Diary of an Investor: Imperfect foresight
‘Administration!’ declares Geert, our head of investment research one morning. ‘Not a sexy subject.’
Geert has read recently that our regulator, the Dutch Central Bank, is very focused on pensions administration at the moment.
‘It may not be the sexiest of topics but it has caused some pension funds and their providers a lot of grief in recent years,’ I point out as we take a coffee break.
One of the problems is that the Dutch social partners like to make things as complicated as they can when it comes to pension contracts, with plenty of exceptions and special rules for small groups. These things are a nightmare to administration providers.
As a relatively small company pension scheme, Wasserdicht does not have such complicated rules. But it does not mean we are off the hook.
At our February trustee meeting, the subject of the new Dutch pension contract was on the agenda. And yes, as this will probably involve some kind of individual pension account, the subject of administration was heavily discussed.
Thijs is from our administration provider. ‘We have an internal team working on new solutions for a new pension system,’ he says. ‘In the past few years they have been developing a robust yet user friendly system that we can adapt to the likely scenarios for the new contract.’
Thijs demonstrates the platform on the screen, showing off prototype individual accounts for a collective DC system and another area, which shows the options for retirement income.
‘We tested a variety of prototypes with a focus group of ordinary members last year. As you can see, the interface shows the individual’s entitlement but clearly marks out possible future developments in a variety of scenarios.’
‘What about Blockchain?’ asks Rolf ‘Can you tell us what you are doing there?’. ‘Definitely an area for future development,’ says Thijs. ‘But it didn’t come up in our focus group.’
Pieter Mullen is investment director at Wasserdicht Pension Funds