The €16.5bn Dutch railways scheme SPF and the €4bn public transport scheme SPOV are again exploring the options for co-operation – including a potential merger.
In its annual report for 2017, SPF said it had approached SPOV for a second time, after a previous attempt to merge failed in 2016.
At the time, the schemes – which both use SPF Beheer as their provider – concluded that a merger would not offer their participants sufficient benefits.
Although the smaller SPOV was actively seeking co-operation, it was also keen to keep its own identity.
Both a spokesman for SPF and Peter-Paul Witte, SPOV’s chairman, declined to elaborate on the new discussions.
However, in its own annual report, SPOV said that a recent review had indicated that the need for growth and lower costs remained. The scheme said it would not be able to achieve sufficient growth under its own steam.
Such growth could be possible by focusing on the entire public transport sector, the SPOV board said, which could include future co-operation with SPF.
In its annual report, SPOV said it also wanted better performance from SPF Beheer so that its administrative and financial quality would be assured for the longer term.
The board indicated that it would decide this year whether or not to continue with the joint provider beyond 2019. In 2016, SPOV’s relationship with SPF Beheer was among the reasons why the co-operation talks failed, it said.
Railways scheme boosts funding with 6.7% gain
In its annual report, SPF recorded a net return of 6.7% for 2017, adding that its funding had improved by more than 10 percentage points to 112.7%. This had enabled the scheme to grant an indexation bonus for members of 0.16%.
SPF said it had divested its 5% stake in commodities, citing the carbon footprint of the oil and gas component of the asset class as well as the its impact on food prices.
It reinvested half of the proceeds into its residential mortgages portfolio, which increased to 7.5%, while keeping the other half as liquid assets.
The scheme said it had lost 5.2% on its commodities holdings, while government bonds and its interest rate hedge had also incurred losses of 1% and 0.7%, respectively.
Almost all other asset classes yielded positive results, with equity (16%) and private equity (16.1%) the best-performing investments.
Infrastructure and residential mortgages produced 11.9% and 3.7%, respectively.
SPF also made clear that its impact portfolio for environmental, social and corporate governance (ESG) related investments had incurred a 0.2% loss. The majority – €16m – of the committed €25m hadn’t been called in yet.
The ESG portfolio comprises 0.5% of the scheme’s assets and is set to double in size.
SPF said it had set up a dedicated advisory committee for ESG issues, which is to investigate whether climate change requires the pension fund to change its policy.