Deciding where Cordares wants to be
Adri van der Wurff, the new chairman of pensions provider and asset manager Cordares, talks to Leen Preesman about the course the company will take.
Adri van der Wurff, who has taken over from Joep Schouten as the chairman of the €25.5bn pensions provider and asset manager Cordares, is clear about his priorities.
"The ageing of the population is like a glacier, which is shifting downhill with increasing speed," he says. It is one of the main challenges Cordares is facing. We need to be prepared for a future in which the pensions sector is a major income provider in the Netherlands.
"The demands placed upon pensions providers will increase dramatically, and we must be able to deal with an ever-growing group of articulate participants.
"The baby-boomers are increasingly occupied with their financial future, and we are already getting a fast-rising number of questions. And I'm talking large numbers. There are a million customers who could make inquiries. We are already anticipating this development by employing personal financial counsellors, and by developing new software for communication and advice."
Keeping ahead in a rapidly changing environment is another major challenge, he says. "While we are still busy implementing new rules, other measures are already being issued. To mention a few, the introduction of the life course scheme ‘levensloop', the new Pensions Act with its financial assessment framework FTK, and the directive for information provision to all participants in pension schemes.
"Add to this the widely implemented change from final to average salary and the new rules for pension fund governance. It is all happening at a breath-taking pace."
The recently announced government plans to limit the tax-deductibility of pension contributions for higher incomes is another pending development. Van der Wurff is critical. "This is a badly thought-through plan. It only applies to a small group of workers, but the change will force us to a costly system adjustment, which will hardly achieve returns.
"Pension is a matter of trust, mainly in the government which sets the rules. If people lose faith in the government, it will affect pensions as old age provision."
The growing need for individual solutions within collective schemes will also increase the workload, says Van der Wurff. "Mainly because of economising of collective pension plans, there is a growing demand for individual schemes, such as levensloop. We must be prepared to deal with any new arrangements as an outcome of new collective labour agreements," he points out.
"At the moment, we are assisting setting up the new industry-wide pension fund for the flowers and plants industry, which plans to start as a defined contribution scheme. They have yet to decide on their asset managers, but we are helping in outlining the strategic asset-liability mix."
Unlike Schouten, Van der Wurff, who is 50, has not spent his entire career at Cordares and its predecessor, the Sociaal Fonds Bouwnijverheid (SFB). A scientific researcher specialising in statistics and social psychology, he joined the company in 1989 as head of statistics and research. Since then he has worked in most parts of the organisation, focusing on business development.
Van der Wurff has been the driving force behind the establishment of Cordares' insurance and IT branches, as well as its temporary employment agency. In 1997 he became deputy director, strategic development, becoming services director two years later. He has been a member of Cordares' board since 2001.
Van der Wurff will carry on the cross-border explorations that began under Joep Schouten. The focus is on Italy, where Cordares wants to offer its assistance for the creation and management of new pension schemes, as well as its expertise in asset mix. "At present, we are actively recruiting staff for a local office which must be up and running later this year. Cordares, the Dutch embassy and the pensions think tank Netspar have organised a second large meeting with the top players, to make clear how we could contribute to improve the pensions situation in Italy," he says.
Firm contracts have not yet been concluded, he says. "Not all necessary legal rules are in place yet anyway. But we certainly expect a major breakthrough within a couple of years."
Cordares' initial interest in the German market has waned somewhat. Van der Wurff says. "Nevertheless, we are still discussing the options of pooling our worldwide investment expertise on indirect real estate with a German partner."
As far as Van der Wurff is concerned, Cordares will remain passive towards France, where his predecessor had spotted potential business because of a serious ageing problem. "Things will run their course over there, but then there will be a price to pay," he comments. "Changes are implemented very slowly, and I don't think the French market is interesting to us for the foreseeable future. Nevertheless, we will keep our eyes open."
Van der Wurff shares Joep Schouten's passionate belief in growth as a way to counter the buying power of the large Ango-Saxon asset managers. "But besides scaling-up, the Dutch players must focus on their specific expertise on asset liability management and fiduciary management to attract customers," he emphasises.
Cordares is actively looking for consolidation options, he says. Growth could be achieved through new customers, a merger, or even through the new Dutch pensions vehicle, API, which could take on European pension liabilities.
"We are not dogmatic on this. What's more, an API could help us to increase our activities in Italy. It also offers small company pension funds a chance to keep their schemes while sharing the profits of combining forces with other funds, despite the current of new regulations. This might be interesting to Cordares as well.
"At present, we are consulting the social partners to find out whether small company schemes can be clustered, not only on administration, but also on governance, within the API rules. But we must make sure there will be a level playing field with the insurers. And the mandatory participation in industry-wide pension funds, as a cornerstone of the Dutch pension system, must remain."
Van der Wurff is not worried that Dutch pension funds will move to Belgium, with its new regulatory regime. "Belgium is very pleased with it, but the supervisory arbitrage suggests that the supervision is sub-standard," he says. "I am afraid Belgium is promising mountains of gold. But at the end of the day, a pension fund's board remains responsible ultimately.
"The Dutch market is such that few schemes will benefit from a cross-border move. However, if the supervision in Holland is tightened any further, the risk of pension tourism will increase," he adds.
Van der Wurff is more worried about the smaller schemes that are trying to remain independent for identity reasons, while the requirements to operate schemes become more stringent. "They run the risk of being pushed to the edge, making risky investments, or indeed being forced to move to Belgium in the process.
"With the fast increasing ageing of the population, consolidation is absolutely necessary. Pension funds need to scale up in order to achieve extra returns and to dispose of sufficient expertise."
A merger of Cordares with Mn Services - recently joined by metal scheme Metalektro, creating a €58bn giant - is still an option, van der Wurff says "But we should only merge if our customers will benefit. Quite a few mergers have failed because of insufficient preparation and inadequate execution. Nevertheless, we are still in touch. One shouldn't disturb a brooding chicken."