.last_img read more

Chart of the Week: UK asset managers target £15trn AUM

first_imgUK assets under management by client type (%)Chart Maker The £7.7trn figure includes roughly £3.4trn run on behalf of pension funds (see above chart) – although the approximately £1.2trn run for insurance clients includes a growing element of defined contribution assets.The UK is already Europe’s biggest asset management market. According to IPE’s annual Top 400 Asset Managers survey (below), the UK’s €4.8trn edges out France’s €4.6trn of assets under management.  UK-based asset managers are determined to grow their influence on the global stage despite the challenges posed by Brexit.The Investment Association (IA), which represents the UK’s £7.7trn (€8.8trn) asset management industry, this week issued a statement declaring its intention to double this figure in the next 10 years.It follows the association’s work with the UK government regarding the future approach to financial services and asset management, as well as recent agreements between UK and European regulators to ensure markets keep functioning when the UK exits the EU at the end of next month.The IA said it had set an “ambitious” target of £15trn under management for its members, which include UK-headquartered companies as well as overseas asset managers with a UK presence. Biggest markets by domiciled assets (€bn)Chart Maker Europe’s institutional asset management centres (AUM, €bn)Chart Makercenter_img (Note: IPE’s data refers to institutional assets run by UK-based managers, while the IA’s figures refer to money run for institutional and retail clients anywhere in the world by UK-based firms.)The picture is rather different when looking at the legal domicile of assets, according to the European Fund and Asset Management Association (EFAMA). The below chart illustrates the amount of money in UCITS and AIF fund structures, and shows the dominance of Luxembourg and Ireland as the destinations of choice for cross-border assets. The planChris Cummings, chief executive of the IA, said: “Asset management has gone from strength to strength over the last decade, with a total of £7.7trn managed by the IA’s 250 members and more than 100,000 jobs supported across the sector.“Our ambition to double the assets under management to £15trn reflects our belief that by putting innovation, resilience and openness at the heart of our industry we can continue to deliver for savers and investors who trust us with their money.”The association has set out a number of specific areas of focus to help achieve its goal.It wants government and regulators to help it prioritise legal, fiscal and regulatory measures “to ensure that the market is demonstrably competitive” on an international stage, including “joined-up policies” in education and immigration to attract and nurture skilled people.On financial technology, the IA said it would set up a project this year within the UK treasury’s asset management task force to focus on fintech strategy. It also called for the creation of an “electronic ID or digital identity system” to be used internationally to ensure transactions were secure.The asset management industry should also “develop a distinctive range of fund types, making provision for alternative and long-term investment products to satisfy future client requirements at home and abroad”, the IA said.Finally, the association emphasised its desire to become a “global leader” on corporate governance and stewardship issues. The target was “part of a plan to enhance the UK’s competitiveness and reputation as a global hub for asset management” and become a “world class economic forum for investment management to attract the world’s most significant investors”, the IA said.last_img read more