A new IT system will allow PMT and PME, the large pension funds for the Dutch metal industry, to cut administration costs by 30%, according to PME chairman Frans-Willem Briët.
Writing in the schemes’ annual report for 2014, Briët said savings resulting from the new system would translate into an increase in pensions rights of at least 2% over the coming years.
Since the start of this year, PME and PMT have implemented a single pension plan for the Dutch metal and technical industries.
Social partners are still assessing whether PMT, the €63bn scheme for the metalworking and mechanical engineering industry, and PME, the €43bn pension fund for the metal and electro-technical engineering sector, should merge, but Briët said such a union already enjoyed his support.
“As a single large pension fund, we would have a greater political voice, as we would represent a large part of the business community,” he said.
He said the merger was necessary as the two other large pension funds in the Netherlands – the €373bn civil service scheme ABP and the €178bn healthcare scheme PFZW – were “strongly associated” with the government.
Last year, PME incurred administration costs of €95 per participant, a 1% increase compared with 2013, while ABP and PFZW reported costs of approximately €73 per participant.
Citing figures from CEM Benchmarking, which showed that costs at large pension funds were €91 per participant on average, PME put the difference with ABP and PFZW into perspective by noting that these schemes were three times as large on average as PME.
“Moreover, with 0.39% of assets under management, PME’s asset management costs are lower than those of ABP and PFZW, which are 0.73% and 0.54%,” it said.
PME does not invest in hedge funds and tends to prefer passive investments.
However, it made new commitments to private equity last year and made clear that it aimed to increase its allocation gradually.
Because buyout funds typically charge relatively high fees, PME has arranged a maximum performance fee.
Last year, its private equity holdings accounted for 2% of its investment portfolio, returning 11%.