Social

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: Thijs Knaap, chief economist at APG, on whether the Dutch are more financially vulnerable than they used to be.

Last year, 60 percent of Dutch people were financially vulnerable or unhealthy. In 2021, the figure was 50 percent. Just over half (54 percent) of households can pay all bills without a problem, compared to 65 percent in 2021. This is evident from research on the financial health of Dutch households conducted by Deloitte in collaboration with Nibud and Leiden University. Does this indicate a downward trend?

Bad year

“2022 was a financially bad year for many people,” Knaap says. “We saw high inflation and declines in real wages (available income after adjusting for inflation, ed.). As a result, people have less money left over at the end of the month. According to Nibud, the situation has improved somewhat this year due to wage increases implemented in many sectors and the increase in the minimum wage.” Nibud therefore sees 2023 as a year in which people need to recover from the blow of 2022. Because many people have had to dip into their savings recently, Knaap believes that a large group is actually more vulnerable now than one or two years ago. However, if we look further back, for example to the 1980s - characterized by economic contraction, unemployment and budget cuts - we are less vulnerable now. Knaap: “We are on an upward trend with occasional nudges up or down, like we just had.” 

Then there is the question of what being vulnerable actually means. According to Knaap, it usually does not mean that you are slowly but surely reaching the end of your budget, but that it happens with a jolt. For example, due to the loss of a job, illness or divorce. “These kinds of shocks have always been there, and the question is, what can you do about it? Part of the solution lies with a social safety net and accessible health care. The other component is resilience: can you withstand a shock, for example by finding a (new) job? In that respect, things have been worse before. Currently, unemployment is about 3.6 percent. In the 1980s it was many times higher, especially among young people. So that resilience is quite high now.”

Gap

Another positive development is the situation of older people. “Seniors traditionally have far fewer options because they usually can no longer work. Fortunately, in the Netherlands we have set up a pension system, so there is very little poverty among the elderly here.”

There is still a gender gap in the Netherlands, but it is slowly closing. “On average, women are already more educated than men and the number of women earning an income independently is increasing. That increases resilience among women. These are all improvements that add up to making the financial vulnerability of the Dutch, on average, lower than it used to be.”

At the same time, the danger lies in that “on average”, Knaap continues. “Because has the situation of Dutch people who are less well off also improved? You could have some concerns about that. For example, people with flex contracts have a harder time absorbing a shock.” This also touches on the gap between so-called “insiders” and “outsiders”, with the insiders (those with jobs) benefiting more from wage increases than from extending employment to the “outsiders”. “This is true at any time, but to get a job you need not only intellectual capital but increasingly social capital. It’s about knowing how to behave, how things work within a company and who to go to for questions. There is a risk that people who have difficulty with that will increasingly be left out. So in many ways the situation now is better than it was in the 1980s, but that doesn’t mean that everyone is able to keep up on their own.”

Young people

Deloitte’s research also shows that young people are relatively often financially vulnerable. According to Knaap, this is related to the difference between solvency (which indicates whether you can meet your payment obligations over time, ed.) and liquidity. “Young people are enormously solvent because they still have a whole working life ahead of them in which they might earn hundreds of thousands of euros. Only, they don’t have those now, so for many young people the lack of liquidity is a problem. Measures they can take closely resemble what pension investors do to avoid liquidity problems: provide a savings buffer and keep an eye on whether it runs out too quickly. Because of the labor market shortage, it is relatively easy for young people to get a part-time job now, thus increasing their financial resilience. As a young person, it is therefore better to be in financial trouble now than it was in the 1980s.” 

Pay gap, pension gap, loss of purchasing power in divorce, financial dependency. More than 60 years after the abolition of the Incapacity Act, women are still persistently behind economically. On International Women's Day, Parkstad Limburg reflects on the theme of Women and Money. Mariëlle Heuts joins the forum discussion on behalf of APG.

Today, women still get paid less for the same positions as men, are more likely to work part-time and are less economically independent. For the cause, we need to look to recent history, says legal historian Madeleijn van den Nieuwenhuizen. She collects stories about the time when, according to the Civil Code, married women were “incapacitated” - a legal category that also applied to children and the “feeble-minded”.

This law lasted until 1956 and meant, among other things, that as a woman, you could not open your own bank account, take out a mortgage or insurance, and you could only enter into an employment contract with your husband’s formal consent. You would also technically hand over your pay to your husband, because he was in charge of the community of property you would marry into by default at that time. The idea behind this law was that in the union, including the marital union, only one could be the boss. The relentless lobbying of politician Corry Tendeloo led to the abolition of this incapacity to act.

Bizarre. With that one word, Mariëlle Heuts describes the law that was abolished in 1956. Heuts is board secretary and advisor at APG and closely involved in the transition to a new pension system, in which informing and guiding pension participants is an important part. She also helped develop online platforms that provide insight into people's own financial situation. “I kept my grandparents’ marriage booklet. It literally states that the wife owes obedience to her husband. Nowadays, that is unimaginable. After that, by the way, it took until 1980 before the Equal Treatment Act came into being.”

On International Women's Day, you will be joining discussions in a forum about women's economic inequality. What is your motivation for participating in this?  

“Sometimes seems like we are okay with the economic gap between men and women. In any case, development to close the gap is incredibly slow. And that fascinates me. At the micro level, thankfully everyone now takes it very much for granted that men and women have equal opportunities. But at the macro level, it looks like it will be years before the gender pay gap disappears.”

What surprises you the most?
“APG closed the pay gap between male and female colleagues in one fell swoop in 2019 after its own internal investigation. We made the national media with the decision to pay men and women the same salary. That kind of felt like an upside-down world.

But I am also surprised that the Netherlands lags so far behind the rest of Europe, while in other areas we are often seen as an enterprising and progressive country. I visit France a lot privately, where women working full-time is the norm. Here in the Netherlands, we not only have a gap to close between men and women, but also with the rest of Europe.”

What could be the cause of that?

“Women’s rights, as they were established by law, are undoubtedly a cause of this. The traditional division of labor that emerged at that time, even generations later, often still creates social pressure for women to take on most of the family care duties, for example. Also, looking at the current number of women in top positions, there is still a glass ceiling for women, who often see their male colleagues advance their careers faster.

Finally, I don’t think many women realize enough about the effects of certain choices - for example, going to work part-time when children are born. Not only are you signing up for a pay gap during your career, but also for a pension gap afterward.”

