Pension

The French parliament may nevertheless approve President Macron’s pension reform plans on Thursday, March 16, against which there have been several very large-scale demonstrations and strikes. The hot issue: raising the retirement age from 62 to 64. Why are the French so stubbornly clinging to achievements that seem financially unsustainable? We asked Pieter de Gooijer, partner at consulting firm Brunswick, who held the position of Dutch ambassador in Paris for five years.

There is a lot of opposition among the French population to the pension system reform plans, on which the French parliament has yet to decide. Resistance is especially strong in the Assemblée Nationale (the French equivalent of the Dutch House of Representatives). A committee from Assemblée and Sénat (French Senate) is now working on a compromise that will be put to a vote as a whole, possibly as early as Thursday, March 16. In his first five-year term, Macron already tried to modernize the fragmented pension system. Now, in his second and final term, he is making a new attempt. The central element is raising the retirement age from 62 to 64. To the Dutch, this sounds modest. After all, ours is 67 and this age will be raised automatically in the future as a result of a further increase in age expectancy - albeit, thanks to the pension agreement, not as soon as previously conceived.

Stubborn

Life expectancy keeps increasing in France too, so the sustainability of the system is a growing concern. Working longer seems to be the logical answer to this. Many see that, yet the majority of the population is against shifting the retirement age. Even though a look at the so-called Mercer index - in which pension systems from around the world are assessed on various criteria - reveals that while the French system scores high on pension benefits, it scores low on long-term financial sustainability. The question therefore arises: why are the French so stubbornly clinging to a retirement age that seems financially unsustainable?

The financial sustainability of the French pension system is indeed coming under more pressure due to an aging population, agrees De Gooijer, who was Dutch ambassador to Paris from 2017 to the summer of 2022. Moreover, that pressure is arising sooner in France than in our country.

Under pressure
“Financing the French system differs fundamentally from the way the Dutch system is financed. In our country, the premiums and taxes for the state pension - the so-called first pillar of our pension system - are paid out in the same year they are paid. In addition, in the Netherlands we have the pension funds - the second pillar - which are financed on a capital basis, meaning that premiums paid are first invested for years. In France, however, the first and second pillars largely coincide and the second pillar is also almost entirely financed as pay-as-you-go, like our state pension. This is putting increasing pressure on financial sustainability, because an aging population means that there are fewer and fewer people employed compared to the number of pensioners - and so they have to pay more and more per person to keep pensions at the same level. Because the French system is financed almost entirely as pay-as-you-go, financial sustainability is more vulnerable than in the Dutch system, which is only partially financed on a pay-as-you-go basis.”

Champion of working part-time
Yet, according to De Gooijer, that is not the whole story. Because there are also differences between France and the Netherlands that work exactly the other way around.

“The Dutch work a lot longer than the French. However, we are the champion part-time worker of all European and OECD countries, so we work fewer hours per year. French parents often both work full-time. Very many working parents therefore call on relatively young grandparents to take on some of the care of grandchildren, especially during the long school vacations. This is one reason why young French people do not want their parents to retire later, and grandparents do not want to work longer.”

Another difference that speaks in favor of the French is their attitude toward migration. De Gooijer: “French society seems to be more open to migrants. At least, it seems to assimilate them into French culture more quickly. To the extent that there is more immigration in France than in the Netherlands, it has a delaying effect on aging of the population.”

Distant

The statement, “The Dutch work much longer than the French and so their retirement age is far too low,” is therefore not without its critics. But there are also cultural and political reasons why the French do not take this longer working life for granted, De Gooijer explains.

“In the Netherlands, many working people feel connected to their work, their colleagues and their company or employer. In France, this is much less the case. Many French people feel no affinity with their work, experience the usual hierarchy as distant, and have the greatest desire to be able to retire as soon as possible.

Moreover, while French people are supporters of a strong state with ample opportunities to intervene in the economy and society, at the same time they do not like the state. Indeed, the tradition is to oppose it. Outside Paris, you can describe politics with the negatively intended term le pouvoir. Macron is seen by many French people as a former investment banker who may have started his political career with the Parti Socialiste, but then betrayed the left to rule with Les Republicains and other right-wing forces. In that perspective, he owes his second victory at least as much to a dislike of Marine Le Pen as to a positive choice of his program.”

François Mitterrand
De Gooijer continues: “Moreover, the retirement age of 62 was introduced in France as a reduction by the now mythical leftist President François Mitterrand. This reduction was and is seen as one of his great social reforms. Incidentally, this was not all that unusual in the 1980s. In the Netherlands, too, all kinds of forms of early retirement - such as the VUT - were long looked at as a solution to (youth) unemployment. By now the economic consensus is that that doesn’t work, but in France that certainly has not yet landed with the electorate.”

Meanwhile, probably partly for opportunistic reasons, both the far right (Marine Le Pen) and the far left (Jean-Luc Mélenchon’s La France Insoumise) and all the unions have seized on the pension issue to oppose Macron, says De Gooijer.

Preferably not
So won’t Macron's proposal turn out to be a failure? According to the former ambassador, not necessarily.

“Ultimately, the French pension system needs reform and this is Macron's last term. So, he personally does not have to fear not being re-elected if he perseveres. I also have the impression that the French government is deliberately letting the public discussion continue while parliament debates the proposals, to see if sub-topics surface where partial concessions are possible - for example, by taking a little more account of the rigor of certain occupations and the length of one’s career rather than just age. Or by making a little more room for childcare responsibilities, if necessary. If the demonstrations stop growing or possibly even fade a little, limited concessions might achieve a lot. Incidentally, Article 49-3 of the French constitution also allows the prime minister to enact laws himself instead of parliament. Macron will prefer not to resort to that, but the knowledge that it is possible may help convince parts of parliament that a compromise could also make sense.”

If people get more freedom of choice regarding their pensions, how can you best guide them in that selection process in a way that an optimal result is achieved for both the individual and society? This is the central question of the research Jorgo Goossens recently used to obtain his doctorate. As the transition to the new pension system draws ever closer, the subject is becoming increasingly relevant. All the more reason to put the insights from his research to the test.

The title of your research is “Non-standard Preferences in Asset Pricing and Household Finance.” Can you explain what it is about?

“My dissertation is about preferences in general. How can we use participants’ preferences to better explain their behavior and also better explain and understand the behavior of stocks, bonds and interest rates. Current models for that in the scientific literature struggle to do this. For the explanation of that behavior, I introduce the factors ‘risk preference’ and ‘time preference’ in my research.”

What do these two concepts entail and why are they relevant?

“Risk preference in a pension context refers to the degree of risk a participant is willing to take in their investments. Under the new pension legislation, funds have to ask their participants about that preference at least once every five years, so that question is very relevant. Time preference is all about how patient you are as a person. Do you have an excessive focus on the present and prefer to immediately spend the money that comes in on a new iPhone, or do you use your money to save for the future? I used surveys to identify these individual risk and time preferences among participants, based on APG data. I then aggregated them in such a way as to provide a picture of average risk appetite and average patience per 5-year age cohort.”

How do you utilize research insights regarding participants’ time preferences?

“For example, the Future Pensions Act states that there will be a lump-sum option of up to 10 percent. For participants with an excessive focus on the present, it is tempting to take advantage of that. We found that connection. Participants with an excessive focus on the present are more likely to opt for a lump sum - or for a high-low construction, where someone receives a higher benefit in the first years of retirement and a lower one in the years after that. As a policymaker, you can be paternalistic about this, offering these options only under certain conditions. But you can also say: who are we to decide for the participant whether they want to succumb to such a temptation? As a scientist, it is not up to me to make that choice, but from the perspective of science we can help through the choice architecture and participant communication.”

Can you give us an example to explain that?

“Consider the conscious timing of when to offer a choice, because the temptation to make a particular choice in the present always occurs during a specific time interval. In perception, there is a separation between the present and the future - the present ends at some point and then the future begins. If you know where that time interval of the temptation is, you can make it easier for someone to resist that temptation by having them establish that choice earlier. For example, you could send participants a letter as early as at age 50, offering the lump-sum choice.”

Your research also shows that participants’ risk preferences can fluctuate from day to day. If that is the case, does it make sense to base policy on it?

“This part of the research was done in the context of savings and investments, and the interesting thing about this is the timing of the survey: March 2020. Exactly the time when Covid was at play worldwide and also made its appearance in the Netherlands, resulting in the intelligent lockdown at the end of March. We examined risk and time preferences on a daily basis. And we found that there was a correlation with hospitalizations. On days of when there were more hospitalizations, people were more risk-averse and more patient: that is, they were less willing to take risks and more willing to save money for later.

Because these changes occur from one day to the next, you can’t base investment policy on them, of course. But as a fund, the timing of when you ask participants about their risk appetite matters. And this also applies to time preferences. When people are in an uncertain situation, such as the Covid crisis, they seem to want to allocate more money to a later date. As a pension fund you can take this into account in the timing of your communication, and you can also include it in the interpretation of the results of a survey.”

So, the research shows that you can use participants’ preferences - in terms of time and risk - to better explain their behavior. Does that also mean you can predict that behavior?

“Based on the 2018 time and risk preference survey, we can now explain - for 80 percent of participants - why someone chooses a high-low benefit or a flat benefit. Predicting goes one step further, because then you also need to know whether, at the time they will make that choice, their preferences will be the same as they are now. If you measure that every year, for example, you can make more reliable predictions about it.”

Who are these people who consciously choose to work in the pension sector? What do they do there all day for your pension? And what do they like about their work? We will take you for a look behind the scenes. Bram Scipio (42) is service owner. “At APG, a whole world opened up for me.”

Service owner, that sounds important. What exactly does your job entail?

“I have substantive responsibility for about 35 people at the IT Service Center. We monitor the IT landscape, as we call it, 365 days a year, 24 hours a day. When there is a glitch somewhere, we try to fix it as quickly as possible. We are also the department that makes sure all employees get a new phone and laptop every once in a while. And when, during Covid, suddenly everyone had to work from home, we were the ones who made that possible for 3,500 people. That was a really great project, where, as a service, we were really seen.”

How did you end up at APG?

“Well, I made quite a career switch. Before getting into IT, I was a hospitality entrepreneur. I quit that at some point; I wanted to do something else. I had already done an intermediate vocational course in system and network management, and some time later I started studying ICT & Information Management at college. After graduating, I started working in e-commerce. There I mainly dealt with challenging customer ICT issues. I learned a lot there, but after a few years I was ready for a real IT organization. I noticed that solving complex issues gave me energy. That’s how I ended up at APG seven years ago.”

Um, but APG is a pension organization, not an IT company, right?

“Many people don’t realize it, but APG is not only a pension organization but also a very large IT company. Everything you can think of in terms of IT, we have in-house. We actually do pretty much what big companies like Microsoft do, but in Heerlen. To tell you the truth, I didn’t know that before I joined here either; a whole world opened up to me.”

Isn't that world secretly a bit boring?

“It is anything but! There are so many internal and external developments affecting our work. For example, the new pension system, where we ensure a healthy financial perspective for a large part of the Dutch population. But there are also threats in the form of cybercrime. As you can imagine, this affects our IT landscape. We need to keep that agile, stable and secure, and user experiences must remain positive. We not only build reliable and solid services, but also embrace new technologies so that we can be a guide in IT service delivery. And if something does go wrong, we pull out all the stops to fix and restore it. All this ensures that we are challenged in our work on a daily basis. So, no, I’m never bored.”

