EU gathers intelligence on pensions tracking as Germany rolls out platform

first_imgThe project will be presented at universities, as well as through advisers, and, in Switzerland, the board of university principals has recommended it to its member institutions.Wegner-Wahnschaffe said large Swiss pension funds such as Publica and schemes for the cantons of Bern and Zurich had already contributed information and factsheets. Finland and Spain are expected to join the platform in the near future, while Norway has expressed interest in integrating its own research staff.Wegner-Wahnschaffe said the platform would serve as “a first step in helping people to achieve the sort of pensions literacy that is vital for academic employees, as well as others”.However, within the European pensions industry – particularly in German – there have been some concerns regarding the possible introduction of an EU-wide pensions-tracking system and the collection of data connected with it. Meanwhile, the EU is stepping up efforts to prepare just such a service.At the annual PensionsEurope conference in Frankfurt, Titus Sips, a consultant at APG and one of the people responsible for the EU’s TTYPE project, confirmed the working group was currently looking into national pensions-tracking services.“In the end, we are going to come up with a design, looking into how a tracking service in Europe can be established,” he said.One of the systems he will be assessing is the ‘Pensionskonto’ in Austria.From next year, Austrians born after 1954 will be able to use the system to see what they can expect from the state pension.The Austrian supplementary pensions industry hopes the platform will serve as a wake-up call for people to start saving for their retirement.Sips added that TTYPE – short for ‘Track and trace your pension in Europe’ – is working with the actuarial association Groupe Consultatif, which issued a report on pensions-tracking services in October and is now preparing a survey of EU member states’ attitudes towards tracking systems. The German-initiated pensions platform for researchers is to be rolled out as a pilot project in Germany from early next year, as the EU steps up efforts to gather intelligence on national pensions-tracking systems, including one to be introduced imminently in Austria.‘Find your pension’ – a platform for academic researchers – will go live next year, having collected information on pension systems in 10 countries to date. Claudia Wegner-Wahnschaffe, project manager for the platform, told IPE: “That means we have so far covered almost 60% of those working in the education and research field in the public and university sectors within the EU and the EEA, according to Eurostat figures.“With a low budget, we managed to collect important information via our network but without the exchange of sensitive data.”last_img read more

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Denmark’s Unipension credits active management for strong H1 results

first_imgThese returns compare with profits for the whole of 2013 of 8.3%, 8.3% and 8.9%, respectively.In absolute terms, the returns to members in the first half of 2014 totalled DKK6.4bn.Danish shares returned almost 22% in the first half, while private equity investments produced around 10%.Bond investments generated almost 6%, it said, as a result of the historically low yields that produced good price rises on the instruments.Commenting on the investment environment in the first half, Unipension said trouble in Ukraine and the Middle East had fomented a great deal of uncertainty on the international political scene, which spread to the financial markets.Expectations about the full-year result were uncertain, it said, because the continued debt crisis in countries within the euro-zone meant developments in Danish, as well as international markets, were marked by great uncertainty.The schemes’ average annual returns in the five years between 2009 and 2013 – ranging between 9% and 11% – were among the highest in the Danish pensions sector.Unipension said: “Investments have been made using active management of the portfolio, and we have estimated that members have gained DKK8bn more in returns than they would have received if we had used passive management.”Altogether, Unipension manages around DKK100bn in assets in the three pension funds.Solvency levels at all three funds continue to be strong, it said.“Because of this, we can stick to the long-term investment strategy that is the background for the good investment returns,” Unipension said. The three labour-market pension funds administered by Denmark’s Unipension produced investment returns of between 6.1% and 6.4% in the first six months of this year, with profits on private equity and Danish shares driving returns, according to interim reports.The pensions administrator praised its strategy of active portfolio management, saying this had resulted in DKK8bn (€1bn) more in returns over the last five years than would have been gained with passive management.The Architect’s Pension Fund (AP) made a 6.1% return on investments before tax between January and June this year, while MP Pension, which covers academics in Denmark, produced 6.3%.Meanwhile, the Pension Fund for Agricultural Academics and Veterinary Surgeons (PJD) returned 6.4%.last_img read more

