Norway’s Storebrand Returns 13.7% in 2018

Storebrand, Norway’s largest private asset manager, reported a 13.7% return on equity for 2018, raising its total assets under management to NOK707 billion ($82.6 billion) on a profit of NOK3.7 billion after tax. The results improved upon 2017’s returns of 11.3%, and after-tax profit of NOK2.41 billion.

“2018 was a good year,” Odd Arild Grefstad, Storebrand’s group CEO, wrote in the fund’s annual report. “Our financial solidity was strengthened and there was an increase in the dividends distributed to shareholders. At the same time, the financial markets experienced turbulence at the end of the year, in a somewhat uncertain macroeconomic situation.”

The fund said that during 2018, it implemented several initiatives to strengthen its sustainability investments, and focused on water risk. It also said it formulated a special investment policy that will be launched in 2019 for deforestation, which encompasses soy, palm oil, and cattle farming.

“The financial industry is an important contributor in the efforts to limit global warming, and we have a clear strategy to invest through our own, targeted funds in companies that provide climate solutions,” said Grefstad. “Most importantly, we have strict environmental, climate, and sustainability criteria for all our investments.”

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Storebrand excluded 171 companies from its investment universe as of the fourth quarter of 2018. The investments through Storebrand and its Swedish subsidiary SPP’s funds have a total carbon footprint of 21.8 tons of CO2 per NOK1 million of revenue. Storebrand said this is lower than the funds’ comparable indexes, which showed 31.8 tons in equivalent units of measurement.

In total, 23% of Storebrand’s portfolio is fossil free. It also said that nearly 5% of assets under management in Storebrand and SPPs fund portfolios is invested in companies that contribute specifically to sustainable development, and it has NOK68 billion invested in fossil-free products.

In 2018, Storebrand also launched Wave, three custom portfolios that invest exclusively in companies that contribute to solving global challenges related to renewable energy, sustainable cities, and gender equality. Under the program, the fund assesses all companies in its investment universe with respect to gender equality. In addition to assessing whether the companies have a policy to prevent gender discrimination, the fund also assesses whether they have initiatives to contribute to UN sustainable development goals.

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Tags: Norway, Odd Arild Grefstad, Private Equity, Storebrand

The UK’s Work and Pensions Secretary Amber Rudd said she supports allowing Collective Defined Contribution (CDC) pension plans in the UK, a decision that was welcomed by postal services provider Royal Mail and the Communication Workers Union (CWU).

“These pioneering proposals should deliver improved investment returns for workers and savers while cutting costs and red tape for British job creators,” said Rudd. “The new type of pension is currently used in Denmark and the Netherlands—two countries widely recognized as having among the best pension systems in the world.”

CDCs are a type of retirement saving plan that differs from defined benefit plans in that the employee is not promised a certain retirement income, but instead has a target amount the plan will pay out based on a long-term, mixed-risk investment plan.

CDCs seek to pay out an adequate level of index-linked pension for life, but unlike defined benefit plans they do not offer a contractual guarantee. And they differ from defined contribution plans in that they do not produce an individual pension pot, which a worker then has to decide how to invest, but instead invest savings in a larger “collective” pot, and then provides an income during retirement.

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Although the plans are common in the Netherlands, Denmark, and Canada, they have only recently been allowed in the UK. They were authorized by legislation in 2015, but regulations to make it possible have not yet been enacted, and Parliament recently concluded its inquiry into the matter.

In a video message to CWU members, Terry Pullinger, the union’s deputy general secretary, called the approval by Rudd a major milestone.

“There is a period of time when the legislation has to be drafted and, given the current political climate, we can’t say exactly when that time is,” said Pullinger, “but we can say our new pensions scheme is coming.”

The UK’s Department for Work and Pensions said that millions of workers could eventually benefit from better retirement savings with CDCs.

“The benefits of CDCs are clear,” said the DWP in a release. “Members get more certainty in their retirement, with regular pay-outs from their scheme. And unlike traditional final salary pension schemes, those pay-outs aren’t affected if your employer goes under.”

The DWP also said protections will be built into the system to ensure fairness for both younger and older CDC pension members. Additionally, trustees of CDCs will be required to explain the potential for fluctuations in pay-outs—depending on investment performance—to members at the start.

However, the new type of pension is not without its critics. Last summer, a report from conservative think tank The Centre for Policy Studies said CDCs are risky and untested.

“The system risks creating irreversible intergenerational injustice by overpaying pensioners at the expense of current and future employees,” said the report. “The evidence all points to an obvious conclusion—CDC schemes in the UK are superfluous.”

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Tags: Amber Rudd, Collective Defined Contribution, Pension, UK, Work and Pensions Secretary