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IPE special report May 2018

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ABP says it could begin hiring again in 2005

NETHERLANDS – Stichting Pensioenfonds ABP, Europe’s largest pension fund, says it could begin hiring new staff in 2005 – following a hiring freeze that has been in place since 2002.

Executives of the fund said in its annual meeting in Heerlen this week that it has been able to reach a 10% overall cost reduction, due to IT integration and an employment freeze which had seen payroll fall by around 100 a year. It said it may start taking new people on in 2005. Staff levels would be flat this year.

Fund chairman John Neervens told the meeting that the Dutch pension system needs to be changed along market lines. To support the current system, he told delegates that the 150 billion-euro fund wants to promote a new flexible pension system in which rigid age-limits were no longer a stumbling block.

Neervens would like to see a total integration of the pre- and post pension date systems, in which a larger flexibility of subscribers is possible.

He said that people would also be able to implement their own life-cycle - in which they could work until a later date, while taken already a part-time pension scheme at present.

Total premiums received in 2002 were around 4.7 billion euros, and ABP’s finance chief Dick Sluimers expects them to reach six billion euros this year.

The introduction of a recovery plan in 2003, which has been agreed upon after discussions between the social partners, ABP says it is again on the road to total recovery.

The fund returned 11% on investments in 2003 – which compares to 2002’s –7% return, which Neervens termed a “black page” in the fund’s history.

The result was largely due to lower indexation (1.8%), against 3.8% in 2002 and exchange rate movements. Neervens added that indexation during 2004 would also not be at a 100% level. He said premiums would rise to around 19% in 2004.

ABP said it wants to support the defined benefit system. There were no indications given by board members that a defined contribution system even is being considered for the near future.

Jean Frijns, managing director of ABP Investments, said that even with the new corporate governance code “loads still need to be done”.

In his view, shareholders still don’t have the power to control or resist company decisions or management. Frijns called for a system supported by all in which shareholders have greater say.

ABP is focusing on executive pay. It says it will actively vote at around 1,000 company meeting during 2004, as a step towards a more active role of the fund internationally.

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