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Dutch pension funds achieve highest returns in world against lowest costs

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Dutch pensions funds performed well in 2012 relative to their peers in other countries, generating the highest returns against the lowest costs, according to Canadian benchmarking firm CEM.

It said Dutch schemes reported returns of 14.3% on average over the period, while pension funds in Europe and the US returned 12.5% and 11.4%, respectively. 

The benchmarking firm compared costs at 344 pension funds worldwide, including 60 schemes in the Netherlands, the UK, Ireland, Norway, Sweden, Finland and Denmark.

The 29 Dutch schemes that took part in the survey represented almost 6m participants and more than €600bn of assets.

CEM also looked at 193 pension funds in the US, 82 in Canada and nine in Asia.

The company found that the Dutch pension funds spent 0.44% of their assets on asset management on average, including 6.4 basis points on governance.

Schemes elsewhere in Europe and the US reported asset management costs of 0.48% and 0.59%, respectively, it said.

In contrast, on pensions administration, Dutch schemes incurred costs of €93 per participant, against a worldwide average of €65.

CEM Benchmarking attributed the difference chiefly to the smaller scale of the participating Dutch funds, which had 204,000 participants on average against 444,000 for the other pension plans.

It said it found that costs per participant decreased by €149 if the number of participants increased tenfold, adding that this appeared to be true in particular for pension funds with fewer than 100,000 participants.

According to the benchmarking firm, Dutch company pension funds and industry-wide schemes reported administration costs of €249 and €90 per participant on average.

Between 2008 and 2012, administration costs at Dutch pension plans increased by 3.1% a year on average, against an annual increase of 4.2% at schemes elsewhere.

CEM said it also saw much variation between costs and added value, but stressed that it had been unable to identify a statistical link between these two variables.

CEM’s survey also found that Dutch schemes generally invested less in equity and more in fixed income – in particular in euro-denominated government bonds – than other schemes.

Whereas Dutch schemes had the largest allocation to property and commodities, their investments in hedge funds, tactical asset allocation (TAA) and private equity were the lowest.

CEM also found that Dutch schemes contracted out more active and passive asset management than schemes elsewhere.

 

 

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