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Bond-valuation changes in FTK will impact buffers, actuaries warn

first_img“However, what matters is the proportion of government paper in the portfolio,” he stressed.“If a pension fund doesn’t have many bonds and is hedging its interest risk through swaps, the impact is less.“In contrast, a conservatively investing scheme with large fixed income holdings will face a much larger effect, of 4-6%.”For pension funds that have deployed swaps to hedge their interest risk, the effect would be between 0.5% and 1%, estimated Agnes Joseph, an actuary at Syntrus Achmea.She added that the largest effect found was 3.5%.In her opinion, the funding level under which pension rights must be discounted – estimated at 92% on average – should be reduced by an equal percentage.This critical level is the coverage ratio pension funds must have at the start of 2015, in order to achieve the required financial buffers within 12 years.Pension funds with a lower funding must cut pension rights (incrementally if the prefer).However, the critical funding level is higher for pension funds with a conservative investment policy.That said, Van de Velde said he doubted whether the critical level would drop in line with the required buffers, “as pension funds are not allowed to have a funding of less than 105% for five consecutive years”.“We expect the amendments to the rules will result in the obligation that a pension fund must show it can always improve its coverage to 105%,” he said.“Our calculations show this is impossible for a funding of 92%.”Van de Velde went on to explain that pension funds also must consider the negative impact of the new ultimate forward rate in their calculations for their recovery potential.“Even if the market rates remain unchanged, the discount rate for liabilities will decrease over the coming years, resulting in a slower recovery,” he said. New rules for the valuation of AAA bonds in the Netherlands would result in a smaller increase in Dutch pensions funds’ required financial buffers under the new financial assessment framework (FTK), actuaries have claimed. Until recently, Dutch schemes had assumed that the FTK – which will come into force on 1 January 2015 – would increase the mandatory buffer from 121% to 126% on average, following a new risk-based accounting method.However, at the request of Parliament, Jetta Klijnsma, state secretary for Social Affairs, has now removed the initial risk surcharge on AAA government bonds, including Dutch ones.Mark van de Velde of consultancy Aon Hewitt estimated that the adjustment would lead to required buffers of approximately 124%.last_img read more

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Restoring faith in pensions: Show them, and they shall believe

first_imgThe European pensions industry has been contemplating the idea of ‘trust’ for some time, as a growing number of consumers lose faith in the sector. In light of a number of less-than-favourable events, ranging from the Maxwell case in the UK to recent rights cuts in the Netherlands, many feel that pensions, rather than secure income in retirement, will simply let them down. Whether by one means pension funds, trustees, insurance companies or asset managers when referring to the “industry” makes little difference. In the eyes of consumers, they’re all the same – providers providing only for themselves. But none of this is new. Since the financial crisis, financial services in general have seen little good light, with one delegate at this year’s World Pension Summit in The Hague lamenting how it had even fallen behind the press in terms of trustworthiness.Restoring trust in pensions has become a staple of almost any conference these days. But an idea floated by the interim director of the National Pensions Commission in Nigeria succeeds in bringing together two very hot conference topics – trust and infrastructure – and discusses how they could help each other.Chinelo Anohu-Amazu told delegates in The Hague about the first-pillar pensions system in her country pre-2004. It was not one that invoked confidence among the people. Many citizens retired expecting the unfunded system to provide them with promised benefits. However, the financing of the scheme became unsustainable, and many participants ended up in long queues awaiting payment, with some never seeing their promised benefits at all. In 2004, the government, backed by political consensus, moved to reform the system, and after drawing inspiration from Chile and Mexico, created a defined contribution system, with payments taken directly from salaries and managed by the private sector, away from government hands. In the 10 years since, the scheme has moved from being $15bn (€12bn) in debt to acquiring assets of around $27bn. It now has more than 6m savers with individual accounts.This year, the country then amended the system, which increased coverage and allowed greater investment freedom for the scheme’s assets. The investment amendments allow the scheme to invest in classes Anohu-Amazu said can “assist the pensioner” – namely real estate and infrastructure.Trust was still an issue given the disastrous systems of the past, and Anohu-Amazu said new reforms added education to help build trust. But there was more to be done, more information, and a convergence with investments. “Investment into assets that contributors can see,” she said. “Better roads, rail and housing. It will make the reforms more acceptable and more involving.”Let us take this idea forward, and combine it with calls from almost all EU states for infrastructure investment from pension funds, the long-term investment platform announced by the European Commission, and the need for pension funds to invest in long-dated, inflation-linked assets, and you could almost have a perfect pie.Of course, it is not that simple, but the basic premise is positive. Investment in infrastructure, as IPE has suggested on several occasions, is a popular concept but difficult to implement. And the trust issues faced by pension schemes are arguably, and ironically, down to schemes falling victim to the very same reasons members no longer trust financial services.But, pension schemes are unfortunately banded together with financial services. One way to shed that might be to show the schemes are not merely out for themselves. Building bridges with members – as well as for them – might just be a start.last_img read more