Sounds like there’s a lot of work yet to be done, to close that gap. Where should we start?
“It starts with awareness, so good education is essential. I see a role for employers in this. For example, by actively talking to part-time women about how they can be facilitated to work more hours. For example, through more flexible working hours or work from home options. I bet there are a lot more options when you look at reality through a different lens.

Favoring women with a quota is also a common tool. However, I see that more as a tool than a solution. It does not address the source of the problem.

Another role is for husbands and partners; they can encourage their wives. I am reminded of a conversation I had with a female colleague. She took a step up the ladder and got a managerial position. Very nice of course. But her husband didn't like that at all. Because: she was away from home more often, had more responsibility and worked more in the evening. What about the kids? The husband immediately looked to his wife for childcare and not to himself or other solutions.”

And then there are the women themselves, of course. How can they themselves tomorrow close that gap a little bit?

“Start looking for information. There is plenty about this topic on the Internet. Make sure you understand, for example, what working less means, both in the here and now (wage gap), but also for your career and your future after retirement (pension gap). Ask yourself if you would make the same choices based on this information. If you work less, you will later depend on your husband's pension pot. Do you want that? And what if you're no longer together by then? Do you want to run that risk? And discuss this at the kitchen table at home. I have witnessed a divorce in my community where the wife got so much less than the husband. I wouldn't want to experience that. And I wouldn’t wish that on my kids either.

Take a look at your salary too. Women still earn less than men for the same work. On top of that, it is often still a typical woman thing not to negotiate. Or see if you couldn’t work a few more hours. Discuss this with your employer and negotiate your salary. When I took a new step within APG, I asked HR whether my salary was appropriate. It wasn’t even about the money, but I wanted to make sure it had been seriously considered.”

International Women’s Day is also a day to celebrate what is going well, of course. What progress have you experienced yourself and what would you like to pass on?
“Let’s face it, a lot has already changed for the better over the past few generations. For example, my parents encouraged me from childhood to develop myself and earn my own money. Thanks in part to them, I am financially independent. With the full support of my husband, incidentally; I am proud of that too. Buying new shoes with my husband’s credit card? I can’t even imagine that! I am also grateful for the female role models I had. My mother showed me that work and family don't have to get in the way of each other. She always joked that with my father’s income, we paid the fixed expenses and from her income we did the fun things. Both my grandmothers also worked, even in the days when this was not done. So I am not used to anything other than women doing their part. And that is also what I want to pass on to my two daughters. That you can achieve a lot with work. That goes much further than just in a financial sense. Working and being independent is also related to the balance and equality in a relationship. Plus, it’s fun to work and it can be very meaningful.”

Current issues related to the economy, (responsible) investment, pensions and income: every week, an APG expert gives a clear answer to the question of the week. This time: head of European real estate Robert-Jan Foortse on the central government’s more assertive role in housing construction. “As a real estate investor, we are looking for both a financial and a social return and are actively working towards a solution, but we are not the solution.”

Last week, it was announced that Amsterdam will receive a financial contribution from the state to build some 1,000 flex homes. In total, Minister De Jonge (Housing and Spatial Planning) made 100 million euros available to 42 municipalities for about 8,360 flex homes. This fits into the cabinet plan to build some 900,000 houses between now and 2030. The question is whether the government is thus taking over the role of real estate investors.

Ambitious
The first question is whether Minister De Jonge’s plan is even feasible. “It is ambitious to say the least,” Foortse argues. “Last year, a record 74,000 homes were built. That is not enough to meet the overall target of 900,000. And for this year, ‘only’ 60,000 new homes are expected, so the shortfall is piling up.”

Meeting the 2030 target requires five factors: land, permits, materials, builders and money. Each factor has its own challenges. “Because where is that land, and what is the price? And what about the permits? The process is slow now, due to a lot of objections being filed and municipalities being understaffed to grant the permits in time.”

These are all challenges that are difficult to tackle. “For instance, land is mostly controlled by municipalities, for whom its sale has become a major source of income. Land prices rise, so to speak, to keep the municipal budget in order.” And in recent years, not only land prices have risen, but also those of materials and labor, making newly built houses more expensive, continues Foortse. “That poses a further problem, because the majority of those 900,000 new homes must be affordable. Making newly built homes more expensive is undesirable, because then they will remain unattainable for first-time buyers. However, municipalities need the income from increased land prices and investors want to make a reasonable return. So, who should give in?” 

Changing rules
To break the deadlock, two solutions are possible, says Foortse. “Either someone has to take the reins and direct housing construction centrally, the minister, for instance, or a decision is made to leave the market as free as possible in the expectation that as many houses as possible will then be built. The problem with the second solution is that it will then be built mainly in the more expensive segment, possibly at the expense of opportunities for first-time buyers if the throughput does not kick in. I understand that the minister is trying to take charge. But I don’t know how successful he will be in this, given the many challenges and different interests at national, provincial and municipal levels.”

The role of real estate investors is certainly not over yet, as they bring an indispensable factor and that is money, says Foortse. “At the end of November, we went to meet Minister De Jonge with representatives of five of the largest housing investors in the Netherlands, including APG. We said that, as a Dutch pension investor, we are interested in investing in housing in the Netherlands on behalf of our pension fund clients, and that Dutch rental housing is also already an important component of our clients’ investment portfolios. As a property investor, we are looking for both a financial and a social return and are actively working towards a solution, but we ARE not the solution. The task and cost of 900,000 new homes is so big that foreign investors are also needed. It does not help that regulations have changed several times in recent years, such as the adjustment of transfer tax or the extension of the points system to the freehold sector. It amounts to changing the rules of the game while playing. This is unpleasant, especially since, as pension investors, we have a long-term horizon. We therefore stressed to the minister the importance of clear and predictable rules. Because predictability lowers risk and thus attracts investors.”

Contribution
The small size of the national government’s contribution to Amsterdam’s flex housing also shows that the government is not taking over the role of real estate investors. “We’re talking about 12 million euros for about 1,000 houses, which is 12,000 euros per house. The government is not a real estate investor, but provides a contribution, a subsidy as it were. That is a different role from ours as investors. However, I do think that all market players agree that it would benefit the Netherlands to build many more homes as soon as possible,” Foortse concludes.

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: Thijs Knaap, chief economist at APG, on how much debt the Dutch have compared to other Europeans.

The number of Dutch households in debt is expected to increase in the coming period. The cause is the increased energy prices. Currently, debt assistance takes too long and too few people with problematic debts report to the municipality, says Minister Schouten (Poverty Policy, Participation and Pensions). She therefore wants to ensure that households with incipient money worries come into the view of social workers earlier. This should prevent debts from rising too high. Compared to other Europeans, do Dutch households have a lot of debt?

