Custodian KAS Bank and private bank Van Lanschot have pulled the plug on their €1.8bn ‘general’ pension fund (APF) in the Netherlands, which they had been in the process of setting up together with payment processor Equens.
In a blog, Equens chairman Ben Haasdijk said they decided to abandon their plans after it became clear that APFs set up by insurers were likely to charge lower fees than one launched by themselves.
In January, Sako Zeverijn, chairman at Van Lanschot’s pension fund, said the players involved had put their plans on hold, as they wished to include quotes from insurers in their decision-making process.
By that time, merchant bank GE Artesia had already pulled out of the initiative to launch an APF for the financial sector.
The APF vehicle was introduced with the view to helping pension funds cut costs by increasing scale while maintaining independence.
To date, however, insurers have been responsible for nearly all of the six pending APFs.
The four financial companies represented one of the few attempts so far by pension funds to launch an APF.
Unilever previously said it wanted to place its closed defined benefit scheme Progress and its new defined contribution pension fund Forward into its own APF.
According to Haasdijk, insurers are able to charge lower fees, as they can “take out an overdraft” on expected turnover, whereas an APF would lack the financial resources for this.
“As a consequence, the options for APF growth are limited, yet growth is essential to further drive down costs.”
Zeverijn confirmed that the three players would not launch an APF at the moment, “as we have become aware that our growth potential would be insufficient”.
He pointed out that the pension funds’ €1.8bn in combined assets probably needed to double at least to achieve the costs savings of an insurer’s APF.
Zeverijn said Equens, Van Lanschot and KAS agreed to look jointly at the option of an insurer’s APF.
He stressed, however, that no decisions had been taken, and that the three parties would “first thoroughly explore the still settling APF market”.
Haasdijk said his pension fund would re-assess its future, including participating in an APF, set up either by other pension funds or an insurer.
He added that the scheme would also look into other possibilities for co-operation.
However, if his scheme is to remain independent, he said, it will have to contract out an increasing number of board tasks.