NETHERLANDS- Six of the Netherlands’ medium-sized funds have announced they are to co-operate and to bring together every aspect of running the schemes including investment management, custody, administration and IT systems.
The pension funds of PBO-Dienstverlening, Hollandsche Beton Groep, Koninklijke Volker Wessels Stevin, P & C Groep, BPF voor het Baggerbedrijf and TNO are working on a project that, if successful, will see them operate as one.
Between them there are 60,000 participants, assets of e4.3bn and now a team of 75 managing the alliance. Last year the funds built and subsequently moved into the same office building in Rijswijk.
They have stressed unconditionally that the identity and authority of each organisation will be maintained. Says Loek Sibbing at Koninklijke Volker Wessels Stevin: “there was an explicit demand from all the trustees that their funds retain the freedom to do what they like.”
In practice, the undertaking is a major logistical project as investment structures at the six funds vary considerably. Some manage up to two thirds of their assets in house, others outsource their entire portfolios to external managers.
Cornelis de Krijger, head of asset management of Schroders’ pension group, has been hired by the six to oversee overall management. All existing in house investment managers have been brought together and will work together under the auspices of De Krijger, formerly at Robeco before Schroders.
Between them, the funds have seven external money management companies overseeing fifteen mandates. Sibbing says there is a degree of overlap and combining two mandates belonging to the same manager is straightforward.
But the alliance is planning to go a step further and end up with one external manager per asset class. Sibbing says that this may entail the retention of one of the existing managers or the appointment of a new one.
He says they hope to have two thirds of the e4.3bn in assets managed in this manner by the summer.
“We are at the stage of seeing how, in practice, we can make this operational. I have a feeling that a lot of funds managed in house will move to external managers,” he says.
With regards custody, the six funds use two between them but this will eventually be cut to a sole custodian overseeing the combined assets. Whether this will be one of the two or a new appointment is undecided.
As for IT systems, there is already significant overlap. Talk of working together has been around for some time and, in anticipation, four of the funds recently took on an identical system from the same provider.
For the two funds with alternative systems, Sibbing predicts it is a matter of time before they switch. “In a couple of years their systems will be getting out of date and it’d be quite logical to take up the new system.”