What do you enjoy most about your work?

The thing I like most is that I get to facilitate my colleagues to bring out the best in themselves. I make sure they can do their work in the best possible way and guide them to enhance their job satisfaction. There’s a lot of personal development in that, of course. If I can help colleagues achieve their ambitions, then I have already achieved a large part of what I stand for.”

What motivates you?

“My personal motto is: ‘Enjoy and have fun by seeking challenge, by investing and by yourself developing every day’. I am a go-getter and love challenges. As I mentioned, I coach my colleagues and teams to perform at their best and achieve goals. In my ideal world, I do this by creating a working environment where fun, safety, trust and ambition are paramount.”

What character traits make you really fit in here?

“My coworkers say I am very client- and service-oriented, a connector, good at planning and organizing, and ambitious, as well as boundary-pushing and solution-oriented.”

Do those traits come in handy in your personal life too? What do you do when you are not at work?

“In my spare time, I am a recreational runner, I love to exercise outdoors. I live near the Brunssummerheide and the Tevenerheide and these surroundings are great for really switching out of work mode. I regularly sign up for running events, where not only the sporting achievement matters, but also the sociability.”

What do pension participants notice about your work?

“My team and I ensure that our APG colleagues have modern ICT workstations and services at their disposal, so that they can work and collaborate optimally, carefree and with pleasure. In our department, we are also the voice of the client and I have a lot of contact with stakeholders: what can we do better? Again, that fits in with my background: the client or guest is always king and their wishes come first. The trick is to translate what they want into working solutions. So, we not only make sure that everything works, but are also constantly improving. With our excellently organized services, our APG colleagues can then focus fully on their work for funds, employers and participants.”

Recently, “Pension Challenges for a Thriving Society in 2122,” a survey among 1,133 Dutch people, was published as part of 100 years of ABP. It looks back at 100 years of pensions and looks ahead to the long-term opportunities and challenges facing the Netherlands. What are these opportunities and challenges? And how will they affect the future of our pensions? We asked Research Director Martijn Lampert of Glocalities, the company that conducted the study.  

In the survey, commissioned by ABP and APG, Dutch people were surveyed to gain insight into the values that play an important role in their wishes, expectations and concerns. They were asked to look back on the past century and look ahead to the next 100 years. The goal: a broader perspective on the topic of pensions, enabling us to better deal with the challenges ahead.

The research shows that Dutch people see solidarity and compulsory membership as important elements for the future of our pensions. Freedom of choice is considered much less important. The Dutch also value the security of their pensions and the fact that it grows with the economy. However, 3 in 5 Dutch people fear that the security of retirement will decline over the next 100 years. But only 3 percent of Dutch people are really aware of the new system.

If we want to get the topic of pensions closer to people, we have to realize that our view of people in general is shifting, Lampert says. From economic, rational, purely neoliberal thinking - the homo economicus - we are shifting toward the homo florens, who is more focused on well-being.

Can you explain why this shift from homo economicus to homo florens is happening?

“After World War II, everything was about increasing our economic prosperity. The homo economicus is focused on self-interest and wealth, and with that premise we have been successful for a very long time. With this, and through hard work, we achieved the welfare state and economic prosperity and helped build the liberal world order. But by now we have also seen the limitations of this way of thinking, making homo economicus less of a given. The context has changed dramatically, nationally and internationally. The image no longer matches people’s aspirations and world experience.”

What are these limitations of the homo economicus?

“We’re exhausting the earth, inequality is increasing, we have more and more burnouts. In this way, society is no longer sustainable. Many people at this time feel uprooted, alienated, abandoned. By politics, by those in power. So, the question then is: how did we get here and how can we change it? An interesting result of the study is that older people look more pessimistically at society as a whole and its development in recent times, but on average are more positive about the development of their standard of living than young people. Young people, on the other hand, see the past century in a more positive light, but are more pessimistic about the development of their standard of living in the future.”

How can society be sustainable?

“Our thinking should not be determined solely by the growth idea of homo economicus. The idea homo florens, for whom quality of life and thriving is more important, is going to have to play a greater role. The homo florens reaches maturity when he or she can achieve deeper values. The survey shows a need for more justice and solidarity. And, of course, prosperity is still important; people also appear to fear its loss. But in hopes and desires there is more emphasis on well-being. Individualism no longer reigns supreme. When it comes to the question about in which direction society should develop, respondents indicate that safety, respect, caring, justice and solidarity are important. The lesson from this study is that in order to meet societal challenges, much more attention needs to be paid to the interpretation of these types of values. I think it is important for administrators to realize that they will further alienate citizens if these values are not reflected in their narrative and in the policy choices they make.”

How hopeful are people? Do they think the tide can still be turned?

“In many areas, respondents have negative expectations for the future, but expect that these negative developments can still be reversed. This applies, for example, to the quality of education and income inequality, but also to pension security, solidarity in pensions between generations and the welfare state. In other areas, they do not expect negative developments to be reversible. People are especially defeatist when it comes to ethnic tensions, political tensions and citizens dropping out of Dutch society. On the other hand, they are optimistic about the knowledge economy and gender equality.”

3 in 5 Dutch people fear that pension security is going to decline over the next 100 years. At the same time, it appears that only 3 percent of Dutch people are really aware of the new system. How can we change this?

“If you approach retirement as something technical, for many people it is a distant and uninteresting topic, even though it is incredibly relevant, of course, because it is about their future income. And respondents also indicated that the security of a pension is important to them, but when it comes down to it, they don’t really pay very much attention to it. To bring the topic of retirement closer to people, I think you have to start the conversation with them about their desires, their ambitions and the values that are important to them now. What kind of future do they want? That is the question we focused on in this study, and it shows that there is a strong desire for more equity and solidarity. For a pension fund, that is a good starting point in the conversation with participants, because a pension fund is an excellent way to facilitate solidarity. Moreover, many Dutch people cite ‘enjoying life’ and ‘being healthy’ as important life goals, so as a fund you can also pick up on that when talking to them.”  

So, the survey showed that having that conversation is a key challenge for pension funds. Can you name one more?

“How do we avoid a lack of perspective for young and future generations? They will feel the effects of climate change the most. Moreover, for them the development of the standard of living is increasingly stagnating, compared to previous generations. At the same time, those younger generations are standing up for themselves less and less: 50 percent of the world’s population is under 30, while only 2.5 percent of parliamentarians are. That makes not only the conversation about intergenerational solidarity relevant, but also the conversation about what you invest in as a pension fund. We need to make sure that thinking about retirement becomes rooted in a broader vision of quality of life and the future of society. When you enter into a conversation with participants about such fundamental values, you contribute to this.”

In a letter to the House of Representatives, the five biggest pension funds emphasize that the chances of increased pensions are greater in the new pension system than in the current system. This refutes the criticism of some former politicians and administrators, who last week, advocated putting the new system on hold.

Annette Mosman, chairman of APG’s board of directors, also signed the letter to the MPs. On response to it, she commented, “As the biggest pension administrator in the Netherlands, we also advocate for the new system, as the pension funds do. That is why we must act now so that our pension system will remain among the world’s best in the future and members and pensioners can continue to count on a good pension. It is a huge operation, but as a sector we are putting our shoulders to the wheel. We believe in the benefits of the new system, which we jointly set out in this letter.”

Solidarity
The letter writers explain that indexing pensions is difficult now because pension funds under the current system are required to maintain high buffers. Under the Future of Pensions Act, those buffers are no longer mandatory, which actually increases the chances of pensions going up.

One of the core values of the current system, solidarity, is also an important part of the new system. “Together we share risks for a lifelong old-age pension, protection from the financial consequences of disability and protection of surviving relatives in the event of the participant’s death,” write the signatories, which include the CEOs of the five biggest pension funds.

Customization

An important advantage of the new system is that it enables customization. It is always clear to each participant how much personal pension capital has been set aside. Whereas the current system has a uniform pension plan, the personal pension assets in the new system allow participants to determine investment risks appropriate to their age, among other things.

The letter writers point out that converting, or “moving” pre-existing pension assets to the new system, is a crucial part of the transition to the new system. Not converting has several disadvantages, including the fact that the collective would then have to be broken up. This will result in a decades-long cost increase at the expense of participants’ and pensioners’ pensions.

Improvement

At the conclusion of the letter, the signatories express their conviction that the new system “will lead to an improvement in purchasing power for pensioners in the short term and will provide age-appropriate, transparent and sustainable pension plans for active participants.” They also emphasize understanding the concerns of participants and pensioners and paying attention to them in both decision-making and communication.

The entire letter to the House of Representatives can be read on the Pension Federation’s website (in Dutch).

Current issues related to economy, (responsible) investment, pension and income: every week an APG expert gives a clear answer to the question of the week. This time: Alwin Oerlemans (Head of Product Management at APG Asset Management), on whether it is a good idea to temporarily give employees the option to reduce their pension contributions, so that in these times when everything has become more expensive, they can use that money to pay their bills.

Many Dutch people are really feeling the skyrocketing inflation, due in particular to increased energy prices, in their wallets. While the government has now allocated billions to mitigate the effects for citizens, it is not possible to fully compensate for the decline in purchasing power. This is a huge problem especially for low- and moderate-income households with less sustainable homes. Unions would therefore like to see wages rise to the point where there is full compensation. Because this risks sending the Netherlands into a wage-price spiral, - as it did in the 1970s - there are calls here and there to temporarily allow workers to put a reduced pension contribution - so they can use that money to pay their bills. Is that a good idea?

Shortsighted
No, says Oerlemans. First of all, because doing that could get people into financial trouble in the future.

“From the perspective of behavioral economics, we know that people value money now more highly than money later. If you give employees the option of a reduced pension contribution temporarily, it will be at the expense of their pension accrual. To see that this is a shortsighted idea, you need only look at Chile, for example. When the economy there stalled during the Covid crisis, Chileans were given the option to withdraw an advance on their pension money. As a result, Chile's pension pots seriously shrank. The government would have been better off helping the vulnerable instead, because it was mainly the small pension pots that were depleted by one-time withdrawals. It is not without reason that the recently released Mercer CFA Institute Global Pension Index 2022 warns against premature withdrawal of pension money.”

Cigar from your own box
According to Oerlemans, the option to temporarily reduce premiums is also not a good idea because for employees it is just a cigar from their own box. And now is not the time for that.

“Because reduced premium contributions result in a reduced pension accrual, - and thus less pension - employees end up paying for the purchasing power compensation themselves. Only they’re not paying now, but in the future. People should get a higher wage now, not a cigar from their own box. Because big companies’ profits did rise in recent years, and that is much less the case for employees’ wages. Unions are rightly making the case for higher wages. This gives workers a fair share of added value. This is how the ratio of wages to profits can shift.”

The Netherlands: an export country
Those higher wages are no luxury, because high inflation is here to stay for a while, Oerlemans expects.

 “Even before the war in Ukraine, inflation was rising, due to disruptions in production chains caused by Covid. The Russian invasion then led to a sharp rise in commodity prices and energy prices in particular. So, inflation will persist for now, especially with a continuing war.”

Oerlemans does not want an exporting country like the Netherlands to price itself out of the market with higher wages.

Australia
“This fear seems exaggerated to me. Because of the tightness in the labor market, there is room for higher wages. That is also good for the labor supply, because it makes more worthwhile to work. In Australia, when there was an impending wage-price spiral, that was when pension accrual increased. There, the pension system started in the 1990s, when there was an overheated economy and inflation. Employers then started pouring some of the extra pay into the new mandatory pension system.”