Big debtors

Figures from the Organization for Economic Cooperation and Development (OECD) show that of all European nationalities, the Swiss have the most debt, 255 percent of disposable income. “The Norwegians and Danes are still above that. But recent data from the Bank for International Settlements (the central bank of the central banks, ed.) show that many of them have recently paid off part or all of their mortgages because of rising interest rates,” Knaap says. “That would mean that residents of both those countries now have a lot less debt AND that the Netherlands is second behind Switzerland. So the conclusion is that according to this measure, of total debt to disposable income, we are pretty big debtors. Including from an international perspective.”

The development in Scandinavia does provide an indication that debt should not always be seen as a problem, Knaap continues. “A debt can be a choice, and if you have assets or a mortgage against it, it is not so bad.” To this end, he points to figures showing the correlation between debt and assets by country. “The great thing is that the Netherlands is also number two there. We also have the most assets after deducting our debts, after Belgium, scaled by disposable income.” It should be noted that the OECD does not consider pensions as assets. “If that were included, we might be the country with the largest net wealth among households. Although the reason Switzerland is missing from this list, might be its banking secrecy.”

Individual Dutch people

So much for the macro figures. Knaap: “As a society we have far more wealth than debt, and we could pay it all off tomorrow, so to speak.” But that does not apply to individual Dutchmen. “If we look at the debts of the median Dutch person (the one with the middle debt when all the debts of Dutch people are sorted from low to high, ed.), then, as the Netherlands, we are in the European middle. This does indicate that the debts we have in the Netherlands belong to a relatively small group, and this mainly concerns mortgage debts. Take those out, 61 percent of the Dutch have no debt at all. At the same time, 60 percent of the Dutch have a mortgage, the highest percentage in Europe.” This is mainly a result of the tax favoritism of homeowners. “Borrowing a lot for an expensive house does not have to be a problem, until the house suddenly becomes worth 20 percent less and is ‘under water,’” he says. This is why the Dutch Central Bank has long said that lending standards should be tightened and mortgage interest rates should be phased out. These kinds of measures will lead to the debt in the Netherlands declining. But it will be some time before we drop in the international debt rankings.”

Nibud figures show that the number of Dutch people with payment problems is not yet much higher than in previous years. “That is quite remarkable, soon after the Covid pandemic, and with current inflation,” Knaap says. “Although of course there was income support from the government during the Covid crisis, and the effects of the energy crisis are now cushioned by the price cap and tax cuts. Possibly many people had some savings in reserve that they now need to tap into. If so, more households may eventually run into debt, as the government expects.” According to Nibud, payment problems arise mainly when people’s income remains stable but expenses increase. Knaap: “That can be the case with people with a very low income but also with high incomes, who suddenly see their fixed expenses rise sharply. That is exactly what is happening now, with inflation.” 

Complex economy

The countries high in the OECD’s debt rankings, such as Denmark, Norway, Switzerland and the Netherlands, are among the most developed economies in the world. And that is no coincidence, Knaap explains. "In fact, it is related to the development and so-called financialization of a country. If an economy is unstable, debts are also lower. But that is not necessarily better than a developed economy where you can take out loans to buy a house or start a business. So the fact that the Netherlands has very high debts can also be seen as a sign that we are rich and successful. After all, we live in a very complex economy where a lot is possible: there are banks, you can buy on installment at Wehkamp, and companies are willing to provide credit. This is a consequence of the fact that we are a well-functioning society with relatively high levels of mutual trust. So we should not abolish debt, but we should be careful not to leave people with problematic debts.”

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: Charles Kalshoven, macroeconomist at APG, on the economic benefits of the European Union for the Netherlands. “The power of the EU market is enormous.”

Three years ago, the United Kingdom left the EU. Brexit is now costing the British economy nearly 114 billion euros a year, Bloomberg news agency calculated. Their economy apparently has gone down by 4 percent since the Brits turned their backs on Europe. Jeremy Hunt, Britain’s finance minister, this week expressed his annoyance about the “gloom” over the economic outlook. He believes Brexit actually enables economic growth.

“Brussels effect”
For the Netherlands, the advantages of EU membership still clearly outweigh the disadvantages, Kalshoven argues. “The Netherlands is a small country with a limited domestic market. We therefore benefit from free trade and access to the EU market of 450 million potential consumers. Because of its size, the European internal market creates more trade and investment opportunities. This is partly a result of having one market for which the rules are harmonized. If, as a manufacturer, you produce a car or refrigerator that meets the Brussels standards, you can be sure that you can sell your product throughout the EU.” This is also where the so-called “Brussels effect” occurs. The EU internal market is so big, that it is beneficial for manufacturers to design their product to meet the -generally high- Brussels standards. They can then market their product not only in the EU, but also in other markets, such as the United States or China. “The power of the EU market is enormous. We are on a winning team.”

EU membership is also beneficial when it comes to entering into trade treaties, Kalshoven continued. “As a small country, you can say that you negotiate your own free trade treaties, but who are you, as the Netherlands?” The EU carries much more weight when negotiating a treaty, where individual member states do have a say in how it is implemented. “You have more influence when you are part of a major trading power than if you act on your own as a country, because then you can be played off against other countries.”

Trading nation
Kalshoven cites the classic book The Wealth of Nations, published by the Scotsman Adam Smith in 1776. “In it, he rails against all kinds of obstacles to free trade. And within the EU there is free trade. However, non-member countries that want to get their products into the European trading bloc can certainly run into trade barriers. British companies are noticing this now. For example, an English beer brewer was in the news recently, saying that a case of beer costs 20 pounds in England. If he wants to export that same case to the EU, the price would increase to 200 pounds because of all the (customs) formalities. That red tape at the border is anything but conducive to trade.”

If a country is not only a member of the EU but also belongs to the euro zone, not only trade is facilitated, but also payments. This allows citizens to pay with their currency in other euro countries as well, and companies need not fear that the exchange rate will suddenly change after sending their invoice.

The EU has thus reduced trade costs between member states, leading to more trade between them. For the Netherlands, as a relatively small trading nation, this means gross domestic product (GDP) is 3.1 percent higher, according to a calculation by the Netherlands Bureau for Economic Policy Analysis early last year. Few countries stand to gain even more from Brussels’ removal of trade barriers. Figures on how much the average Dutch person benefits from the EU range from 500 to 2,200 euros a year.