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Technology shares lead third-quarter returns at Norway’s oil fund

first_imgNorway’s NOK7.1trn (€707bn) former oil fund, the Government Pension Fund Global (GPFG), saw its year-to-date investment returns rise markedly in the third quarter as equities – and particularly those in the technology sector – performed strongly.In its report for the third quarter, the GPFG confirmed preliminary numbers released earlier this month and said, in foreign currency terms, its investments had produced a 4% return between January and September.This was up from the returns seen in the first and second quarters of -0.63% and 1.27%, respectively, and brings the return for the first nine months of this year to 4.65%.Equity investments returned 6% and fixed income returned 0.9%, with returns for both these asset classes beating the benchmark by 0.2% in the quarter, according to Norges Bank Investment Management (NBIM), which runs the GPFG. Real estate investments, meanwhile, generated a 2.3% return in July to September, the first positive quarterly result produced by the asset class this year.Trond Grande, deputy chief executive, said: “Equity investments performed strongest during the quarter, with positive return in all regions.”He added that this was the main contributor to the fund’s result.Technology companies were the strongest performers in the third quarter, returning 13.5%.“Consumers are spending more time on their smartphones, and the sector was boosted by strong growth in e-commerce and digital advertising,” NBIM said.It said there had been further growth in new cloud-based IT services, as well as higher levels of investment in traditional hardware and software.It terms of the GPFG’s individual shareholdings, the fund’s shares in Apple contributed the most in the quarter, followed by HSBC Holdings and technology company Alphabet.Despite the investment return of NOK240bn in the third quarter, the fund’s value fell to NOK7.12bn at the end of September, down from NOK7.18bn at the end of June.NBIM explained that the Norwegian government withdrew NOK30bn from the fund between July and September, and that, in the same period, the fund’s value in Norwegian kroner shrank considerably because of the domestic currency’s strong rise on foreign exchanges, taking a NOK268bn hit.The GPFG only invests outside Norway.Some 60.6% of assets were invested in equities at the end of the third quarter, 36.3% in fixed income and 3.1% in real estate.last_img read more

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OECD: Funded and private pension assets hit record high of $38trn

first_imgSource: OECD Global Pension Statistics. Methodological notes at the end of the report, which can be found here. Pension funds and other private pension plans in OECD countries held $38trn (€32trn) of assets at the end of 2016, the highest level ever, according to the think tank for the world’s developed economies.Around two-thirds of these assets were in the US, although funded and private pension arrangements continued to expand in countries such as Australia, Canada, Denmark and the Netherlands, the OECD said in a report.In the latter four countries pension assets exceeded the size of the domestic economy, reflecting a trend over the last decade of pension asset growth outpacing that of GDP in most countries.Pension assets also exceeded total GDP in Iceland, South Africa and Switzerland. Private pensions have expanded the fastest in Denmark and Netherlands over the past decade, according to the OECD, with increases of 73 and 64 percentage points of GDP, respectively, between 2006 and 2016.The OECD also said pension providers achieved positive real investment rates of return, net of investment expenses, in 2016 in most OECD and non-OECD countries.  Net real return was more than 2% on average.Annual returns were also positive over the past decade in most countries, according to the report. The highest average annual real investment rates of return (net of investment expenses) were observed in the Dominican Republic (6.3%), Colombia (5.8%) and Slovenia (5.2%).The 2017 version of the OECD’s annual report on pension markets covered 85 countries.For the first time it covered insurance companies and other pension providers in addition to pension funds. Previous editions had only focused on pension funds “for reasons of data availability”, according to the OECD.Assets in funded and private pension arrangements in 2016#*#*Show Fullscreen*#*#center_img #*#*Show Fullscreen*#*#last_img read more