All in all, then, it is not a good idea to temporarily allow employees to reduce their pension contributions, even if it is, say, up to 50% of the contribution?

“No. There is nothing wrong with a little flexibility in the premium as part of the benefits package, but not to that extent. If you give employees the option to remove such a significant portion of their pension contributions, even if only temporarily, that’s still a cigar out of their own box.”

Ten Dutch people, each from a different decade, meet in a bus driving across the Netherlands. They each have their own story, but connect with each other around their struggles, their passion and their dreams about the Netherlands of the future. Director Sander Ligthart recorded their conversations during their cinematic road trip Encounters. A documentary created in honor of 100 years of pensions in the Netherlands.

100 years of pensions in the Netherlands is the premise of the documentary commissioned by ABP and APG and created by director Sander Ligthart. The result is a look back and ahead at the state of the Netherlands over the past century: how has our country dealt with sustainability, equal opportunities for all, and wellbeing? Ligthart gets ten Dutch people from ten different decades to have conversations about this with each other; ten perspectives and ten different stories. They are unknown but special people, such as Roxanne Salehi, until recently Children’s Director of Nature & Sustainability of Flevoland and a student at the first ecological elementary school in the Netherlands, and education professional Karim Amghar who fights against inequality of opportunity and polarization in the classroom and in the neighborhood. But well-known fellow citizens, such as historian Els Kloek and writer and former politician Jan Terlouw also appear before the camera. In the film they all ride together in a bus through the Netherlands, and on the way, they have frank and inspiring conversations. We are now speaking to the director, who has an impressive resume that ranges from light-hearted commercials to a short film about sexual abuse, prior to the premiere of the documentary.

And then there's the question about a documentary on pensions. Were you able to immediately envision what kind of story you wanted to tell?

“Yes, the idea came to me pretty quickly. I have made videos for ABP and APG before and I know that for them, their work doesn’t end at providing pensions: they use their knowledge and network for social issues. My idea was to give viewers inspiration about sustainability, wellbeing and equality: a story that makes pension builders and pensioners, people with a heart for education, science, defense and politics, look at things differently. This film is really the opposite of the News. Not focusing on what went wrong, but looking back at the past years and then creating vistas of the imagined Netherlands of the future. A perspective on the future, and how you can influence it, without losing sight of the fact that there is still much to be done.”

And what does that Netherlands of the future look like?
“While we were recording, we came to realize that, in terms of politics or society, there is generally not really any vision of where we want to go as the Netherlands. Where are we going to be in ten years, or a hundred years? We need to have that vision.”

And how do you portray that in a documentary with 100 years of pensions as its theme?
“The actual pensions occupy a modest place in it: the 100th anniversary of the pension act is the occasion to look back 100 years and ahead 100 years. Questions that come up include ‘How did sustainability become an increasingly important issue?’, ‘How have we dealt with equal opportunity for women or groups who could not always make their voices heard?’ and ‘What about wellbeing?’ The people we chose for the film fit into the story in multiple ways. Like Maaike Leichsenring, a former TU Delft student who, despite being advised that engineering is not for girls, decided to go into that field anyway, and is now researching applications of sustainable energy.”

And are the answers to the questions you ask always positive?
“No, we certainly also make the dissenting voices heard. Take pensions as an example. Scientist Rutger Hoekstra, one of the ten people, questions the measurement of wealth in economic figures. He agrees that pensions have made many people independent and allow them to live the way they want to. But Rutger argues that pensions can also be seen as a cause for more loneliness among the elderly. Pensions make Dutch people feel almost like they no longer have any responsibility for their parents, which in turn can lead to loneliness. In other words, social cohesion partly falls away because of pensions. The story of Ibrahim, the boy who fled Syria with his parents when he was six years old, ties in with this: his parents have given their children a lot of love and care, and they see this as a kind of loan. They get that love and care back from their children when they are old and in need of care and assistance.”

Your films always focus on people, because you want to touch the viewer’s heart. That is also the case with this one. Why that approach?  
“I wanted to create encounters between people who all have interesting views of the future: people from every decade opening up their world and showing their perspective from there. Children, adults, pension builders, pensioners; a diverse group of people. They have stories about the past and the present, about dreams and ambitions, and about fears. About how the Netherlands is changing, as well as the changing world, about economic prosperity and the crunch of sustainability. Stories that are worth sharing. And precisely because they are genuine, personal stories and because sincere interest arises between people, this is inspiring and the stories move you.”

The setting is not commonplace; you are driving across the Netherlands in a bus.
“Think of it as a unique road trip. Ten people going on the ‘trip of a lifetime’ together. During the trip, they share their stories with each other. The bus is a place where they get together, they share, they are proud of the past and express ambitions for the future. It’s a place that has no geographical location, but it’s where the stories are. On a road trip, everyone is free; not bound to their own domain.

And it is precisely there that unexpected conversations arise, between the teenager who makes a case for sustainability and the politician who is now in his nineties, and who brought economic prosperity to the Netherlands when the word sustainability did not even exist yet.”

What challenges did you face while you were filming?
“The biggest challenge was to show the viewer new perspectives and opinions. I.e., staying away from the beaten path and not telling them what they actually already know.”

Such as?
“Most people think sustainability is important, but they might not know, for example, that the Netherlands is way ahead of the game. The challenge is in tapping as many resources as possible, and in energy storage, because energy is needed even when the sun is not shining and there is hardly any wind.

Everyone is for equal opportunity women, but people often don’t realize that women are barely mentioned in history books and how it affects a woman when she is the only woman in an organization; something we illustrate with the story of Colonel Sylvia Busch. There is also a lot of discussion about equal opportunity in education, but people don’t always know how it affects a student when they are dismissed as part of a pathetic minority group who won’t make it anyway.”

You spent days filming, traveling and talking. Which of the stories will definitely stick with you?  
“That of Karim, a Moroccan boy from Bleiswijk who works as a program writer for NTR and as a teacher. When he was in elementary school, he was advised to aim too low and consequently ended up in a kind of black hole. He felt left out, got bored, ended up in crime and became radicalized. Until his own brother said he believed in Karim and signed him up for a college entrance exam. That set off a huge upward spiral, and look where Karim ended up. He even got to attend King Willem-Alexander’s Uitblinkers lunch (Lunch for Star Students) to talk about this.

Karim only needed one person who believed in him. And it is with that attitude, that he now walks into his own classroom every day himself. He exudes confidence to the kids and makes them feel that they all have their own talents; he motivates them.”

And what are you giving the viewer?
“The main lesson that has been learned is that when different groups in society do not know each other, misunderstanding and separation occur. Money is not the answer to that. Stepping out of your bubble and showing interest in what concerns someone else, what fears and aspirations someone else has; that is the answer. The need to meet face to face and have genuine conversations with each other came up in every conversation. Take a look around your neighborhood, and have conversations with each other.”

APG CEO Annette Mosman is walking with Wouter Koolmees, Minister of Social Affairs and Employment on behalf of D66 until January this year and, as of November 1, President of the Dutch Railways (NS). Together they look ahead, to the new pension system. “I am convinced that pension assets can be fairly allocated to all participants.”

No access to pedestrians. Wouter Koolmees and Annette Mosman have barely started their walk from Beverwijk to Wijk aan Zee, and they already have to stop. A prohibition sign. What to do? Take a detour and hope they’ll get back onto the walking route? Ignore the sign and stoically keep walking? They opt for the well-behaved variant. And it makes them both laugh, because as people born and raised in Rotterdam (Koolmees) and Amsterdam (Mosman), they should be used to dealing flexibly with these kinds of rules. After a slight detour, they get back onto the walking path, where they see a parking attendant. They ask him why that sign is there. “To protect pedestrians from possible freight traffic. But everyone ignores it. You’re the only ones taking a detour,” the man in the yellow vest smiles. Does he recognize the former minister? The man who spearheaded a thorough overhaul of our pension system? Koolmees stepped down as minister in January. Friend and foe praise his commitment, incredible dossier knowledge and intelligence. He himself remains modest: “I saw it as my job. But the new pension act is absolutely my love child. I worked on that with heart and soul.” He describes his departure figuratively: “Once you stop being a minister, your bag-full of documents is turned upside down. But your baggage remains. I will continue to follow all developments surrounding the introduction of the Future of Pensions Act very closely, because the subject is close to my heart.”   

Clear explanation

After a brisk climb up the dunes, Wouter and Annette suddenly have a full view of the immense grounds of Tata Steel. Smoking chimneys and coal-fired power plants, surrounded by the beautiful dune landscape. It makes them quiet for a minute. “Wow, this is the first time I’ve seen Tata Steel like this. The site is much bigger than I thought. You can really see the necessity and scale of the climate transition in one image here,” Annette says. That brings their conversation to the transition in the pension sector. 

Insiders understand the need for it, but very few pensioners and participants do. And so: how do you communicate with them? Wouter: “The pension discussions in the House of Representatives are always heavy on content. An outsider can’t understand any of it. I understand the importance of a clear explanation for both working and retired people. This summer, I spent three hours being interviewed by Cees Grimbergen of the TV program Black Swans. With the goal of explaining the how and why of the new pension act as clearly as possible. An interview like that is always a gamble, because you never know what quotes the media will run with.”

Having a real conversation

Annette agrees: “This is why pension funds and administrators tend not to want to engage with the media. And also to not have the real conversation with our participants. As a result, we don’t hear what their concerns are. What we do want to do: explain things to them. But that’s not enough; we really need to break through that. I was at a meeting about 100 years ABP. Minister Schouten spoke to some participants there, among them a police officer. A woman in her late 50s. She still has almost ten years to go until her retirement and has completely lost confidence in her pension fund. First her pension was based on her final salary, and later that was changed to the average salary. She knows that pensions have not been indexed for years, and meanwhile her opportunity to retire keeps moving further in to the future. “Pretty soon, I’m not going to be able to run after a crook anymore, and then what?” she sighed. In her eyes, we are not keeping our promises. I completely understand that. As a pension sector, we need to focus less on technical explanations and more on the experiences of our participants.”  

Feasibility

Annette notes that Wouter, – “quite exceptional for a minister” - during his time as minister, not only had an eye for the content but also for the implementation of the new act: “In other words, not only how pension funds arrive at the correct distribution of pension monies, but also how we, as administrators, operationally handle the transition. For APG, the transition does mean that we have to examine the files of some 4.5 million people and calculate what their new pensions will look like. We are therefore eagerly awaiting concrete policy decisions.” Of course, Wouter nods: “Because then you can proceed. I do think it just makes sense, however, that as a responsible minister you want to understand the feasibility of plans made. I hope that politicians will really take that into account sufficiently in the coming period.” For example, when it comes to the choice of what method will be used to convert collective pension assets into personal pension assets: the standard method or the VBA method (Value Based ALM). Wouter: “I have seen that there is discussion in the House of Representatives about the methods, but I am convinced that this can be resolved technically, so that the assets can be allocated fairly to all participants.”

Minister Schouten has announced that the Future Pensions Act (Wtp) going into effect will be postponed until July 1, 2023. Careful consideration in the House of Representatives turns out to take more time than expected.

In the coming weeks, on October 10, 12 and 19, 3 more legislative consultations are scheduled to discuss the Future of Pensions Act (Wtp) in the House of Representatives. The preliminary plan is that this will be followed by plenary debate in the House of Representatives on November 1, 2 or 3, but the House of Representatives will not decide whether the bill is ready for plenary debate until after the legislative consultations. After the debate in the House of Representatives, the draft bill can be submitted to the Senate for approval.