Disadvantages
Are there no economic disadvantages of the EU? Yes, there are some, Kalshoven states. “By becoming a member of the EU, as a country you give up partial sovereignty. That is true, at least in theory, but then I come back to my argument about small countries. How much sovereignty do you have as the Netherlands compared to say, America or China, ‘I want to make different agreements about our mutual trade’?” The same applies to countries belonging to the euro zone to a greater or lesser extent. “As a euro country, you can no longer tailor your monetary policy to what is best for your country. Instead, the European Central Bank looks at what is best for the euro zone as a whole. But again, you can ask how sovereign we were when we had the guilder. If the Bundesbank raised interest rates, we followed suit half an hour later. Not that the Germans forced us to do so, but it was much more advantageous for us to latch onto the Deutschmark than to chart our own course. We chose to give up our freedom. So, losing sovereignty by joining the euro is a disadvantage mainly in theory. We used to wait for a phone call from Frankfurt; now Klaas Knot (president of the Nederlandsche Bank) is one of the determining figures in monetary policy.”

In the Netherlands, the discussion also raged on for a long time about the fact that The Hague has been the largest net contributor to Brussels for years: we contribute more to the EU than comes back through subsidies. That is not a good way to look at the net benefit of EU membership, Kalshoven argues. For one thing, part of those remittances consists of customs duties on goods entering the EU in Rotterdam. Other EU countries are usually the final destination. So those payments should not really be seen as Dutch remittances to the EU. In addition, the economic benefits of the EU, as described above, are much broader than just EU funds, Kalshoven concludes.

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: Martijn Olthof, equity investor with a specialization in utilities, on why energy rates do not immediately fluctuate with the price of natural gas.

With the sharp drop in the price of natural gas in recent weeks, you would expect to see that drop reflected in the energy rates you pay. Especially since not only the price for short-term supply has dropped, but also that for supply over the next two years. But although the first energy suppliers have already started lowering rates, they are not immediately moving along with a falling - or rising - price of natural gas price. There are several reasons for that.

Notice period
“These things always take some time,” Olthof says. “When prices rose very sharply last year, a number of energy providers tried to raise rates quickly. However, those suppliers did not fare well, because a price increase should always be announced well in advance. That gives customers the opportunity to switch to another provider.” The fact that suppliers must observe the customer's notice period also causes them to be cautious about reducing their rates quickly. “They then run the risk that, in the event of rising gas prices, they will have to wait for the notice period before they are allowed to raise their rates again.”

Opportunism can also play a role, Olthof explains. “There are companies that take advantage of current inflation by raising their prices beyond their own costs because they know they can get away with it. This is also known as greedflation. Inflation causes people to lose their anchor points about what is a reasonable price. They are therefore more likely to accept price increases because everything is getting more expensive. Perhaps that is why some energy companies think: we will leave the high prices as they are for now.” 

China
The fact that natural gas prices are currently at their lowest level since February 2022 does not mean that they will stay that way. “Natural gas prices are currently low for several reasons. It is partly because factories could not afford the earlier higher prices and therefore shut down production - reducing the demand for natural gas. Another reason is that consumers are turning down their thermostat and taking shorter showers to save energy. The mild winter weather also plays an important role.” And then there is China, which has been buying less liquefied gas, better known as LNG, in recent years because of the lockdowns the country has been in. “If the Chinese economy reopens more and more and it still starts to get very cold here in Europe, there could suddenly be a shortage of natural gas in Europe. Therefore, it is premature to say right now: the natural gas shortage problem is gone, the natural gas price has dropped significantly so rates can go down again.” This uncertainty in the energy market also prevents suppliers from reducing their rates quickly. After all, they then run the risk of having to reverse the reduction a month later.

Olthof emphasizes that the energy market is currently in extraordinary circumstances. “That is also why the government intervenes with a price cap. But if there is scarcity of a certain product and more demand than supply, that product simply becomes expensive. That also applies to natural gas, because people don't want to be left out in the cold.” What does not help to keep the price of gas down permanently is that there is no way to create additional supply very quickly. “We can get LNG from Qatar or America, but that is not immediately available. So that additional supply can only contribute to lowering the price of natural gas in the longer term.” 

Sustainable energy
Natural gas reserves are now unprecedentedly high in Europe, which may help it get through next winter. At the same time, it is hoped that renewable energy will get off the ground even faster, Olthof says. “More solar and wind farms are being built every year, but it will be some time before renewable energy can really play a big role. In the longer term, natural gas, and thus the price of natural gas, will no longer be relevant. However, if you look at how much natural gas Europe imported from Russia in recent years, the threat of a shortage will continue to hang over the European market in the coming years. That threat can be reduced by a combination of three measures. Import natural gas from other countries, consume less natural gas and commit even more to renewable energy.” The energy market will remain volatile in the coming period, and it remains to be seen to what extent and especially how fast energy rates will fluctuate along with the price of gas.

If the pace of new appointments of women to company boards in India stays as low as the last three years, it will take until 2058 to achieve 30% gender diversity. This was one of the findings of the study “Corporate India: Women on boards”. What are the reasons for this slow transition and how can the process be sped up? We asked Debanik Basu, Senior Manager Global Responsible Investment & Governance Asia Pacific at APG, who was involved in compiling the study.

"Corporate India: Women on boards" was published by Institutional Investor Advisory Services (IiAS) in partnership with APG, on behalf of Dutch pension fund ABP, at the end of 2022. The study shows that India has progressed in this area. Women accounted for just 6% of directorships on company boards in 2014, but this had jumped to 14% five years ago. At the end of March 2022, however, this figure was somewhat disappointingly only 17.6% for the NIFTY-500 companies (stock market index with the top 500 listed companies on the National Stock Exchange of India (NSE)), with growth during the last three years almost at a standstill (1% in total). And that’s worrisome, says Basu, as India is still behind more developed and mature markets in this respect, and that should change.

Why is the current pace of new appointments of women to company boards so low, compared to the years 2014-2020?

Basu: “In 2013 regulations made it mandatory for boards to have at least one woman director from 1 April 2014. In the first year the number of women holding board directorships immediately doubled from 5-6% to 11% and then increased steadily. A further impetus came when the capital markets regulator mandated companies to appoint at least one independent woman director from 1 April 2019. This reinforces the notion that the growth in women’s representation was driven primarily by regulation rather than a real acceptance of the fact that diversity in company boards creates value and improves the spectrum of viewpoints – which is going to be beneficial for the company in the long run. India is a market where voluntary norms usually don’t move the needle that much.”

