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Dutch regulations boost pension outsourcing

NETHERLANDS – Complicated pensions regulations have made direct pensions outsourcing “almost unavoidable”, according to the 100 delegates at a debate regarding the future of outsourcing.

The €12bn outsourcing deal between Philips (involving its pension management and administration arms), Merrill Lynch Investment Managers (MLIM) and Hewitt Associates earlier this month prompted the debate.

“This recently closed deal was seen as an example of where the market will be going in the next couple of years. It gave the industry an opportunity to exchange thoughts, ideas and expectations,” said Hewitt spokesperson Michiel Cleij.

Pension funds, banks, pension services and insurance companies were among the organisations present at the debate hosted by Philips, MLIM and Hewitt.

Until this debate, “outsourcing was regarded as an interesting option for bigger pension funds, but too complicated and expensive for the medium to small-sized ones,” said Cleij.

“There is a growing understanding that outsourcing has become more interesting and there are specialised providers. Cost versus results has also turned around, and costs involved are more attractive than in the past.”

While some commentators believe they are being forced into outsourcing due to complicated pensions regulations, Cleij believes it is more a “gentle push.”

“Outsourcing today provides effective and cost-efficient service. It is inevitable for medium-sized and small pensions in the Dutch market,” he explained.

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