Many questions

And the debate in the House of Representatives is going to be challenging. After all, there are still a lot of topics about which there are many questions, as well as several amendments that would have quite an impact. Furthermore, the House is divided over whether it should wait for the recommendations of the Parameters Committee. If so, further debate could not take place until December.

In response to parliamentary questions from Pieter Omtzigt, the minister reported the following: “It is ultimately up to the House to proceed to plenary discussion. I cannot and will not intervene in this. However, as someone responsible for the system, I want to offer clarity to the sector. Given the careful treatment to which the Senate also attaches great importance, I do not consider it plausible to complete the legislative procedure in the Senate this calendar year either. It is therefore unrealistic to expect the Future of Pensions Act to go into effect on January 1, 2023. I am therefore amending the target date for it to go into effect. The next change date for legislation is July 1, which is what I am aligning with.”

Careful

Delaying the effective date does not affect APG’s schedule. Peter Gortzak, Director of Policy Implementation at APG: “For APG, both careful handling and speed are important. APG is proceeding with implementation based on working hypotheses to avoid implementation delays.”

Would you like to find out more about the Future of Pensions Act? The answers to these 7 questions will get you up to speed right away 7 questions about the Future Pensions Act | APG

100 years ago, in 1922, ABP was founded, the pension fund for government and education. Now, a century later, the Netherlands has one of the best pension systems in the world and that has brought us a lot. How do we ensure a good collective pension in a livable society in the next 100 years? ABP and its administrator APG (until 2008 they were one organization) pay attention to these themes in this special anniversary year.

The General Civil Pension Fund was established on 1 July 1922. When it was founded, the number of participants was about 90,000. By the end of 2021, that participant base had grown to 3.1 million participants, of which almost 1 million were pensioners, including more than six hundred also 100-year-olds.

In 1996, ABP, which until then was under the Ministry of Finance, was privatized. The board consisted of representatives of employers and employees. The privatization enabled ABP to broaden its investment horizon. In addition to traditional government bonds, more and more investments were made in equities and other categories, including worldwide. In 2008, ABP was split into Stichting Pensioenfonds ABP and the newly established Algemene Pensioen Groep NV (APG). APG has grown into one of the world's largest executive organizations, which provides the pension administration and manages the investment portfolio for several pension funds. The Algemeen Burgerlijk Pensioenfonds continued under the name ABP and grew into one of the largest pension funds in the world.

Harmen van Wijnen, Chairman of the Board of ABP: “We are celebrating ABP's 100th anniversary. The idea behind the decision 100 years ago to take care of a pension together is rock solid to this day. It connects young and old, sick and healthy, workers and retirees, and the individual and society. That is the core and the strength of our unique pension system. Together with the AOW, it also ensures that poverty among the elderly is much less common than in neighboring countries. In the next 100 years we want to jointly continue to build a good pension for our participants in a liveable world. For this, our pension system must be adapted to the current times. So that we will continue to have one of the best systems in the world in the future.”

Good income
Annette Mosman, chair of APG: “We have been together for 100 years, first within ABP, and from 2008 as an independent executive organization, but still together with ABP. We share a rich history and a lot of experience. And that comes in handy. After all, we are on the eve of one of the biggest changes to our pension system in the past century. In the coming years, APG will be fully focused on the implementation of the transition to the new pension system. It is our task, together with ABP and our other funds, to ensure a pension administration in which everyone will soon have a good income and in which it is clear and understandable for young and old how their pension stands.”

In the second half of 2022, ABP and APG will pay attention to '100 years of the pension of the Netherlands'. Fund and executor seize this moment to look back and forward; ABP and APG look back in history and collect 100 stories from participants (see www.pensioenvannederland.nl). We also celebrate participants who turn 100 in the same year as ABP with a congratulation and flowers. An exhibition in Heerlen and Amsterdam is also planned for the autumn. We are also working on a documentary about the value of a pension that will also be shown online. Would you like to know more and stay informed about the activities? Go to www.pensioenvannederland.nl

How do you deal with work and money for now and in the future? Do you live from day to day or are you deliberately planning your financial future? And do you arrange ‘later’ yourself or are you participating in a pension fund?

Nathalie van Dinther started working fewer hours when she became a mother and has therefore not accrued the pension she would have liked.

Nathalie van Dinther (59)

Profession: Management supporter and fitness coach

Weekly works: 28 hours

Income: 1,800 euro net

Savings: More than enough

Pension is arranged? Yes, but not to my full satisfaction

What kind of work do you do exactly?

“I am management supporter at an organization consultancy firm. I also run my own company as a fitness coach, but that's currently on hold because I moved to a different county. I lived in The Hague and have now moved to Zeeland to live closer to my daughter and grandchildren. This means I have to build a new customer base and start all over again. I don't know if I will succeed in doing so. I did start working more hours in paid employment to compensate for that loss of income. I work four days one week and three days the other week. On average I work 28 hours. I work almost entirely from home these days, so it luckily doesn't matter that I live further away from the office. That's one of the positive things we owe to Corona.”

How much do you earn?

“1,800 euro net. And nothing at the moment as a fitness coach.”

Are you satisfied with that income?

“I just about make ends meet. It is enough, in principle, especially since my fixed costs are lower. I pay less mortgage and I no longer have to contribute to an owners’ association, so I can manage. Although it's not all that; I cannot pack my bags and take three weeks’ vacation when I feel like it.”

Don't you have a buffer?

“I have some savings from the excess value of the previous house. That amounted to a total of 350,000 euro which I had to share with my ex-husband. I could have bought my current house without a mortgage loan, but that would mean emptying my buffer and that doesn't feel comfortable. I want to be able to pay for things that may possibly need to be done to the house. I paid part of my new house using the excess value and took out a small mortgage loan. So, I still have quite a bit of money set aside but I must manage those funds extremely economically. Also because I only have a small pension. Including my state pension, I will end up earning 1,500 euro per month. That is not a lot. I think I will be able to only just make ends meet.”

How much do you pay on fixed costs?

“Mortgage, home and car insurances, road tax, municipal taxes and energy together is 495 euro. I pay 58.50 for TV, internet and mobile phone. My health insurance is 140 euro per month, and I also have subscriptions for the gym, yoga, streaming services and the newspaper, together amounting to 100 euro per month. Besides that, I spend 53 euro per month on what I call ‘miscellaneous’. Those expenses include a lottery, a good cause, my funeral insurance and the coffee cups I order. All together my fixed costs are less than 1,000 euro, but my energy contract just ended so it will be a surprise as to how much I will pay on energy in the future.”

What else do you spend much money on?

“I don't spend that much money. There was a great coffee shop just around the corner of my house in The Hague that I visited sometimes to eat cake, or I sometimes had some wine and cheese at the beach. That's something I truly enjoy. But the village I live in now, has absolutely nothing. No shop, no bar… It does save me money though. I also don't spend a lot of money on clothes. If I was to buy what I like, it would be expensive branded clothing, but I cannot afford that.”

What do you save money on?

“I go to the thrift store to buy clothes and furniture. I don't care about stuff much, so things don't have to be brand-new as far as I'm concerned. Moreover, used goods are sustainable. I also considered getting rid of my car, but I really cannot do without where I live now. I am quite committed to the environment. I don't eat meat and wouldn't easily travel by airplane. I haven't been on vacation in a very long time for that matter. I quickly believe that to be too expensive. When I still lived close to the sea, it didn't seem all that necessary. I've been swimming for years, all year round. Now I do that at the Oosterschelde.

But I have to say I am currently longing to go on holidays again, but I cannot really afford it. That's not a disaster. Vacation to me also means waking up without having to set the alarm and to read the newspaper while drinking a cup of coffee until the late morning still wearing my pajamas.

Do you worry about your pension?

“No, I don't. I don't mind living a sober life. If I can go on vacation every five years, I am happy. I am not very demanding. I feel as if I will be able to make ends meet in the future, there's always a solution. But it is important to manage the savings I have economically.”

How do you envisage your life as a pensioner later on?

“I am not really sure to be honest. I now live close to my grandchildren and I think it's amazing seeing them grow up this closely. But there is a chance they will be moving eventually, maybe even abroad. It would be a pity if they leave any sooner, but I will stay in this house at least until my pension. I don’t know what I'll do next. I´ve never been much of a planner. You just follow a path and choose to take the exits you are faced with on the way or not. You never know, there might be a man in my life again someday. I live by the day and just see what life has in store for me.”

Does money bring happiness?

“Maybe a bit more happiness. A general state of happiness doesn't exist, moments of happiness are the highest attainable. Money does provide for a more carefree life. And I don't have any worries right now. I believe everything will turn out for the best.”

How do you deal with work and money for now and later? Do you live by the day or do you purposefully plan your financial future? And do you arrange 'later' yourself, or are you a member of a pension fund?

In addition to her master's degree, Emma Verschure runs her own business as a tax consultant.

Emma Verschure (23)

Profession: Master's student and tax consultant

Weekly working hours: About 24 hours

Income: Last year 20,000 euros profit

Savings: More than 40,000 euros

Pension arranged? Not yet

What exactly do you do?

“I'm studying for a master's degree in tax law and I also work independently as a tax consultant. I mainly help female freelancers with their accounting and tax assessments. It's quite challenging to combine my studies with my business, because both take quite a lot of time."

How many hours do you work?

"It varies every week. I think I average about 24 hours. In a month with VAT returns and income tax, it's a lot more, but I can never exceed 40 hours anyway, because I simply don't have that time. Ultimately, I want to do this full-time, but not in its current form. I'm very ambitious and want to enter the legal profession. I'd like to set up a company where entrepreneurs can go for legal assistance, as well as their accounting and tax returns. A fixed point of contact for all things that, as an entrepreneur, you don't actually want to deal with. It appeals to me."

How much do you earn now?

"Last year, I made a profit of 20,000 euros and had a turnover of 35,000 euros. I very consciously made all kinds of investments in December, including in courses, so I had to pay less tax. This year, my goal is a turnover 50,000 euros, of which 35,000 euros profit."

Are you happy with that?

"Certainly, I earn a lot more than friends and fellow students. I don't worry too much about what comes in. I'm very serious about my work, but because I'm still a student, I don't necessarily have to take it super seriously. I mean: if I don't meet my turnover target, there's no stress. My parents can always help out if I'm really struggling. They also pay my study costs and a large part of my health care costs. I really appreciate that. We all went skiing at Christmas and they paid for that holiday in full, right up to the PCR test. We wouldn't be able to afford such a luxurious holiday ourselves, so we're very lucky in that respect."

What about your home?

"I live in a rented house in Amsterdam with my boyfriend. We pay a lot of money for what we get. 1,200 euros 'including all bills', but we pay for hot water separately. Our apartment is 40 m2 and is also located in Holendrecht, one of the worst neighborhoods."

How do you divide the expenses at home?

"I pay 550 euros for rent and insurance, my boyfriend pays the rest. He's a PE teacher and also works in the hospitality industry. He earns about 50,000 euros per year. More than me, so this way it's fair to both of us. For the rest, such as groceries, we go halves."

What other fixed expenses do you have?

"Health insurance at 130 euros per month and a telephone contract at 25 euros. I don't really know what we pay for electricity and such. We have Netflix and Videoland, I believe the latter costs 5 euros with commercials in between. And my dad pays Spotify for our whole family. We don't have a car, it's incredibly expensive in Amsterdam. I also have student public transport, so I often travel for free with public transport."

