The Dutch KLM pension funds for pilots, ground crew and cabin crew are taking steps towards a more business-like relationship with their asset manager and administration provider Blue Sky Group.
In its annual report for 2020 the ground crew fund wrote that it, together with the two other KLM funds, is investigating the dependency risk connected to outsourcing to Blue Sky Group.
All three KLM funds have outsourced all their asset management and administrative duties to Blue Sky Group, and “want to know the impact of possible changes to this situation in the future”.
The question is what the chances are that any of the three funds would leave Blue Sky Group, even partially. None of the three funds are saying anything explicit about this possibility at this point, but all are taking steps to strengthen their own governance models.
The fund for cabin crew is in the final stages of setting up its own executive office, and the same goes for the fund for pilots. The fund for ground crew is thinking about establishing an executive office too, but has not yet taken any concrete steps toward this.
So far, Blue Sky Group has provided management support for the ground crew and pilots funds. The cabin crew fund already has two full-time executive directors since 2019, when the fund changed its governance model, although it has a board secretary from Blue Sky Group.
Cost transparency required
The three pension funds are joint shareholders of Blue Sky Group, and expect the governance changes to lead to better results for them.
The supervisory board of the cabin crew fund noted, for example, that “some of the tasks performed by Blue Sky Group for the fund now take place on the basis of experiences and best practices from the past”.
In a sign of further professionalisation, the cabin crew fund has now given a “target for cost reduction” to Blue Sky Group. The fund also requests “more transparency on the cost level”.
The ground fund and pilots fund are taking similar steps. The board of the pilots fund, for example, wants the “accountability of performance” to take centre stage.
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