Asset management costs at Dutch multi-sector scheme PGB rose by 7 basis points in 2021 to 0.37% due to a steep rise in performance fees paid to infrastructure managers.

Performance fee payments increased from €6.2m in 2020 to €41.3m in 2021. Most of these fees were paid to the managers of infrastructure funds. PGB has allocated some 2.5% of its €37bn in assets to the asset class, which generated a 20% return last year.

Fees paid to private equity managers also saw a steep rise, from €3.8m in 2020 to €12.9m last year. Fees for PGB’s private equity portfolio are this high because the pension fund is already paying management fees for €1bn in capital it committed to two private equity managers in 2019 and 2020.

However, only €73m of this had already been invested in 2021, which explains the particularly steep total expense ratio (TER) of almost 18%.

A spokesperson for PGB said the build-up of the private equity portfolio is going “according to plan”, with the target allocation of €1bn to be reached “somewhere around 2026”.

PGB agreed to a $500m US private equity mandate with RCP Advisors in 2020 and awarded a €500m mandate to invest in unlisted small and medium-sized European companies to Aberdeen Standard Investments (ASI) back in 2019.


PGB increased pensions by 0.23% as of 2022. It’s the fund’s first indexation since the 2008 financial crisis as its funding ratio finally exceeded the 110% minimum required threshold by the end of last year.

The indexation was cold comfort for PGB’s members, however, as inflation in the Netherlands was in the double digits in March and April.

“Perhaps we can provide some additional indexation later this year,” PGB president Jochem Dijckmeester wrote in the fund’s latest annual report, referring to the Dutch government’s intention to lower the minimum threshold for indexation to 105% as of 1 July this year.

6.2% return

Because of the still limited allocation to private equity, the multi-sector pension fund only benefited marginally from the 23% return made by its underlying managers. Overall, the fund returned 6.2% over the year, one percentage point above its benchmark.

The 16.5% return on the scheme’s return portfolio more than compensated for the 7.4% loss on its matching portfolio.

While asset management costs rose, admin costs came down by €21 per member thanks to cost efficiencies that were made possible by the addition of 30,000 members of the travel sector scheme Reiswerk and the fund for workers in the foodstuff and agricultural trade AVH.

As a result, total membership of the fund rose to 125,000.

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