Why is there no overarching acceptance by boards in India that diversity is important and must be embraced, in your opinion?

“I think it’s partly a cultural issue. Society in India, and by extension, the workforce tends to be male dominated. The men in the family usually take on the role of worker (at least at senior levels), rather than the women. The second factor is that many listed but also unlisted companies in India are family-led or family-managed. They have a generational view on business. A company is built up by a family and passed on to the children, who in turn pass it on to their children. In such cases, it’s usually the sons that come into the company and take over the important roles, like the position of the CEO or chair. The daughters really don’t get involved in the business that much, even if they are qualified to do so. When it comes to matters of leadership and succession, these societal structures take precedence rather than an objective evaluation of individual attributes and skill sets.”

“Moreover, to round this all off, there is a general reluctance to change a particular pattern or way of working. Typically, board rooms in India tend to be an old boys club and they often question the need to increase diversity when they have done quite well with the current mix of directors for years. There is little faith in both the intuitive notion that greater diversity leads to more balanced perspectives and the empirical studies which repeatedly point to a strong correlation between board diversity and company performance. Despite what companies suggest, the availability of educated and qualified women is not the issue – it is the desire to maintain the status quo which is a greater barrier. ”

Could an increase in the diversity quota be a solution to this problem?

“We believe the regulator is hesitant to do this because regulations in India in this context already go beyond what regulators in other jurisdictions have done. There’s a lot of corporate pushback against increasing the diversity quota even more and the regulator doesn’t want to be accused of overreach. That’s why this study is also important. We can use these results to engage with the Indian regulators and argue that companies might need to be pushed in the right direction a bit more. Not necessarily by a further increase in diversity quotas, but in other ways.”

Could you give an example of such an alternative?

“You could create a separate listing category for companies that go above the minimum requirements – for example, 20% or 30% of women on the board. These enterprises can then be labeled as quality governance companies, creating the potential for them to receive additional flows of capital. So you create a separate, premium category that works as an incentive for companies to bring more women onto their boards. Of course, this would require more governance-related criteria, but the diversity threshold could be one of them.”

The study says that the upcoming ‘Board Refresh’ in 2024 will be a one-time opportunity for Indian companies to rebalance the gender diversity scales. Why is that?

“In 2013/2014 a unique piece of legislation was adopted, which stated that independent directors could have a maximum tenure of ten years, after which they needed to step down. It also stated that this tenure started from 2014. So in 2024 a lot of tenured directors will have to be replaced by a group of new directors. When we ask companies to increase their board diversity, they often say: ‘please wait for the director to step down, because we can’t ask someone to leave and make place for a woman and we can’t extend our board, because it’s already too large’. Therefore, it is important that women are well represented in this group of new independent directors in 2024. If we miss this opportunity, at the current pace of change, it will probably be a long time before we see substantial improvement.”

Historic labor market tightness, sharply fluctuating stock prices and inflation reaching into the double digits. 2022 has been quite an eventful year economically. But what will 2023 bring us? In this series, Charles Kalshoven, macroeconomist and senior strategist at APG, explains what we can expect in the coming year with respect to our purchasing power, the labor market and investments, among other things. Today part 3: What 2023 will be like for the housing market?

The overheated housing market of recent years tempted RTL to produce the TV program Kopen zonder kijken (Buying Site Unseen). People who had trouble finding a suitable home turned to that program to figure out how to be able to buy their own home. Kalshoven expects that in 2023, it would be better for this format to be changed to a variant where not buyers, but sellers are helped. After all, homes are getting cheaper, giving buyers more to choose from. On the other hand, the cost of living for an owner-occupied home is increasing due to increased interest rates. This makes it (even) more difficult to find a home, especially for first-time buyers.

Demands
A cooling housing market follows a set pattern, Kalshoven says. “Realtors first notice that the influx of viewers decreases, but still manage to sell homes at good prices. Then comes a period when houses are for sale for longer, which leads to an increase in supply. This is because sellers have a price in their heads and don’t want to drop it too quickly. The number of transactions then decreases, something you are already seeing. In recent years, potential buyers regularly waived all kinds of requirements, such as an architectural inspection, for fear of missing the boat. That period is over for now.”

Buyers may be getting more critical, but at the same time, mortgage costs are rising. “The rise in interest rates from roughly 1.5 percent at the beginning of this year to 4.5 percent now means that an annuity mortgage becomes almost 50 percent more expensive per month gross. Net, the difference is smaller. First, the lion’s share of monthly payments consisted of repayment. Now the bulk is interest - and you can deduct that from your taxes. In the first year, the net monthly costs are therefore ‘only’ 27 percent higher. But don’t forget that over time, a larger part of your monthly amount will be repayment and a smaller part will be interest. So, in the end, in year 30 - in which you almost only repay – you’ll be paying 50 percent more than before.” According to Kalshoven, falling house prices do not outweigh this: “According to the Central Bureau of Statistics, house prices in October were about 1.5 percent below the peak, the Dutch Association of Realtors saw prices fall by 6 percent in the third quarter. To end up with lower monthly costs, you need a drop of a quarter or more. I don’t see that happening any time soon.”

Jubelton
The increasing cost of housing is also reflected in technology company Calcasa’s affordability index. Kalshoven: “That index looks at average net wages and net housing costs. Right now, people are spending an average of 20 percent of their income on housing. Between 2014 and early this year that was less than 15 percent. Between 1999 and 2012, incidentally, it fluctuated between 20 and 27 percent.” Rising mortgage interest rates are also resulting in lower confidence in the housing market. The indicator that Vereniging Eigen Huis (Own Your Home Association) has for this is at its lowest point since September 2013. First-time buyers in particular, are affected by the rising interest rates. After all, they have no surplus value from a previous house. Also, the Jubelton (tax-free gift for buying a house) is disappearing. This year, parents can still give 106,671 euros tax-free to a child for the purchase of a house, next year it will be 28,947 euros. In 2024, the scheme will be abolished altogether.