What else do you spend a lot of money on?

"We both used to pay 200 euros for groceries into the joint account each month, but we can no longer manage due to inflation. That's why we increased it to 250 euros per person, let's see if we can manage that. It helps that my mother always buys me detergent and dishwasher tabs; she keeps an eye on all special offers and then immediately buys a huge amount. What's a relatively large cost item for me is the toilet at the station. I study in Tilburg and every time I have to transfer at Den Bosch, I have to go to the toilet. That's 70 cents four times a week. Not a huge amount, but it's adding up, you know. I can also use the toilet on the train, but that's dirty. I also like to buy designer clothes, but for that, I save for a long time."

How much savings do you have?

"More than 27,000 euros, plus an investment account that held about 15,000 euros when the stock markets were doing well. Quite an amount, but a large part of it my parents saved for me and there's also part of my grandmother's inheritance. I myself have invested about 1,600 euros through other investment apps. I see that more as play money, because I don't fully trust that I make the right choices. For example, on the advice of my friend, I invested 2,000 euros in exchange rates, but now I only have 600 euros left… He forgot to tell me how risky it was. Also my own fault, I should have looked into it more. A wise lesson."

Where do you make savings?

"Saving is a big word, but since grocery prices have risen, we often go to cheaper supermarkets now. We also order food much less often and we deliberately no longer have a TV contract. We hardly even watched TV anyway and haven't missed it for a moment. But I don't want to deny myself things. I'm not going to cut on electricity. I don't think that's necessary. What I do pay attention to is what exactly my insurance covers. That tends to change and before you know it, you pay more and more premium while you get less and less in return. So I'm very careful about that. You're going to pay over the odds if you stay a customer with one particular company for a long time. Strangely enough, switching to a competitor almost always pays off."

Do you think about your pension?

"Last year, I looked at my annual margin, but it was so little that it made no sense to do anything with it. I definitely want to build up a pension, but first I have to earn a little more. I don't know of a single student who's already building up a pension."

How much would you like to receive each month once you retire?

"Hard to say. It's about fifty years away, who knows what an amount like 5,000 euros will be worth by then? In any case, I don't want to have to compromise on how I live before I retire. It looks like I'm going to be a lawyer and I'm going to earn a nice amount of money. More than a hundred thousand a year is very likely. I don't want to live on an old-age pension later on. When you have so much free time, it's nice if you have money to do fun things."

How do you envision your future?

"I hope I have a big, nice house and that I can eat out and go on holiday whenever I feel like it. I will probably do volunteer work, mean something to people who need it. My parents do that too, and they're not even retired yet, and I like that. For now, I want to keep working. I don't really understand the whole FIRE movement. Do these people find their work so terrible that they can't wait for their retirement? I don't want to retire at 40, I wouldn't know what to do with my time."

Does money make you happy?

"That's a difficult one. I believe it's hard to be happy when you have to be tight-fisted and have a lot of money worries. Money can contribute to a nice and easy life and it allows you to do a lot of nice things. Beautiful experiences can make you very happy. But having a lot of money can also cause certain concerns. You'll have people who want to take it away from you, and you never know for sure if your friends are friends with you for you or because of your money. So let's say money buys happiness to a certain extent."

Next year, the rules for a new, future-proof pension system are expected to take effect. But in the meantime, much work remains to be done. Where do we stand? And what’s in store for the next eight months? Tinka den Arend, strategic policy officer at APG, takes us through the process that will culminate in a future-proof pension system on January 1, 2023.

Where are we, on the road to the new system in 2023?
“Carola Schouten - the Minister for Poverty Policy, Participation and Pensions - submitted the Future Pensions Bill to the House of Representatives on March 30, 2022. This bill forms the basis for the new system in broad lines. Last year, a draft of the bill was already known. This draft has now been amended on the basis of 800 reactions during a public consultation, tests by advisory bodies and the advice of the Council of State.  Now that the bill has been submitted to the House of Representatives, the next item is the Social Affairs and Employment Committee. This will be followed by the plenary debate.  

The Commission first organized two roundtable discussions, in which it collected the opinions of experts and interest groups. The first discussion, with 18 experts, took place on April 22. The roundtable with the interest groups was held on May 10.”

What kind of experts and interest groups should we think of?

“They are mostly scientists, such as Kees Goudswaard (professor of economics and endowed professor of social security at Leiden University, ed.), Casper van Ewijk (professor of macroeconomics at the University of Amsterdam, ed.) and Bas Werker (professor of econometrics and finance at Tilburg University, ed.). But people from the field are also participating, such as Agnes Joseph, an actuary at Achmea. The interest groups include employers’ associations such as VNO-NCW, trade unions - CNV, FNV - and senior citizens’ associations such as KBO Brabant.”

How does such a roundtable discussion work?

“Each participant has submitted a position paper in advance, outlining their views in a concise manner. During the roundtable discussion, each participant is given a few minutes to explain and defend these positions. This is followed by a conversation between members of parliament and participants, in which members of parliament can ask further questions.”  
   

How do participants know if the House committee is doing anything with their input?

“They don’t know that right away. But if you look at the parliamentary questions about the submitted Future of Pensions Act to the cabinet after the April 22 meeting, you can see a lot of the input from experts in it.”

Can you give an example of input that we have seen reflected in Parliamentary questions?

“An important example is the input from Casper van Ewijk, Bas Werker, Theo Nijman, WTW and Ortec on the entry method. During the entry process, pension entitlements accrued under the old pension system are converted into pension entitlements under the new system. In this case it means that the collective assets of a pension fund are converted into personal pension assets for participants. The Future of Pensions Act offers a choice between two methods for this: the VB-ALM method and the standard method. The experts rightly note that the VB-ALM method is not useful for this purpose. Because when using this method, you have to make arbitrary assumptions. By definition, these therefore become open to discussion. And since the outcome of the VB-ALM method is very sensitive to those assumptions, there is a good chance that legal disputes will arise. In any case, it is not advisable to use two methods.”

Why not?

“By definition, one method will work out better for one group and another method for another group. After all, if a fund chooses the standard method, for example, there are always participants who will wonder how much their pension entitlements would have been when using the VB-ALM method. It is more advisable for each fund to use the same entry method. And the standard method is the most suitable for this, partly because it is easier to implement and the results are easier to explain to participants and other stakeholders. This method does, however, require more leeway to be able to compensate for disproportionately negative effects.”

Are there any other examples of such input?

“The Dutch Pension Federation and the Association of Insurers have drawn attention to the feasibility of the new rules for survivor’s pensions. In order to be able to guide participants in their choices at the right time, pension administrators need information from the UWV. This will prevent participants from falling between the cracks, for example after a period of unemployment. This point of attention was also adopted by many members of Parliament in their questions to the minister.”

When will we know the extent to which the bill will be amended?

“We will probably know this by July 2022. More will gradually be known about the content of the possible changes in the near future. The written questions submitted to the minister on April 26 run to 108 pages. A number of them, including the questions about the VB-ALM method and data exchange, are being asked by many groups. There could be some changes in the bill on those points, but whether that happens remains to be seen. The Cabinet can still modify the bill with amendment bills and the House of Representatives can also amend the bill itself. If the bill is adopted by the House of Representatives, the legislative text will then be fixed and the bill will go to the Senate. The Senate can adopt or reject the bill, but can no longer amend it.

In addition, there will probably also be changes to the secondary legislation, which will flesh out the bill in more detail. Consultation has also taken place in this regard, which has resulted in 44 responses. We expect clarity about the final secondary legislation no later than January 1, 2023.”

Will that date of January 1, 2023 be met?

“The government seems to be pulling out all the stops to meet this date, but at the same time you can see that the House of Representatives attaches importance to a thorough debate. So far, the one does not exclude the other, but this requires a lot of effort from both parties. From APG’s perspective, we have an interest in both timely and careful consideration. From our perspective, enforceability and explainability are particularly essential. It will be interesting to see whether the choices that are made contribute to feasibility and explicability.”

Netspar director Marike Knoef strives for more pension knowledge

Drop the word “pension” and Marike Knoef will get genuinely excited. An unusual reaction in a country where most people seem to feel more emotion at the word “brick”. But that enthusiasm is the ideal attitude for Netspar’s general manager, whose mission is to convince the nation that retirement is definitely not a “we’ll think about it later” thing. More retirement literacy is what she aims for. “Because more than half of people are worried about their retirement.”

Is saving for later by definition a good idea? It depends, as Marike Knoef (39) discovered when she moved from her parents’ house in Lochem, Gelderland, to a student room in Tilburg. When she was clearing out the cupboards, she found a stack of origami sheets. Expensive paper, which she used to love folding into origami animals as a six-year-old. But now it dawned on her that she had saved three quarters of them “for later” and now she realizes that she would have been much better off enjoying them at the time. You can also put too much aside, she concluded. She likes to use those Japanese folding sheets as a metaphor when talking about retirement. She also did this in her inaugural speech when she was appointed as professor of empirical microeconomics. She also helped people visualize the differences between pension incomes by handing out a smaller or larger origami paper to everyone present.

Netspar

The key question for her, however, is: how do you distribute your financial resources in such a way that you benefit from them in all phases of life? “That is a challenging question. And one in which various scientific disciplines come together. There are the financial, economic and psychological sides, the work and health aspects - how long can you work? - and the communication about it also plays a role. That’s what makes it so fun and interesting for me.” Which is why she feels like a fish in water at Netspar, an independent think tank and research and knowledge network on pensions, of which she has been the general manager since 2020.

As director of Netspar, you are striving for more "pension literacy”. Why is that so important?

“Research done by Netspar shows that most people know very little about pensions. At the same time, over half are very concerned about it. Even so, for a large proportion of them, their pensions are in order. The only thing is, they’re not aware of it. If people gain a little more basic knowledge, you notice that their worries subside. Of course, you don’t need to know everything under the hood. But 40 percent of young people think that there will be no pension for them later. That really is a lot! If they knew a bit more about it, they could feel more at ease.”

But how do you get them interested?

“We also do research on that. How do you activate people, how do you improve communication? On the one hand, you want to reduce the worries that many people have. On the other hand, you want to inform them about their situation personally. We ourselves communicate little with 'the public'. Once in a while we hold a public event for all Dutch people, for example around the elections. And occasionally we organize information events for interest groups. With our research, we ensure that a debate can be held based on facts, rather than on 'gut feelings’. That is why it is important that our stakeholders - all the agencies involved in pensions - receive the information.”

So, who should inform the public? Is that the pension funds’ responsibility?

“The entire pension sector benefits if people know more about pensions. But it’s a shared responsibility; I also see a role for the government here. At the Ministry of Social Affairs and Employment, they’re working on a major campaign. For example, many people don’t even know that Mijnpensioenoverzicht.nl exists. I also noticed once again how low pension literacy is when I tested the questions for a new survey in my surroundings in advance. Both they and the representative group of Dutch people who took part in the survey turned out to have an even lower level of knowledge than I had expected. That was a bit of a shock to me.”

Spread the word, in other words. The Pension Federation now provides information to secondary school students. You yourself have visited elementary schools?

“This was an initiative of Leiden University, the Meet-the-Professor project. Professors visit grade 7 and talk about their field of study. I tell them a bit about pensions. When I drop the word, you see students thinking: oh... pension. But then I ask if they have ever collected anything. And was that too much or too little? They recognize that. They mention marbles, stickers. Nail polish, someone said. That’s how they get really interested: how have we set up that pension, how does it work? So perhaps you first need to get people over the threshold. The new pension system could be a good opportunity to make them more aware of the issue.”

