Pension funds and their providers seldom find themselves at the top of political and societal agendas. But in the Netherlands, they are firmly in the spotlight right now.
With the upcoming Dutch general elections in March and increased responsibilities set to land at providers' doors, firms such as APG Group are working hard to prepare for changes at the heart of their retirement system.
“Pensions has been brought forward as one of the most important items” in the upcoming election, said Eduard van Gelderen, chief investment officer at APG Group NV. “We are following politicians carefully to find out their way of thinking.”
Under the current system, participation is almost always mandatory when an employer offers a plan. These plans are often one-size-fits-all, and there is little flexibility when it comes to contributions and choice.
Much of the conversation at a political and societal level regards major changes to the existing collective plans, moving instead toward an individualized system.
“There is public anger about the (rigidity of the current) system: some changes will be made, but the big question is to what extent will it affect us? It is also possible where we get rid of collective schemes in a big-bang scenario ... divide the pie and give it to the individuals” to manage retirement savings themselves, said Mr. van Gelderen.
He said work is being done on methodologies of how this would work, for example by the Netherlands' Social Economic Council. That big-bang move would not be difficult to make, and “would solve a lot of things: the politicians get rid of a nasty problem; we won't have any solvency issues anymore; and corporates and other pension funds won't have to bother about liabilities because it (would all be) in the hands of the individuals.”