NETHERLANDS – The €2.5bn pension fund of TNO, the Dutch institute for applied technical research, has praised the "clarity" of a new asset-liability management tool that allows it to monitor the odds and severity of a cut to benefits.
Custodian KAS Bank and Ortec Finance jointly developed the risk monitor, enabling pension funds to compare the real time value of their investments with their strategic asset-liability management.
The monitor provides users with an insight into the differences between tactical and strategic management and their respective impact, the companies said.
The companies said the monitor took into account a pension fund's financial position, regulation and investment policy as well as its approach to risk management.
As the monitor employed fund-specific data, it enabled boards to a direct response to market developments, KAS Bank and Ortec added.
Hans de Ruiter, CIO of TNO's fund, said that he is pleased with the monitor, introduced by the fund last year.
"It doesn't only provide figures, but also an interpretation," he said.
According to the CIO, the risk monitor shows the necessary information for both management and board for a solid investment policy that takes account of financial risks.
"The instrument provides data about the balance management of both investments and liabilities and provides, for example, also clarity on the chances of a rights cut as well as its the required level," he said.
TNO also assisted in fine-tuning the risk monitor, De Ruiter said.