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PGGM closer to asset management-admin split

NETHERLANDS - The board of PGGM, the €74.4bn Dutch healthcare scheme, has officially decided to investigate the options of separating its asset management and administration from its pension fund.

One of the possibilities is to house both business parts within a cooperative, it indicated. A decision on such a structure, which will be a first for a Dutch pension fund, is expected in the coming months.

In a separate move, PGGM's advisory body of employers and employees has voiced its support for the board's decision, spokeswoman Ellen Habermehl said.

The change is meant to enable the industry-wide scheme to sell other commercial insurance products to its own participants, and compete directly with insurers and banks.

"We think we can offer better and cheaper products," Habermehl explained. "Our long-term scenario analysis on the direction of national legislation has indicated the need for a change of our structure, which can anticipate to an increasingly flexible and individual retirement provision."

"We feel the need to offer a wide scope of schemes for income replacement, in addition to the mandatory pension scheme," PGGM's chairman Hans Alders was earlier quoted as saying by the media.

"The present legislation doesn't allow us to offer our clients pension-related products, which are also offered by commercial players."

Earlier, both PGGM and civil service scheme ABP were fined by regulator De Nederlandsche Bank, because their respective subsidiaries were directly approaching the pension funds participants with ‘levensloop', or life-course, products. The Dutch Association of Insurers, or VvV, had objected to this practice.

"For a long time, we have been limited, when offering new products. We consider it as our task to offer a wide pension provision to workers in the care sector, but we want to get rid of the discussion on what our insurance subsidiary Careon is allowed to do," Alders was cited as saying.

PGGM and ABP, the €201bn civil service scheme, are amongst less than a dozen Dutch pension schemes that still have their asset management and administration under one roof. Most schemes have these disciplines already contracted out to a pensions provider or an insurer.

ABP is also discussing its structure for the next decade for similar reasons. However the outcome might be different, its spokesman Hans ten Brinke said recently.

PGGM is the second largest pension fund in the Netherlands.

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    Closing date: 2019-06-28.

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