Kalshoven expects house prices to fall by up to 5 percent next year. This is a far cry from the price declines after the 2008 credit crisis. “A few things are really different now. There is a long wait for a social rental house and rents in the free sector are high. This keeps it interesting to buy, even though people can now offer less because of higher interest rates. At the same time, new construction is stagnating, due to both the nitrogen problem and the construction labor shortage, and thus the housing supply.” Normally, the housing market only goes bad when many people have to sell their homes, for example, because they become unemployed. Because of the tightness in the labor market, however, that is unlikely, Kalshoven said. “In addition, homeowners are less likely to get into trouble now because the conditions for obtaining a mortgage have become stricter in recent years. You can’t borrow more than 100 percent and you start repaying right away. And then many homeowners still have excess value on their homes due to the sharp price increases of recent years.” Consequently, the housing market is in a much more solid position than it was in 2008.

The state of the housing market affects the economy, Kalshoven argues. “When house prices fall, people feel less wealthy. That results in them consuming less, but that doesn’t have to be a bad thing in this time of high inflation. It is also better for the planet. Some sectors may suffer to some extent from the fact that there are fewer transactions in the housing market. Examples include kitchen retailers and interior design stores. After all, a new house is often the time for a new kitchen or flooring.”

Outcome
Next year, we can expect a slight drop in home prices, which may encourage the buyers to be more critical than in the overheated housing market of recent years. However, the price decline will be limited to about 5 percent, due to the housing shortage and the fact that the labor market is in good shape. For first-time buyers, homeownership will remain difficult to achieve, as the decline in home prices is offset by increased mortgage interest rates and the elimination of the Jubelton. Looking at houses will be easier, as they are less likely to disappear from the market, but buying will put a greater strain on the wallet. Many a starter will opt for “looking without buying” in 2023 for that reason.

Topical issues in the field of economy, (responsible) investment, pension and income: every week, one of APG's experts provides a clear answer to this week's question. In this edition: Senior Pension Educator Fabian Schumans on the question what it entails for both the employer and the employee if someone wants to continue working after the state pensions’ age.

Not everyone retires when reaching the age of 67. About 200,000 Dutch people decide to work longer and that number only increases, as reported by RTL Nieuws. Doesn't that decision to work longer lead to bureaucratic hassle, and not in the least for the employer?

Honor
It's not that difficult, according to Schumans. “It is rather remarkable though that once you reach the state pensions’ age, you are no longer insured for disability to work or unemployment. That's because the assumption is made that you stop working. That is not a bad thing for an employer, because let's say a 68 years’ old employee falls ill, there is no need to start an entire reintegration procedure. And whereas a sick employee usually gets paid his or her wages for two years, that term is only 30 weeks for an employee who has already reached the state pensions’ age.” When the CAO (Collective Labor Agreement) states that dismissal will follow upon reaching the state pensions’ age, the employer has to offer a new contract to the employee who wants to continue working. “But that is mainly an administrative act and usually does not pose any difficulties.”

Yet, in practice, there aren't many employers who are eager to hire people over the age of 67, Schumans says. Whether an older employee is able to remain employed after reaching the age of 67, also depends on the way in which this is arranged in the CAO of the employer. An employer therefore doesn't always have to honor an employee's request to remain employed for a longer period of time. That can be annoying for someone who wants to continue working, for example because his or her pension is insufficient. “In that case, you can only hope that the employer is willing to retain you.”

Commitment
An industry in which it often occurs that an employee chooses to postpone his or her pension, is the educational sector, Schumans has noticed. “In that industry, employees are often highly committed to their profession and their employer. And if they work in a region with a significant shortage of teachers, many teachers decide not to retire straight away but, for example, to finish the school year or to stay on for another year.” By adopting a flexible attitude, an employer can make it more attractive for employees to work for a while longer should they want to.

“If people contact me to say they may want to continue working for longer, they start thinking about what that means to them and they also regularly express the fact that working gives meaning to their lives”, says Schumans. “They are often done with work as an obligation, but if employees are given the freedom to interpret their job in their own way, I believe more people would be inclined to continue working for a while longer after reaching their state pensions’ date. You could think about the older teacher who is still willing to teach but no longer wants to be required to participate in trainings.” What often happens increasingly more often, is for older employees to start their own business. “They then become self-employed and have themselves hired by their (former) employer. That often occurs at municipal authorities, for instance. This typically involves people who run a project on an interim basis.”

Sustainably deployable
If an employee decides to work longer, there are a few things that need to be considered. “At some pension funds, the pension accrual stops after the state pensions’ age has been reached. That means an employee ends up with a higher net income, because he or she no longer has to pay pension contributions.” There are no rules attached to earning some extra money after the state pensions’ age, Schumans explains. “What I do say to someone considering this, is: Look at what you ultimately end up with on a net basis. Let's say you continue to work for your employer for a couple of hours a week, receive state pension and perhaps also pension. That means you receive money from three authorities on which very little tax has to be paid. But the Tax Authorities adds up all of those payments, meaning you end up in a higher tax bracket and you may be presented with a retrospective tax assessment. It is also important to carefully consider whether or not you want to apply the tax-free allowance and, if so, to what income.”

Although employers are not massively enthusiastic about the idea yet, Schumans can imagine that the phenomenon of working persons over the age of 67 will be increasing. “The generation now reaching the state pensions’ age, generally started working sooner than the generations following them. Working longer will therefore be less popular among this group than among the younger people who are now entering the labor market. If you started working later and you were also able to benefit from the labor conditions such as flexible working and sustainable deployability, it will be easier to continue working for a while after reaching the state pensions’ age. I already notice employers trying to keep their employees vital and to make sure they are sustainably deployable.”  

Tightness
In the article of RTL Nieuws, Peter Hein van Mulligen, chief economist at the CBS, states that pensioners who continue to work will not be able to solve the shortage of labor force. Schumans also believes that the increase of the number of working people over the age of 67 will not be enough to limit the current tightness on the labor market. “That shortage is mainly caused by the ageing population and the so-called dejuvenation (decrease of the share of younger people in the population as a result of a declining birthrate, ed), resulting in less new employees entering the labor market.” Even though more people over the age of 67 are working, it continues to be a relatively marginal phenomenon, especially if you compare this with the entire labor population, according to Schumans. “These people usually don't continue to work for many years, it mainly involves shorter periods of time.” Yet, he doesn't exclude that, if employers become more enthusiastic about employees who are looking to continue working after their state pensions’ age and younger generations become more sustainably deployable, working longer could help balance the labor market more.

With inflation skyrocketing, the Dutch government has earmarked tens of billions for purchasing power repair - through the energy price cap, VAT reduction on energy and an energy surcharge for minimum incomes, among other measures. Far-reaching and costly measures were also taken in our neighboring countries to shore up purchasing power. What instruments have other countries chosen for this purpose and what are their advantages and disadvantages? In three articles, macroeconomist Charles Kalshoven (APG) shines a light on one European member state. Episode 1: Germany. 