That new pension system will, in principle, go into effect no later than January 1, 2027. What do you think its strengths are?

“You are really never done creating a pension system; it is a continuous process because the world is continuously changing. But I do think the new system is an improvement. There is more customization per age group, which better suits people’s situations. The old and the new pension systems are both sensitive to developments on the financial markets. However, the new system does offer better ways of dealing with this, through a more targeted allocation of financial risks. In the future, pensions will move more rapidly, in line with the financial markets. Young people may be exposed to more risk than older people. The new system will not necessarily be less complicated. But it will be more transparent, because everyone will be able to see what assets have been accrued for them. That transparency can help dispel some of the concerns young people have.”

The new pension system is also more uncertain. Benefits may start to rise or fall annually, depending on the financial markets.

“That’s a point I do worry about. Because we see that if pensions are cut or not indexed, this triggers emotional reactions. Losses hit twice as hard as gains, even if the total benefit increases over the years. Therefore, if this happens with spikes and drops, the perception of the pension can be much worse than it needs to be. Of course, there is some thought about whether you can spread out spikes and drops over time. That has advantages and disadvantages. Viewed purely from the perspective of people’s emotions, it would be best to take a major negative shock relatively quickly. So that you are not confronted with a spread-out loss for years on end, which becomes increasingly difficult to explain. Whereas from that perspective, it would be better to spread a major positive shock over multiple years, to create a cushion for future losses.”

Pension funds also determine the investment risk for the various age groups.

“The new Pensions Act (which is still being debated - ed.) therefore states that the risk attitude of participants must be measured every five years. How much risk are they willing and able to take? This naturally raises questions: how do you measure both people’s preference and their risk capacity? And how do you explain this in a comprehensible way? What does someone need to know to be able to answer that? After all, the balance between risk and return is an important decision.”

Netspar is now doing research on that risk appetite?

“A study is underway with APG at the pension fund for the construction industry. We are investigating whether we can make risk measurement more attractive by converting a boring scientific survey into a serious game. We’ll compare the results with those of a regular survey using three different measurement methods.”

Can you say anything yet about the outcomes?

“We have just shared the first results with the bpfBOUW board. We see the same patterns across the different survey methods for the difference in risk appetite by age, by high and low incomes, and by background - whether they are employees in the workshop or in the office. But the level of risk appetite does differ by method. That, too, raises questions: how should we deal with that?”

But the participants were willing to take risks anyway?

“Yes. Look, if you ask people on the street, they would say: preferably as much security as possible. They don’t like financial uncertainty. They prefer to opt for a fixed rather than a variable payment. Even if that rationale doesn’t necessarily give them the best results.

We have also conducted research into this: for most people, it really is better to take some risk. That increases the chance of a higher payout. Because security is expensive.”

The younger you are, the greater the risk appetite?

“That is indeed confirmed in our studies. We also see that in the international literature.”

But ultimately, fund directors make the choice.

“They determine how they are going to interpret their investment policy. They can make use of our research results in making that choice. Moreover, it is a good thing that participants’ risk appetites are measured every five years. You can’t just ignore the results. It is also an instant communication opportunity. If you explain the balance between risk and return in an accessible way, it can create mutual understanding. Incidentally, we see from the surveys that the composition of the board - how many men, women, young people, older people - also affects how much risk is taken.”

So, if there are three female thirty-somethings on the board...

“... you have a different outcome than if it were three men in their fifties. And that’s actually kind of insane, because you want the risk appetite to depend on the composition of a fund.”

Netspar also examines the risk capacity of participants?

“Yes, it does. The great thing is that Statistics Netherlands has a lot of data on the assets that people have, their second-pillar pension entitlements with various funds or insurers, their savings and real estate assets. This enables us to gain insight into the overall picture at an individual level - anonymously, of course. And what that looks like, for example, by sector, age and income bracket. The various sectors will also be able to use the research results in their choices later on.”

Unfortunately, some sectors will continue to be left out of the pension equation even in the new system.

“Yes, the self-employed for example. Particularly among middle-income earners, little pension is accrued. People with flexible contracts and employees in small companies, the SMEs, also accrue relatively little if anything at all.”

What do Netspar studies tell us about that?

“That one of the barriers again is a low level of knowledge about pensions. They don’t really know how it works. Only 50 percent of self-employed people are aware that there is a fiscal annual margin, several surveys show. You can save for a pension in a tax-friendly way, but many people don’t know about it or think it’s too complicated. On top of that, self-employed people more often have a variable income. They do want to save, but not in a pension product where they can no longer access their money if things go badly one year. That’s a difficult hurdle to overcome. After all, you don’t want people to be able to just take it out: then there will be no pension left later in life.”

You yourself have two part-time jobs: you are director of Netspar and professor of empirical microeconomics at Leiden University. What drives you?

“What drives me is a better old age for the Netherlands. That is also Netspar’s mission. It is important to gather both knowledge and know-how - people from science and practice in various disciplines - who will work together to achieve that mission. We obtain knowledge through research projects that are prioritized by Netspar’s partners. We share that information with various target groups, on three levels: quick up-to-date, practical application and in-depth knowledge. Quick up-to-date, for example, is just one page with the most important conclusions and policy indications. Or a low-threshold podcast.”

Is this being gratefully used?

“APG is one of our partners, and we work closely with several APG departments that do research themselves. But it seems to me, with other partners too, that we can reach even more employees with our research results. Because the insights are useful and relevant to everyone. That’s why we try to distribute our knowledge in the most accessible way possible. For example, through websites, social media, newsletters and so on.”

And network development is Netspar’s second goal?

“That is very important. Various stakeholders are involved in our network: pension funds, insurers, social partners, regulators, scientists, the government. We try to expand that network as much as possible. After all, all these types of organizations have their own role to play in pensions. We hear from each other what’s going on and tackle things together. And we share our knowledge. Before I was the director of Netspar, I did my own research: what exactly are the pension issues and are the research results relevant for practice, what is needed? As director, I can do that a bit more broadly, by connecting people with each other.”

In short: sharing and connecting; that’s your mission?

“Well, I also like to surprise people positively with science. Recently I gave a presentation and afterwards someone said to me, ‘Wow, I thought: Netspar, that’s probably going to be very difficult.’ But it was very interesting and relevant. And I got new ideas.’ That aha moment people have, when they understand the world a little better, and that this makes them feel good, that makes me happy. That is also what drives me.”

Current issues related to economics, (responsible) investment, pensions and income: every week an APG expert gives a clear answer to the question of the week. This time: Chief Economist Thijs Knaap talks about the pension funds’ rising coverage ratios.

Many pension funds had good news on Thursday: their coverage ratio - which reflects the financial position of a fund - has risen in the past quarter. The actuarial interest rate is used to determine whether a fund’s current assets are sufficient to pay out pensions (the so-called liabilities) (in the future). The higher the interest rate, the less capital a fund needs to have and the higher the coverage ratio. It’s like saving for a vacation: the higher the interest, the less you have to put aside each month. Based on the coverage ratio, a pension fund decides whether to increase pensions. This is therefore an important percentage.

Returns
“It’s a bad economic time,” Knaap says. “There is a war in Ukraine, and there is a scarcity of personnel and goods because the economy suddenly started to run at full speed after Covid. On top of that, China is in lockdown after the last Covid outbreak there. This creates additional scarcity. The fact that the economy took a hit due to these factors is also reflected in pension fund returns for the past quarter. For example, the bond and share portfolios showed losses of around 5 to 6 percent. You don’t want to have quarters like that too often. In the past, there were quarters in which shares fell by 20 percent, but then you often had bonds that actually increased in value.”

Now the value of all investments is falling, with the exception of so-called alternatives such as commodities, private equity and infrastructure. “But you can’t make it with just good returns on those. Many funds are having negative returns and that has repercussions for their assets: they are falling. But the funny thing is that the coverage ratio is not only based on the assets of a pension fund, but also on the liabilities. This amount is calculated using interest rates and these are now rising so quickly that money is growing faster and less needs to be put aside by the funds to pay pensions. In other words, the liabilities are falling, so the coverage ratio is rising and has even reached a level that we haven’t seen in some funds since 2008, just before the credit crisis. What is going on with the funding ratio right now is quite curious: negative returns but a higher funding ratio. That’s exactly the opposite from the one we saw over the past decade. In those years, pension funds achieved excellent returns but their funding ratios fell. However high the returns were, the liabilities rose even more sharply as a result of the falling interest rates.”

Interest
The current higher funding ratios are due to increased interest rates. That raises the question of how long interest rates will remain high. "Since the 1980s, the credibility of central banks and their policies to curb inflation have become increasingly reliable. Now inflation is rising and the European Central Bank is still not doing anything, so there is a chance that the credibility of central banks will decline again. That could mean permanently higher interest rates because investors want to be compensated for the risk if inflation peaks again in the future."

However, there are also reasons to believe that interest rates will eventually fall again. “Right now, there is a lot of savings, both in the West among baby boomers, for example, and in emerging economies like China.” That pushes down interest rates, and the factors underlying the surplus of (savings) money still exist. “Although you can point to a few that are turning around a bit, such as low inflation expectations. Another one is the Chinese supply shock. Items from China, like TVs and cell phones kept getting cheaper and cheaper. Since Covid, the West has wanted to become less dependent on Chinese production. This could lead to less import of cheap products from China. Low-wage countries also want to earn more from their products, which therefore become more expensive. Moreover, China will also want to start spending more. The same can be said of the Western baby boomers, who are now retired. The supply and demand for money will then come more into balance, which could possibly reverse the trend of falling interest rates. But in my view, it is still far too early to say that we have definitively reached the end of the ever-decreasing interest rate.”

Was everything better in the past, or does 'now' also have its advantages? Different generations discuss social themes on the basis of statements. This time, Angela Ursem (49) and her father Claus (75).

Claus about himself: "I have three children and seven grandchildren. I have been working for Bouwbedrijf Ursem for about fifty years, a company that my father once started and that I and my eight brothers managed to bring to great heights. Unfortunately, it collapsed during the crisis. I'm now retired."

Angela about her father: "My father is very driven, he's always busy developing things and making things better for others. I also think he's very warm and sociable, he's always friendly and never loses sight of the needs of others. I think that's a nice characteristic trait. He's now enjoying his camper van in Portugal, but I know him as someone who's constantly on the go. He now finally is able to sit down and do nothing for a bit."

Angela about herself: "I was born and raised in Wognum, a village in North Holland, my parents still live there. I was the middle child. I now live in Amsterdam with my husband and two teenagers. Over the past ten years, I've worked as an interim marketing manager for many large corporations. Three years ago, I started a skincare company, Food for Skin, with my older sister, born from the urge to make the cosmetics world more sustainable. My sister has been a beautician for thirty years, I contribute all the marketing and commercial knowledge."

Claus about his daughter: "Angela was very independent from her early childhood. She is a woman who's doing well, she's very social, can be businesslike and also stands up for others. She is a precious daughter to us."

Statement: People used to look after each other more

Claus: "You know, in the past, you could hardly help but look after each other. I come from a big family; everyone had to chip in. In our village everyone was equal, there were no big differences in income or they didn't seem to exist. You helped each other, there was great solidarity. With today's possibilities, looking after each other seems to disappear. But on the other hand, people are still there for each other when needed."