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Manager consolidation, fee compression to continue in 2019: Fitch

first_imgSpecial Report: Perspectives 2019The anticipated rise in interest rates urges pension funds to review their liability-management strategies, reports Carlo Svaluto Moreolo.“A country-by-country snapshot of trends in liability-driven investing shows that the shift towards a rising rate environment, although apparently a benign factor, requires thoughtful consideration.”However, this level of so-called dry powder – estimated by McKinsey to be worth more than $1.5trn (€1.3trn) in mid-2018 – held by private equity funds caused Fitch some concern. This was due to the “elevated” cost of some acquisition targets and a credit market, used to finance deals, that some considered overheated with too many investors chasing the available deals.In the year to the end of September 2018, the six private equity companies rated by Fitch grew their undeployed capital from around $290bn to around $320bn, collectively.Fitch said a market dislocation would adversely impact valuations and the pace of realisations, but added that this could turn into an upside for the companies in the long term as it could result in stronger management fee growth thereafter, as uncalled capital could be invested at a faster pace. The dual trends of consolidation and lower fees are set to follow mainstream global asset managers into 2019, with a potential market dislocation adding a further threat to margins, according to Fitch Ratings.In its outlook for the investment management sector for the coming year, the rating agency said that, unlike their alternative cousins, mainstream active-focused firms faced further pressure in 2019.The report said: “Margins at traditional investment managers are likely to remain under pressure in 2019 given ongoing competition, investor fee sensitivity and regulatory compliance costs.”It said that managers it rated had responded to “EBITDA erosion” by pursuing scale, controlling costs and diversifying into higher margin products. Much of this had been accomplished through increased merger and acquisition (M&A) activity, which Fitch expected to continue into the new year. In 2017, deals such as the Aberdeen-Standard Life merger helped push M&A volumes up to pre-crisis levels, while wealth manager tie-ups in 2018 have kept activity flowing.“Volatility arising from diverging monetary policy could lead to fixed income devaluations if rates move unexpectedly”Fitch RatingsThe Fitch report also signalled that traditional managers, whose fees had been “supported” by positive markets and high asset price rises in recent years, could fall foul of dislocations in 2019.“Volatility arising from diverging monetary policy could also lead to fixed income assets under management devaluations if rates move unexpectedly,” the report said.Active managers faced a slight reprieve, however, as flows to passive products have begun to slow, according to the report. Additionally, “a sustained market downturn could lead to active investment managers outperforming passives and regaining some lost ground”, Fitch said.Alternative fund managers looked set for a decent 2019, according to the rating agency, due to the “locked in” nature of their client assets – and the amount they gathered over the last few years.last_img read more

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​Danica to divest weapons exporters to Saudi Arabia after govt ban

first_imgResearch was currently being conducted on the arms trade to Saudi Arabia, taking into account the Danish government’s decision in November as well as companies’ due diligence on arms trading, he said.“We have followed the situation surrounding the conflict closely, and following Denmark’s ban on Danish companies’ arms exports to Saudi Arabia, we have in this special case decided to support Denmark’s ban,” Svennesen said.“We have thus made it clear that we will not invest our customers’ funds in companies if they do new deals for weapons exports to Saudi Arabia that would have been against the ban for a Danish company.”According to a recent report in Danish newspaper Information, 14 of the 17 biggest pension funds in Denmark have invested more than DKK1.1bn in firms that supply military equipment to Saudi Arabia.Last November, the Danish foreign ministry decided to suspend the approval of arms exports and “dual-use products” sales to Saudi Arabia following the murder of journalist Jamal Khashoggi and developments in Yemen. One of Denmark’s largest pension providers is to blacklist investments in companies that export arms to Saudi Arabia, along with its parent company Danske Bank.Danica Pension – Denmark’s second biggest commercial pension fund with total assets of DKK566bn (€76bn) – and Danske Bank backed the Danish government’s ban on domestic companies exporting weapons to Saudi Arabia, a spokesman for Danica Pension confirmed to IPE.Anders Svennesen, CIO of Danske Bank Asset Management and Danica Pension, told IPE: “Decisions to divest will be made on a case by case basis, based on thorough research and company dialogue.”As yet, he said he had no estimate of how much money the divestment would involve.last_img read more

