Bringing it back in-house is better
In 2005, the Pensioensfonds Horeca & Catering (PH&C) scheme in the Netherlands decided to pull away administration from third party provider PVF Achmea and bring it back in-house.
Administration at the sectoral fund - which covers the hotel, restaurant and catering industry - had been outsourced ever since the fund was founded in 1964.
But eventually the fund decided it was so big that it could save money and effort by doing the administration itself.
PH&C has about 700,000 members who work for, or have worked for, over 35,000 employers in the sector, says Eric Uijen, general manager at the pension fund.
“This makes Pension Fund Horeca & Catering one of the 10 largest pension funds in the Netherlands in terms of the number of participants and employers,” he says. “Because of the size of the membership we believed that we can handle our administration more efficiently and at lower cost in house.”
When the fund outsourced originally, it did this to a non-profit organisation, but the situation changed with the arrival of commercial players in the management industry, says Uijen. “We were convinced that it is cheaper for us to do it ourselves because that with their profit margin and the value added tax we save,” he says.
Of course, doing the administration itself meant taking on new staff and building a new department. “We have established and equipped a new organisation,” says Uijen.
Beforehand, the pension fund estimated it would needed 100 staff at the most, to undertake the work. However, up to now, it has been able to carry everything out with less people, says Uijen. “We developed and implemented a new IT system,” he says.
The entire project was slated to take about three years, but since the beginning of last year, PH&C has been able to handle all administration on its own, he says.
“In 2006 we kept some processes out of the standard systems, by so-called workarounds, but at the moment the new IT-system is handling the whole administration,” he says, adding that the fund is very pleased with the results.
“The whole project is realised within budget,” he says. “There never has been a project of this order, in this time and at these low expenses realised in the Netherlands. At first other pension funds curiously followed this project, but at the moment they look at us with great admiration.”
Once the dust has settled, the benefits - all of which are about cost - are expected to be huge. “At the moment, it is too early to calculate exactly, but we expect that the costs will result in a saving of 30% compared with the past,” says Uijen.
“Our goals are only directed at a correct and efficient realisation of the pension regulations in the sectors Horeca & Catering,” he says, adding that the fund has no other interests. “This is important for the employers and participants, but also for the social partners in the different sectors,” he says.