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Impact Investing

IPE special report May 2018

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PGGM may separate asset management and admin

NETHERLANDS - Dutch healthcare pension fund PGGM has confirmed it is discussing separating its asset management and administration from the actual pension fund, and to house both within a cooperative.

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," said spokeswoman Ellen Habermehl.

"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," she added.

"We feel the need to offer a wide scope of schemes for income replacement, in addition to the mandatory pension scheme," daily Het Financieele Dagblad quoted PGGM's chairman Hans Alders as saying. "The present legislation doesn't allow us to offer our clients pension-related products, which are offered by commercial players as well."

Recently, 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 said.

According to the chairman, PGGM has already far-reaching plans to house its asset management and administration within a cooperative, which will be a first for a Dutch pension fund. The pensions regulator De Nederlandsche Bank and the Ministry of Social Affairs have responded positively, Alders stressed.

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

"PGGM's plan is excellent. We think that the social partners within its sector should make their own choice," director Peter Borgdorff of the Dutch Association of Industry-wide Pension Funds commented.

Only 8 pensions schemes - amongst which PGGM and ABP - still have their assets management and administration under one roof. Most schemes have these disciplines already contracted out to a pensions provider or an insurer.

With assets of €74bn, PGGM is the second largest pension fund of the Netherlands. It has almost two million participants.

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