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Government urged to ‘come clean’ about dashboard data approach [updated]

first_imgSir Steve Webb, partner at LCP and former pensions ministerIn the consultation paper, it said one of the Department for Work and Pension’s (DWP) design principles was that dashboards would initially be used for presentation purposes only, which meant that “initial dashboards cannot calculate projected pensions, meaning that providers/schemes must supply an ERI for each pension”.Webb noted that when the government first published its response to the consultation on the pensions dashboard, it said that in the first phase schemes would at maximum be asked for the information already available on annual statements or on request.“However,” he added in a blog post, “the crucial missing phrase which should have been added is ‘… and in a specified format’ and a multi-million pound bill could sit behind those innocent-sounding words.”“The pensions dashboard is a very important initiative, but the government needs to come clean about what is involved,” he said. “If it really intends the dashboard simply to be a cut-and-paste from existing statements, then the information on display will be utterly inconsistent between different pensions.“The pensions dashboard is a very important initiative, but the government needs to come clean about what is involved”Steve Webb, partner at LCP and former pensions minister“Assuming that this is not what is planned, schemes will instead have to do a huge amount of data manipulation to get data in a standardised format for the dashboard. The cost of this will be huge, especially where data is not currently well organised.”Webb noted that the Dashboard Programme team recognised the complexity of DB rights and suggested that each ‘tranche’ of ERI would be associated with a date at which the payment comes into force.However, this way of presenting data could be different to the way in which it was presented in annual statements, he said, and could further add to the cost of supplying data to the dashboard.DWP viewGuy Opperman, minister for pensions and financial inclusion, has urged pension schemes to participate in the Dashboard Programme’s data standards-related call for input, and to “be on the front foot and to get data ready as soon as possible”.”This Call for Input is another important step in bringing pensions into the digital age and ensuring that the record numbers of people saving for retirement are provided with the necessary information to make informed choices as they prepare for financial security in later life,” he wrote in July when the consultation was launched.A DWP spokesperson today said: ”The government has asked the Pensions Dashboards Programme to develop proposals on the data standards needed to best support consumers using pensions dashboards. Their call for input enables industry and consumer representative to set out their views which will be considered as the proposals on data standards for dashboards are developed.”The MaPS will develop a dashboard, but other organisations will also provide dashboards.This article was updated after publication with the addition of the DWP spokesperson comments.Looking for IPE’s latest magazine? Read the digital edition here. On the other hand, if data had to be standardised before it was sent to the dashboard, pension schemes and companies could face huge additional work costing millions of pounds, Webb argued.He cited “estimated retirement income” (ERI), a data point referred to by the Pensions Dashboard Programme, as a key example of data that would require additional data processing or calculations by pension schemes.The Dashboard Programme, set up by the Money and Pensions Service to develop the required standards, specifications and technical requirements for dashboards, addresses the ERI data point in two working papers on which it is consulting until 31 August. The UK government has been urged to provide greater clarity about its expectations for data to be supplied to the pensions dashboard, with LCP partner and former pensions minister Steve Webb warning of a potential “multi-million pound dashboard compliance bill”.According to Webb, the government has two options: pension schemes either “cut-and-paste” existing data onto the dashboard, or are required to supply data to the dashboard on new and standardised definitions.The problem with the former, according to Webb, was that data on the dashboard, an online portal displaying an individual’s pension information in one place, would be completely inconsistent.There was currently “huge” variation among both defined benefit (DB) and defined contribution schemes in the data supplied to members in statements, and many deferred DB members did not get regular statements at all, he said.last_img read more