Angela: "Something has definitely shifted, we've become much more individual. Not that we don't care about others or don't want to show solidarity, but life is a rush, a lot is expected and demanded of you, leaving less room for others. But as my father says: when the need arises, people are really willing to help each other. Fortunately, that basis is still there."

Statement: In the Netherlands, we're lagging in terms of women's emancipation

Angela: "I think that in the Netherlands, we're much further ahead in terms of women's emancipation than many other countries, but we're not quite there yet. Just look at that campaign recently, about how there are more CEOs in the Netherlands named Peter than there are female directors. Equality is important for everyone, not just women. Fortunately, I've never had any trouble proving myself. I stand my ground."

Claus: "I also think women's emancipation is important, women should be given the same opportunities as men. Yet I also thought to myself a few times: is it about the best person in the right place, or does it have to be a woman? I'm not always sure whether good choices are made in that regard. That said, there should be no discrimination in pay."

Statement: You have to be so careful with what you say these days

Claus: "Well, judging by the language they use in the House of Representatives, we don't have to be that careful. But more attention is paid to what you say and how you say it. That's important too. As long as you treat each other respectfully, I think you can say a lot."

Angela: "I think freedom of expression is a great and important asset. But that does not absolve us of our duty to take other people's sensitivities into account. Freedom of expression is not a license to offend people from other cultures or backgrounds. I think it's very important to be aware of who you are talking to and how it comes across. If something is sensitive, try to find out what's behind it: why does someone take it personally, and how can I do it better? I think it's enriching for everyone to continue to develop in this area."

Statement: We're very prudish these days

Claus: "Well, in my day we were more prudish. When someone was washing himself in the kitchen, my mother would put a tea towel over the radio so 'the man in the radio' couldn't see you. The first naked woman on TV, Phil Bloom in 1967, was quite an event. At home we were bound to the church, nothing was allowed there. At age 12, we didn't know where children came from."

Angela: "I'm glad we can now freely talk about sexuality. The average magazine writes about it quite explicitly. That's fine with me, it shouldn't be something mysterious, like when my father was young. Sex is also discussed much more openly in schools. In that sense, I think we are less prudish now."

Statement: The gap between rich and poor will only widen

Angela: "I'm afraid so, looking at how society is developing. The number of rich people is increasing, and so is the number of poor people. Yet there are initiatives, also from the rich, to close this gap. Hopefully, that movement will be big enough to really make a difference. This is also necessary to prevent many problems in the long term."

Claus: "In my time, there was poverty everywhere. In the village where I lived, almost everyone was equal, with the exception of a few dignitaries who we felt were wealthy. We all felt pretty poor, but didn't really mind because everyone was the same. I come from a family of twelve and the trousers of the first one lasted twelve children. That's completely different now. I also think that the gap is getting far too big, something definitely needs to be done about that. Some of the big earners should lead by example, by using their large assets for charities. But it remains difficult to achieve."

Statement: Everyone in the Netherlands can have a good life

Claus: "What is a good life? The most important thing is that you're healthy and happy and that you can get by. I don't know if that's feasible for everyone. Basically it is, but there will always be people who, for whatever reason, can barely scratch a living."

Angela: "In theory, it's possible for everyone to have a roof over their heads and buy food but in practices we see plenty of examples of this not being the case. It also depends a lot on your definition of a good life, as my father says. It's a combination of factors. I can imagine that if you don't have a lot of financial resources, but do have a rich social life, you still think you have a really good life. There must be a subsistence level, but that is apparently not for everyone, despite all the regulations and subsidies. I find that distressing."

Statement: Today's young people are too well off

Claus: "People often say young people are no good, but I don't agree with that at all. Young people are no different than they used to be, the circumstances are different. When I was young, everything was much clearer, we had much less temptation. Back in my day, you didn't even know drugs existed. Today's young people have known few setbacks or poverty - with a couple of exceptions. They grow up with far more opportunities than we used to have. But does that mean they're spoiled? No."

Angela: "Again, define 'good'. Most young people can go to school and have the opportunity to study. Fortunately. Financially, I think they may be better off than in the old days. On the other hand, look at what they're faced with. They've hardly had a social life for two years because of COVID, there's a climate crisis hanging over them that they have to deal with and now there's a threat of war again. For my children aged 15 and 16, this has an impact on their lives and the choices they make. They face very different challenges than my father and I had to cope with. I think that nowadays, there's more attention and care for young people, for their individual needs, also at school. There is more personal support. Is that too good? I don't think so. It's just good."

Statement: By definition, technological progress is good

Claus: "Yes, we need to constantly invent and improve new things. It makes many things easier. On the other hand, it also creates distance."

Angela: "I'm a huge proponent of technological progress, which is what we need when you look at the problems we face, such as the climate crisis and overpopulation. For that, we need behavioral change but also technology. We can't afford to stand still. I do think that with every invention we should ask ourselves: does it really bring us further, or does it bring new problems with it?"

Statement: Everything used to be better

Claus: "Ha, if you start talking like that, you're getting old. Everything used to be different, but certainly not better. Not for me anyway."

Angela: "That's beautifully said, dad. Everything was different, and everything will be different in the future. Everything is constantly evolving and it should be. You shouldn't resist it, you should embrace it."

Just under three more years and then the first pension fund will transfer to the new system. This transition must run smoothly for all parties – employers, participants and funds. That is why 2022 for APG is fully dominated by execution, says APG’s CEO Annette Mosman. “The most important thing is that we first get the primary process in order. That has to be done right the first time. It is the litmus test of the new pension system.” 

“2021 was the last year APG could afford to talk about preparing for the new pension agreement. This year is all about implementation,” says, APG’s CEO Annette Mosman. “As we speak, the bill is in the House of Representatives for approval. The transition to the new pension system is therefore becoming a reality. And now it’s our turn. You can feel that in every fiber of our organization. We’ve thought about it for a long time, we’ve helped create the law, and now we have to renovate our house while the store stays open.”

And meanwhile, 2022 has begun very dramatically. What is the impact of that on you, on the organization?
“Everything is relative when you see what is happening now in Ukraine. That affects me as a person and it affects our employees. There are people working at APG who are from Ukraine, people with relatives there and we have Russian colleagues as well. It affects the organization as a whole, but it also affects the energy prices we all pay, our economy, our investments, cybersecurity. But most of all, it is a humanitarian disaster that is happening right now.”

What is number one on the 2022 priority list?
“For APG and our pension fund clients, the first priority is obviously the Pension of the Future. In the next six months, we will be making agreements with our clients about which fund will be transferred when. Before we transfer the first fund on January 1, 2025, there is still a great deal of preparation to be done. This includes, for example, the implementation of the policy administration and the entry process, but also the development of our employees’ competencies. And secondly: last year was an excellent investment year. We can be proud of APG’s leading position as a responsible investor. But that position is under pressure. Clients and society are demanding more speed on sustainability issues. So, we have to move. In a smart way. By focusing on and accelerating the digitization of our operations. And by making clear choices on the theme of responsible investment, together with our fund clients.

Finally, we need to move even more toward a single APG. We must learn more from each other’s areas of expertise. With the new pension contract, we are seeing asset management and pension management increasingly converging. They used to be two separate, specialist fields. Our magnificent new working environment, EDGE West, helps in this respect. Literally. I spoke to a colleague who now works there and he told me: ‘I’ve been with APG for fifteen years now, but in one week I’ve already met more coworkers than in I did in recent years.’ That’s wonderful. The new APG is starting with the direct collaboration between people.”

The road to the new system is complex. Many parties with different interests. A system that has not yet been worked out in detail. How difficult is it to find your way in it as an administrator?​​​​​​​
“Clear choices’ is the theme of the annual report and that really means that we have made, had to make, clear choices and have put some things on the backburner. We are continuing to experiment; we are continuing to think about new propositions in terms of the financial fitness of the participant. But the most important thing now is to first get the primary process in order. We are going to convert 1,700 billion euros for the transition in the Netherlands. That has to be done right the first time. It is the litmus test for the new pension system. It is crucial for our pension fund clients and their participants that the pots are calculated correctly.”

But are you going to be able to figure that out together?“We work for eight funds. Each fund has its own ambitions and different emphases. Whether it’s data quality, their new client missions or improving ‘my pension’. But that is no small feat, because everyone wants their full agenda accomplished. However, there is also a clear common goal: a smooth and controlled transition to the new pension system. In which we promote the interests of all participants in the best possible way.”

The fact is that not everything is known about the new system yet. How do you lead that process?
“We have a lot of expertise at APG. Still, it is not easy, because we have never before had to face a period in which we had to make such important decisions, while the picture has not yet crystallized. You may call the context we are operating in unclear, but I don’t see it that way. There are always uncertainties. I actually enjoy providing leadership in a context of uncertainties. For me, the glass is usually half full. And besides: there is a lot we do know. We know what the law stands for, we know the direction it is going in. You can also be the master of your own destiny in that process.”

Administrative calm is crucial in this respect, Mosman points out. “We have a stable executive board, which was also involved in the formulation of the strategy in this composition and really lived through it. That also applies to the majority of the leadership team. And that administrative calm is also there because of the good relationship with the Works Council, the Supervisory Board and the shareholders. I am genuinely pleased that the relationships with these important stakeholders has improved and been strengthened. We have achieved this through intensive and genuine contact, in which we have not avoided difficult discussions and dilemmas.”

Today, APG publishes the 2021 annual report. Naturally as a PDF, but also as a website, where you can read in detail how we as APG look back on 2021. And how we, as the country’s largest pension administrator, are preparing for an unprecedented, rigorous pension reform.

APG plays a crucial role in that transition to a new system. All funds must have switched to the new system by January 1, 2027. And some pension funds want it sooner. That's fast. Clear choices are therefore essential. APG’s CEO Annette Mosman says about this in the annual report: “The changes are so great that we have to make clear choices. The new system is the top priority. This means, among other things, thatwe will put certain projects on the back burner for a while, retrain or reskill employees, and recruit digitally trained people.” Read more about it in her foreword.

What else can you find in the report?

Who we are and what we do

As the country's largest pension administrator – we serve 8 pension funds and some 4.8 million participants – we make use of our combined strength and knowledge to build a transparent and future-proof new pension system. We are becoming an increasingly modern communications and IT company, and we strive to provide high-quality services along the way.

About APG

The best possible pension – in a livable world

On the road toward the ‘Pension of the Future’, we’ll do everything we can to achieve maximum pension value and a healthy return. Sustainability plays a central role in all our investment choices.

Our 2021 results

The importance of our culture

Our internal culture is a microcosm of the influence we have within society. To this extent, our employees’ knowledge, skills, and ways of working are critical to our success. The transition to the ‘Pension of the Future’ also requires new expertise and skills – which we are working hard to develop.

How we work together

Read the full Annual Report as a pdf here.

The legislative proposal for the new pension system in the Netherlands was presented to the House of Representatives today. The House of Representatives will consider the bill in the coming period, after which it will go to the Senate. If both agree, the rules will take effect on January 1, 2023. Pension funds will then have until 2027 to switch to the new system.

The bill, which is called the “Future of Pensions Act”, stems from the pension agreement that was entered into in 2019 after over ten years of negotiations. In the new pension system, pensions will move with the economy more easily. Fewer large buffers will have to be built up, bringing the prospect of indexation closer. Members will also gain more insight and clarity about the pension they have accrued. There will also be new rules for survivor’s pensions.