To ease the burden in 2022 and 2023, the German government has allocated a total of nearly 200 billion. The purse strings have been tightened enormously there too, even though German inflation, at 10.4 percent (October), is a lot lower than Dutch inflation (16.8 percent according to the European definition). Part of that money is spent on various one-time benefits of limited amounts, which are mainly aimed at lower income groups: recipients of unemployment or social benefits, or rent allowance. Another portion is going to tax measures.

Maximum natural gas price
Measures that stand out are the reduction of the energy tax on fuels from June 1 to August 31, 2022 (29.55 cents/liter for gasoline and 14.04 cents/liter for diesel) and the temporary (until the end of March 2024) VAT reduction on gas from 19 to 7 percent. But also noteworthy is the introduction of a €49 public transport monthly pass that allows you to take unlimited (regional) trains, buses and subways. Last but not least, the Germans are introducing a maximum natural gas price for households as well as businesses.

Targeted measures, which can be taken quickly and have limited collateral damage for treasury or other policy goals. Kalshoven believes that that, in a nutshell, is what a government should strive for.

“Effectiveness is paramount. Is a measure hitting its target? There can also be a trade-off between those goals, meaning that the closer you want to get to goal A, the more you sacrifice on goal B and vice versa. Another criterion is efficiency. What costs do you have to incur to achieve the goal? These could be direct costs due to rising national debt, or indirect costs in the form of higher taxes in the future. And are better alternative measures conceivable? A third criterion is speed/feasibility. And finally, you can look at whether or not a measure will disrupt competition.”

Disrupting competition
Regarding the maximum natural gas price Germany has introduced for citizens and businesses, Kalshoven is critical in several respects.

“If you want to accelerate the energy transition, limiting the price is not a good idea. It does not provoke the behavioral response you want, because then there is no longer a price incentive to reduce natural gas consumption. What I like in the Netherlands is that the price cap only applies to average usage. But if you don’t tie such a price ceiling to a quota, it could cost the treasury a lot of money. In terms of poverty prevention, you may have achieved your goal, but in terms of accelerating the energy transition and saving energy, you haven’t. And that is a waste of money. Moreover, a maximum natural gas price like in Germany disrupts competition in the internal European market. After all, unlike in the Netherlands, that maximum also applies to companies and in this way, German companies are given an unfair advantage over their European competitors.”

Car use cheaper
About the promotion of public transport in Germany - the €49-monthly pass - Kalshoven is positive, but he says it does not form a happy combination with the excise tax reduction the Germans implemented for various fuels.

“You have offered people an alternative by making public transport cheaper, but then you should not also make car use cheaper. Germans also have a mileage allowance of 38 cents. That’s really hefty. What I like about the German public transport policy in itself is that it helps prevent poverty and at the same time is good for the energy transition. Namely, you ensure that existing infrastructure is better utilized. That way, road miles can decrease, and the miles you travel by public transport are what you were doing anyway. It may provoke extra travel, but on balance you save energy and, of course, carbon emissions, with that kind of public transport policy.”

Targeted pain relief
If possible, you want targeted pain relief. A dentist doesn’t put patients under anesthesia for drilling; at most, he gives a local freezing. For that reason, Kalshoven is positive about the subsidies and benefits introduced in Germany to ease the pain of inflation.

“Because German subsidies are aimed at low-income earners, they get to people who need it. That targeting is desirable, unlike the drastic remedies the German government has chosen elsewhere, such as excise tax cuts and maximum tariffs.” 

Because those drastic remedies cost the treasury a lot of money, they create a less desirable situation from a macroeconomic perspective. For with an aid package of 200 billion euros, Germany risks working against the monetary policy of the European Central Bank (ECB).

In opposition to each other
Kalshoven: “Germany’s gross domestic product is roughly 4,000 billion euros. An aid package of 200 billion euros amounts to 5 percent of GDP and that really is a lot of money. At a time like that, two policies - fiscal policy and monetary policy - start to work very much in opposition to each other. After all, the ECB wants to slow down the economy to curb inflation. But if governments offset all price increases, they are actually boosting the economy a bit. However, those higher prices are a national loss, even in Germany. It is an illusion to think that you can compensate those higher prices completely and for everyone.”

When you compare the support measures in the Netherlands and Germany, both countries are providing substantial support packages, Kalshoven said.

“In both countries, public finances are in good shape, which makes this kind of package possible. Germany is even more robust than the Netherlands. In our case, the package is about 25 billion euros, which could go up to 40 billion euros, or 4 percent of national income. In Germany, it could even reach 200 billion, or 5 percent of the economy.”

Nice problem
And although Germany, like the Netherlands, is struggling to take targeted measures, Kalshoven notes that the Germans are more successful at supporting lower incomes in a targeted way with one-time payments and specific subsidies. However, this does not apply to the maximum natural gas price in Germany.

“That is in fact not targeted, because it applies to everyone - citizens and companies. In the Netherlands, however, the allowance for energy of 190 euros in November and December is untargeted and price caps are limited. In practice, it proves very difficult to meet the ideal of measures that are both timely, effective and efficient.”

But ultimately that struggle is “a relatively nice problem to have,” Kalshoven says. “A total lack of room for compensation measures would force households to make very painful short-term adjustments.”

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.”

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: Senior Portfolio Manager Infrastructure Viktor Filipan, on whether electricity grids will be used more efficiently if consumers receive a weekly forecast of the expected yield from solar and wind power.

How much more or less sun can we expect in the coming days, compared to what is normal for the time of year? And on which days will there be a lot of wind, so that our windmills will generate a lot of energy? Meteorologist Helga van Leur answers questions like these in a weekly Energy Weather Report on YouTube. It is supposed to encourage consumers to use a larger share of electricity at times when there is (too) much power supply (between 10 a.m. and 3 p.m.) and a smaller share of it when supply is scarcer (between 6 p.m. and 8 p.m.). Better for the environment, is the thought, because then the natural gas power plants will need to be turned on less often to cope with power shortages. And better for our wallets, because electricity is cheaper when there is a surplus supply. But will an energy weather report actually contribute to those two goals?

In a direct sense, there is no strong financial incentive for consumers to align energy consumption with renewable energy production, Filipan says. But if, as a society, we don’t take into account those moments of scarcity or surplus due to wind and solar power at all, it will eventually drive up the price of electricity – both during the day and in the evening.