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You won’t believe how much this beach shack just sold for

first_imgPalm Beach has become a popular lifestyle destination, with few absolute beachfront opportunities left.The property is currently tenanted at $600 a week.In the past fortnight, Mr Dowker has sold close to $12 million worth of real estate on Jefferson Lane with three properties selling within metres of each other.He sold a luxurious, five-bedroom house at 225 Jefferson Lane for close to its asking price of $4.975 million and is just about to seal a deal on 241 Jefferson Lane. This beach shack at 193 Jefferson Lane, Palm Beach, has just gone under contract.A TINY, original beach shack on the market for $3.25 million has just sold — making its former owners close to $1 million in just two years. The two-bedroom classic abode on 412sqm of absolute beachfront land at 193 Jefferson Lane, Palm Beach, was built in the 1970s and has barely been touched since.Palm Beach is an hour’s drive from Brisbane and 10 minutes from Gold Coast Airport.The suburb has a median house price of $820,000, with prices increasing more than 10 per cent in the past 12 months, according to CoreLogic. The bathroom in the beach shack at 193 Jefferson Lane, Palm Beach. The view from the beach shack at 193 Jefferson Lane, Palm Beach. The living room in the beach shack at 193 Jefferson Lane, Palm Beach. MORE NEWS: MEGA UNIT BIGGER THAN MOST BLOCKS MORE NEWS: QLD’S CHEAPEST GROWTH SUBURBS center_img One of the bedrooms in the beach shack at 193 Jefferson Lane, Palm Beach.Selling agent Troy Dowker of Ray White-Mermaid Beach said the property had sold for circa $3 million to a local buyer, who planned to build a luxury home on the site.Records show the property last sold in 2016 for $2.25 million.But its location is priceless. GET THE LATEST REAL ESTATE NEWS DIRECT TO YOUR INBOX HERE Overlooking the sand and surf, the house has panoramic coastal views from Snapper Rocks to Stradbroke Island and is within walking distance to popular cafes, shops and the local surf life saving club.More from newsParks and wildlife the new lust-haves post coronavirus17 hours agoNoosa’s best beachfront penthouse is about to hit the market17 hours ago “The top end of the market’s very firm,” Mr Dowker said.“We’re finding anything from $1.5 million to $2 million plus is selling easily.“There are a lot of high net worth individuals … and they’re quite established financially.”Palm Beach has become a popular lifestyle location and few absolute beachfront opportunities were still available. Video Player is loading.Play VideoPlayNext playlist itemMuteCurrent Time 0:00/Duration 1:28Loaded: 0%Stream Type LIVESeek to live, currently playing liveLIVERemaining Time -1:28 Playback Rate1xChaptersChaptersDescriptionsdescriptions off, selectedCaptionscaptions settings, opens captions settings dialogcaptions off, selectedQuality Levels720p720pHD432p432p270p270p180p180pAutoA, selectedAudio Tracken (Main), selectedFullscreenThis is a modal window.Beginning of dialog window. Escape will cancel and close the window.TextColorWhiteBlackRedGreenBlueYellowMagentaCyanTransparencyOpaqueSemi-TransparentBackgroundColorBlackWhiteRedGreenBlueYellowMagentaCyanTransparencyOpaqueSemi-TransparentTransparentWindowColorBlackWhiteRedGreenBlueYellowMagentaCyanTransparencyTransparentSemi-TransparentOpaqueFont Size50%75%100%125%150%175%200%300%400%Text Edge StyleNoneRaisedDepressedUniformDropshadowFont FamilyProportional Sans-SerifMonospace Sans-SerifProportional SerifMonospace SerifCasualScriptSmall CapsReset restore all settings to the default valuesDoneClose Modal DialogEnd of dialog window.This is a modal window. This modal can be closed by pressing the Escape key or activating the close button.Close Modal DialogThis is a modal window. This modal can be closed by pressing the Escape key or activating the close button.PlayMuteCurrent Time 0:00/Duration 0:00Loaded: 0%Stream Type LIVESeek to live, currently playing liveLIVERemaining Time -0:00 Playback Rate1xFullscreenAndrew Winter: Location, location, location01:29 The kitchen in the beach shack at 193 Jefferson Lane, Palm Beach.last_img read more

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