The €3.4bn Dutch Pensioenfonds SNS Reaal has raised concerns about its own sustainability after one of its main clients revealed it was considering a switch from a collective to an individual defined contribution (DC) plan.
In its annual report for 2017, the scheme said that insurer Vivat had renewed its contract with the pension fund for only one year, until the end of 2018, as it was considering a change of model.
However, the scheme’s other main client, the Volksbank, wanted to stick to the current collective DC arrangements and had extended its contract for three years, SNS Reaal said.
The pension fund’s board said continuity of the scheme would be challenged if Vivat placed its pensions elsewhere.
The Pensioenfonds SNS Reaal has already experienced a fall in active participants: last year, the scheme saw its active membership decrease by 800 to 5,523.
It said that the number of employees at the Volksbank – the parent company of ASN Bank, SNS Bank, RegioBank and BLG Wonen – was also likely to fall as a consequence of reshuffles.
The pension fund warned that it would lose half of its remaining active participants if Vivat were to leave, and that implementation costs would rise as a result. Costs per participant had already increased from €290 to €312, largely as a result of falling participant numbers, it said.
The Pensioenfonds SNS Reaal reported combined asset management and transaction costs of 0.36%, which compared to 0.5% on average for comparable schemes, according to the Institutional Benchmarking Institute.
The scheme attributed the relatively low costs to the fact that it hadn’t invested in expensive asset classes, such as commodities, hedge funds and private equity.
Both Vivat and the Volksbank originated from bancassurer SNS Reaal, which was taken over by the Dutch government in 2013 after it ran into financial problems in the wake of the credit crisis.
Vivat, the parent company of asset manager Actiam and insurers Zwitserleven and Reaal, was bought by by Chinese insurer Anbang in 2015. It employs 2,500 staff.