Planning

Now that the bill has been submitted to the House of Representatives, the lower regulations - the further details of the bill - will also be made public. The aim is for the Act to be published in the Staatsblad on January 1, 2023, whereupon the rules will officially go into effect. Whether that date will be met is not certain. “It is quite possible that the Senate or the House of Representatives will need more time to pass judgment on the proposals,” says Wim Koeleman, director of Pension of the Future at APG. Koeleman is pleased that the proposal is on the table. “It marks the beginning of a new phase in the system change. But there is still a lot of work to be done. We will be intensively studying the proposal and the lower regulations in the coming period. APG will pay extra attention to the feasibility of the new system.”

Lump sum

One of the new rules of the new system, the option of withdrawing a maximum of 10 percent of your retirement pension in one lump sum at the time of retirement, was supposed to take effect on January 1, 2023. But that seems too soon. The Pension Federation and the Association of Insurers are urging Minister Schouten to postpone the effective date to at least July 1, 2023. Any sooner would not be feasible.

Suspenseful

If the new pension law takes effect, pension funds, together with administrators, employers and unions, will have until January 1, 2027 to adapt pension schemes to the new legislation. Koeleman is well aware that this will be an immense operation. “That is why APG, APG’s pension fund clients and the social partners (employers and employees) have already made a start with the implementation, based on a draft version of the law. We are certainly very anxious to see the changes.”

How do you deal with work and money for now and in the future? Do you live from day to day or are you deliberately planning your financial future? In this Week van het Geld (Week of the Money, ed.) we talk to some young people. Today we give the floor to Maud (13) who is already earning some money doing small jobs and who is an expert in spending it.

Maud van Zandwijk (13)

Income: 72 euro per month

Savings: 180 euro

Do you get an allowance?

“Yes, I get 22 euro in pocket money and an allowance of 50 euro for clothing. I can also earn some money at home performing household chores. Doing the dishes earns me 1 euro and I receive 1.50 euro taking care of the laundry. That motivates me sometimes.”

Do you have any other sources of income?

“I take on some small jobs. I ‘work’ in the cafeteria at school from time to time. My payment consists of a free sandwich which saves me a lot of money. My parents said: If you deposit the money you save on those sandwiches on a separate account, it's almost as if you really get paid. That was a good idea. I also play walk-on parts at times. That earns me about 30 to 40 euro for each part.”

Is it enough all together?

“It should be. But because it feels as if I have loads of money, I also spend it quite easily. I now literally have 73 cents in my account. Halfway through the month I thought: Hey, I have some money left. So I went to the city center and that's where things went wrong.”

What do you spend your money on?

“Mainly food and drinks. We have nice things to eat at home as well, but McDonald’s is something we don't normally have. It's possible to have meals delivered by certain food delivery services, but then the fries are usually cold. It just feels nice not having to ask for permission and are able to buy whatever I feel like. I also bought a pair of shorts for 10 euro because the weather forecast was sunny. And then I saw a cardigan a friend of mine has and I also wanted to buy it: 20 euro. And all of a sudden I ran out of money. My parents don't tell me what to do with my money, it truly is mine. But once it's gone, it's gone. I have to suffer the consequences and they usually don't help me out.”

Do you roughly get the same as your friends, or more or less?

“I get quite a lot compared to them. Most of my friends don't receive an allowance for clothing.”

Do you save?

“Yes, that was a precondition for my parents to give me my own bank card. The agreement I made with them is to set aside 10 percent of everything I earn on a separate account. I call it my ‘don't touch’ account. I am used to it now, so I don't miss that 10 percent. So, I save quite a lot unwittingly, it feels like free money. That ‘don't touch’ account now has a balance of 160 euro. My parents also have money saved for me in the late future, but I have no idea how much that is.”

Do you save money for anything specific?

“I have another pot holding 20 euro, intended for America. We go to America at the end of the summer holidays and I want to have some money by then to buy Starbucks mugs. I collect those mugs and every city has its own version. Then I will have something special.”

Do you handle your money responsibly?

“No. I have usually spent my pocket money and clothing allowance in three days’ time. When I have money, I think: Yes, spend it, right now. I keep on making the same mistake and I don't learn from it.”

What do you want to be when you are older?

“I always wanted to become an editor, but I never do it anymore so I don't think that's what I still want. Maybe I can do some more walk-on parts or anything social or in the hospitality industry or something like that. I did some voluntary work in a cinema once with my mother and I truly enjoyed doing that.”

Do you care about the amount of money you will be earning later on?

“Yes, it's important to earn a good salary because I don't want to end up being homeless. It would be nice if I can make ends meet.”

Is money important to you?

“It usually is. You need money to buy things or if you have to pay someone back. It's rather miserable if you are unable to pay someone back. I borrow money from friends quite often when I have spent my monthly allowance and they handled their money more wisely. They usually don't mind, as long as I pay them back quickly. And I do.”

Does money bring happiness?

“Sometimes it does, sometimes it doesn't. Money gives you the freedom to buy whatever you like. If you are poor, you cannot do whatever you want and have everything your heart desires. On the other hand, it also doesn't seem great to have everything you want. What should you do with your money in that case? I also heard that people could get very lonely if they have so much money they don't have to work anymore, because their friends still have to work and never have time to meet.”

Do you worry about your financial future?
“Sometimes I do, and then I think: How will I survive if I have to do it all on my own later on? It already happens sometimes that I don't get picked for a walk-on part, and the same may be the case with a real job. If you don't get picked then, you won't be able to pay the rent. My mother already said: You move out once you turn 18. Maybe my parents and I can agree for them to pay my rent if they want to get rid of me that eagerly.”

Your pension is still miles away, what do you know about it?

“That you receive money but no longer have to work, something like that. When I think about pension, I think about old men playing golf wearing those funny hats.”

How do you deal with work and money for now and later? Do you live by the day or do you purposefully plan your financial future? And do you arrange 'later' yourself, or are you a member of a pension fund?

Bianca Wolters (32) is a real saver.

Bianca Wolters (32)

Profession: contract administrator at a water board

Weekly working hours: 32 hours

Income: 3800 euros gross

Savings: 30,000 euros

Pension arranged? Yes, through employer

What kind of work do you do?

"I've been a contract administrator at a water board for two years now. This means I keep an eye on the contracts they have with suppliers for a certain department: are the agreements in the contract being fulfilled? Often in these types of positions, only the suppliers side is considered, but I also check internally whether the organization is meeting its obligations. Before that, I did similar work at a health care institution, but I also did purchasing."

What do you like about your job?

"That I'm kind of a spider in the web. I deal with different layers in the organization, from management to people on the shop floor, and with suppliers. It's very diverse. If things don't go well with a contract, I talk to them about why that is. Perhaps they have to make changes to their business operations. Getting my teeth into something like that is fantastic! My parents are both entrepreneurs and I do notice I have that entrepreneurial spirit in me, but I prefer to apply it within paid employment. I like that 'security', as far as it's there."

How much do you earn?

"3800 euros gross, that includes an individual choice budget. Net, I have about 2300 euros left."

Are you happy with that?

"I get by, but I could do with a little more. Colleagues of mine in about the same position are one salary scale up. The difference is mainly in the job title: I'm a contract administrator, they're contract managers. That position wasn't there when I started. But our tasks are not much different."

Do you dare to ask for more?

"Absolutely. It was something I had to learn. Because the labor market is so tight, you have a good negotiating position. I've already mentioned that I think I should also go up a scale, but as is often the case with authorities, it's a time-consuming process. The enterprising part in me can sometimes get frustrated: come on, if you really want to keep me, it shouldn't be that hard to come up with more money, right?"

What would you like to earn?

"I wouldn't mind a gross salary of more than 4000 euros. If I calculate what I earn per hour, it's about 25 euros. I think I should ask for 50 euros. Now that I've gained some more work experience and achieved a couple of great results, I have a better idea of what I'm worth."

Do you own a house?

"Yes, I just bought a new house with my boyfriend. We both already had our own house, which we sold with considerable equity. I bought my house for 225,000 euros, 50,000 euros of which came from savings. When I sold it, I made 175,000 euros. My friend had only had his house for a year and had completely renovated it. He made a profit of 75,000 euros. This gave us the space to outbid 35,000 euros when we bought our new house."

How do you divide the expenses?

"Fifty-fifty. My friend is a truck driver and we earn about the same. I did contribute more of my own money to the purchase of the house, but we've also recorded that in our cohabitation contract."

What are your fixed charges?

"We jointly pay 1500 euros in mortgage, so 750 euros per person. We now pay an advance of 150 euros for gas, water and electricity, but because we've disconnected our house from the gas, I expect to get a lot in return. We each put 1500 euros in the kitty each month. We're doing everything we can, and so far, it has worked well. I pay 14 euros per month for my telephone contract. My gym membership costs me about 50 euros per month. I pay the health insurance once a year, that's 1400 euros. And I have a car. I pay 34 euros per month in road tax, 40 euros for the insurance of my car and bike together, and about 200 euros per month in petrol. Fuel is quite expensive now, but we can fill up in Germany, which makes a difference."

What else do you spend a lot of money on?

"I often have lunch at work, so quite a bit of money goes to the company canteen. I'm also very focused on healthy food, they've looked into what I'm intolerant to and the like. The nutritional supplements I have to take according to the results of that examination cost me about 50 euros per month. I also like to go to the beauty salon every now and then, or to a good hairdresser. Buying clothes comes in waves for me: sometimes I suddenly buy a lot of new things, and then nothing for months. I'm also regularly being coached on a personal level, to get more out of myself."

Where do you make savings?

"I think I live quite frugally. I don't need the latest phone, I deliberately opted for that contract of 14 euros per month. And we save a lot on energy at home by investing in a heat pump and solar panels. I only buy new things when the old ones are worn or broken. I'm becoming more and more aware of this, also because of the environment. I also often look at second-hand items. At times, I'm really amazed at the beautiful things you can find that still look like new."

Are you more of a saver or a spender?

"A saver. I have 30,000 euros in my savings account and get very nervous when there is little on it. 15,000 euros is the minimum for me. I never had specific savings goals, because my buffer was always large enough to pay everything I really needed. Now we want a hybrid or electric car and that has become a bit of a savings goal. In any case, I automatically save 200 euros every month. I'm now considering exploring further investment options for part of my savings. I would like get advice on this from someone with expertise."

Do you think about your pension?

"Not really, no. At my previous job, I did attend a pension meeting because I was curious about what they were discussing. My parents are about to retire, so they tell me bits and pieces, but it still feels like a long time off. I think I'll have to work until I'm 80 - that will take a while."

Are you building up a pension?

"Yes, through work. But to be honest, I don't know much about it. I do get statements so I can see what I've built up, but I couldn't tell you off the top of my head. All I know is that it's not nearly enough to live on."

How much do you think you will need per month?

"I think it's important to be able to continue the standard of living I'm used to now. That would amount to about 2000 euros per month. I think that's feasible, if I grow a little more in terms of salary. Of course, there's also a lot of money in the house. That will be released if we ever sell it."

How do you envision your future as a pensioner?

"I picture myself walking a lot with a dog and just living a little bit in my own flow. I think it'd be great to be able to do only what you enjoy."

Does money make you happy?

"To a certain extent, yes. If you don't have enough to get by, you really go into survival mode. I think it's terrible if you're in the supermarket and have to start doing sums in your head to make sure you can pay for your groceries. But I think having too much doesn't make you happy either. If you don't know what to spend your money on because you have so much of it, I can't imagine your life really being that much nicer."