Alessandro Baldi, Sebastiaan Schrikker | Mario Negri Pension Fund | Video

Transcript

The Mario Negri Pension Fund administers pensions to managers in Italy’s commercial transportation and shipping businesses. Its President, Alessandro Baldi, is joined by financial consultant Sebastiaan Schrikker, Managing Director of Link Institutional Advisory Ltd, to discuss the details of the fund and what they are able to offer their members.

World Finance: Give us an overview of the fund: both the size of your membership and assets

Alessandro Baldi: The Mario Negri fund is perhaps the oldest fund to be set up in Italy.
It covers pension benefits for executives in the services sector and the tertiary sector. At this time the fund has around 33,000 members, around 23,000 of whom are paying in, and manages a capital of around €2 billion.

“The activities of the fund have grown a great deal, both in terms of members and assets under management”

World Finance: And how has the fund changed in recent years?

Alessandro Baldi: The fund changes quite often in response to various circumstances. For example, recently, as a result of the law of the Italian government there was the possibility of acquiring leaving indemnity of the members, and therefore, in 2007, the fund also started to manage members’ leaving indemnity. The Italian government has also granted significant tax benefits, and therefore the activities of the fund have grown a great deal, both in terms of members and assets under management. Another operational change occurred following the crisis of 2008-9 and there was therefore a global rethinking of the organisation and our investment activities. The advisors changed and Link Institutional Advisory arrived, and together with them we have tried to restructure our investment activities, focusing on absolute return, diversification, risk control, and also the specialisation of various managers in various investment activities.

World Finance: So what benefits and services do you offer to your members?

Alessandro Baldi: Well, the fund comprehensively covers the pension activities of the members. And also offers services both to companies that sign up their own managers, and to members with regard to services offered. We recently established a service, which we called SUID, which allows simultaneous membership of all four funds stipulated in the national labour contract, and therefore both to the health insurance of FASDAC, as well as to the CFMT, the training service, the Mario Negri fund, and to Antonio Pastore, which is a form of third-level security. In addition to core pension activity, the fund provides support services and other forms of assistance to members. For example, some long-running but highly appreciated services include scholarships for members’ children, as well as support services for members’ families who are most in need. For example, it offers a pension to members’ families who have, say, a handicapped child, as well as providing assistance to members in times of particular difficulty. For example, in the event of disability, in the case of death of a member, a specific service and assistance is provided to the heirs.

“The Mario Negri investment portfolio was based on a concept of absolute return”

World Finance: Sebastiaan tell us about your assets, how do you invest?

Sebastiaan Schrikker: The Mario Negri investment portfolio was based on a concept of absolute return. We believe that one of the contributions a fund can make in the social field is to yield returns on the receipt of payments from the fund given that the fund members receive these payments based on the performance of the portfolio; therefore this step also has a social role. We believe that a portfolio is, therefore, exposed to the international markets in order to yield a return in excess of what is risk free, and this exposure to the markets has a price, and that is called risk. Therefore, we try hard to manage the risk of being exposed to the markets. The other risk that must be managed is the source of added value that we find in the markets, which is not always the same in each sector. We therefore need high diversity and must pay attention to where the weight in the portfolio must shift at the opportune moments and this means that asset allocation is managed top down from the fund, together with us as advisor, and can then be managed from the bottom up within the mandates, all of which are very specific mandates entrusted to the specialist asset manager for the assets they manage. Currently we have about 20 active managers on the fund’s portfolio.

World Finance: What are your policies for investing in equity and fixed asset markets?

Sebastiaan Schrikker: Equity markets are divided into various cycles, and within these cycles, are subdivided into various management methods. As I said, we have about 20 active managers. Therefore we can afford to split one specific asset between various asset management methods. On the part of the shareholder, we began to focus last year on two key elements. One is exposure to Italian debt – as an Italian fund, exposure is still considerable – which needs to be administered. The other is the cyclic fact of rates where we are now, and the macroeconomic performance of the various regions resulting in the fact that the classic bond is likely to have very low yields for the next three to four years. So, instead of exiting from asset bonds, which for various reasons is not possible, we have had to be more proactive, to avert the risk of low performance.

“We are in a time of deep crisis”

World Finance: And finally Alessandro, tell us what’s next for the fund?

Alessandro Baldi: We are in a time of deep crisis. So, we have had a couple of years where there has been none of the growth in membership to which we have become accustomed, while the demands on performance grow, because the crisis has led to the Italian government making decisions about social security which have created many difficulties. So in this context, the future of the fund will probably be to find some way to make up for the decrease in membership with an increased intake of contributors and capital, but in such a way that the performance is appropriate to the crisis situation. And, in future we may want to cover the period from the moment you lose your job to the time of retirement. So here, in this period of crisis, the activity of the fund, of the board and its employees, is even more to provide a pension service which is as complete, efficient, effective, and economical as possible.

World Finance: Alessandro, Sebastiaan, thank you.

Alessandro Baldi and Sebastiaan Schrikker: Thank you.