Turning on the washing machine en masse
Filipan: “As a consumer, you now usually have a choice between single tariff and double tariff. With the latter, you pay more - the standard tariff - on weekdays from 7 a.m. to 9 p.m. or 11 p.m., depending on the region. At night, on weekends and holidays, you pay less - the off-peak tariff. That division between peak and off-peak hours is approximate. From that perspective, there is no material price incentive for individual consumers to adjust their electricity consumption any more than they already have been. Of course, there are those for whom environmental considerations are the primary reason for adjusting their electricity consumption. But based purely on that motive, people in the Netherlands won’t be turning on their washing machine en masse on days with lots of wind or sunshine.”

In a more indirect sense, however, individual consumers can benefit when solar and wind energy supply is taken into account, says Filipan.

Groningen
“It used to be relatively easy to equalize electricity supply and demand. But over the years, Dutch households have started to use more electricity for functions that fossil fuels were used for in the past. Examples include induction cooking, heating with heat pumps and charging electric cars. This is generally done in the evening, when the sun is often already gone and it is not always windy either. During those times, the demand for electricity increases sharply in a relatively short period of time - peak load. With the increasing electrification of our society and the increasing generation of renewable electricity, this peak load is getting increasingly higher and matching supply and demand on the power grid is getting even more complex. Over the next decade, this challenge will keep increasing.”

The more power demand is out of step with supply, the more expensive electricity becomes. Because it means the natural gas power plants will have to be turned on more often.

“When demand exceeds supply, primarily natural gas power plants are used to meet our electricity needs. But natural gas is expensive, and with the end of natural gas extraction approaching in Groningen, the Netherlands has become an importer rather than exporter of natural gas. If enough people charge their electric cars at times when wind and solar power are abundant, less natural gas will be needed in the Dutch energy mix and that mix will be less expensive. If we don’t do that en masse, we will all be paying higher prices for electricity.”

Wind parks halted
Besides scheduling electricity consumption, there are other ways to better match supply and demand. But those ways do have their limitations.

Filipan: “Storing power in large-scale batteries is somewhat on the rise and is being used by grid companies to reduce peak loads. You can also export electricity, although that is often not a solution to a surplus. Because when there is an oversupply of power in the Netherlands, a country like Germany also often has that. Sometimes switching off power generation is the only way to avoid overloading the grid. We are already doing that with wind farms. The greatly increased generation of solar energy in recent years also increases the risk of power surpluses. This is why some municipalities in the Netherlands are already no longer issuing permits for the construction of solar parks.”

We are also investigating how we can expand the networks to cope with the rising peak load, and more and more smart technologies are being developed to match supply and demand. APG is actively investing in companies that are developing such technology, such as Groendus (smart energy management for businesses) and Net2Grid (software for additional insight from smart meters).

A shame
Ultimately, smarter electricity consumption is one of the key elements in solving this problem. For the climate, but also for the consumer’s wallet.

Filipan: “It would be a shame if we all have to pay even higher rates because we need more natural gas to meet our energy demand. After all, you could have run that washing machine on cheaper renewable electricity in the afternoon, for example. An energy weather report contributes to awareness about this and in that sense, it can contribute to more efficient use of the electricity grid. This is a collective interest, which will also benefit you as an individual consumer in the long term.”

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.”

100 years ago, the Netherlands chose to take care of a pension together. And 100 years ago, ABP the pension fund for government and education was established. ABP and APG are jointly commemorating this milestone and are organizing various activities, including 100|The Exhibition.

On the occasion of the centenary of 100 years of retirement in the Netherlands, 100|The Exposition was festively opened on Tuesday September 27 at the head office of APG. The opening was performed by Sophie van Gool, author of 'Why women earn less; and what we can do about it' and columnist at the Financieele Dagblad. She was accompanied by Harmen van Wijnen (Chairman of ABP) and Francine van Dierendonck and Maarten Blacquière (members of the APG Board of Directors).

After the opening, the exhibition, which is open to everyone, will travel via the ABP and APG offices in Amsterdam to the NHL Stenden University of Applied Sciences in Leeuwarden, one of ABP's affiliated employers. The exhibition will also be made available in digital form, among others to the 3.1 million participants of ABP.

Pension gap
1922, the year ABP was founded, was also the year that Dutch women were able to use the active right to vote for the first time - which they had been granted in 1919 - during the elections to the House of Representatives. Although quite a lot has been achieved, 100 years later, the playing field between men and women is still uneven. For example, the average gross salary of women is still about 13% lower than that of men and the pension gap between men and women is as much as 40%. This is the second largest pension gap in Europe and is due to the fact that women are more likely to work part-time and, in practice, are often paid less than men for equal work.

To life
To draw attention to the (financial) inequality between men and women, ABP and APG sought collaboration with historians Els Kloek - known for '1001 women in Dutch history' - and Katja Krediet. ABP and APG also conducted research into the future of financial (in)equality in collaboration with the Motivaction agency. The exhibition tells the life story of nine different people, who always live at a different moment in time. On the basis of these stories, the legal position, education and labor participation of women at that time come to life: from women who were fired after getting married because otherwise 'marriages remained childless', to the rise of the pill and the Dolle Minas. From women who until 1971 'owe obedience to the man' according to the law to women who - today - marry someone of the same sex.

Mirror
Every life event includes a so-called 'reality check' for the visitor himself. He literally looks in a mirror and is confronted with questions such as 'what does it mean for you and your financial situation if you decide to buy a house or if you decide to work part-time'? In this way, ABP wants to increase the financial awareness of current generations and hopefully contribute to closing the financial and social gap between men and women.

The first three stages of the Tour of Spain were held in the Netherlands this year. Total costs: almost 15 million euros. Will it be limited to those costs? And are the hotel and restaurant revenues the only benefits of the Vuelta for the Dutch start and finish locations? The benefits of organizing a major sporting event are often broader than the direct economic benefits. But the budgeted costs are also often higher. Charles Kalshoven, macroeconomist and senior strategist at APG, explains why.

Organizers of major sporting events often tell a narrative that paints a rosy picture of the economic benefits, Kalshoven knows. “But that can’t always be substantiated. If there are any benefits at all, they go to the hospitality sector, for example, and not to the municipality or government.” According to the economist, the fact that a sporting event does not always bring in money for the host city is no reason not to organize one. “It can also just be fun, and it´s okay for fun things to cost money sometimes.”

Barcelona

Kalshoven acknowledges that this is a tricky message in these times, “because many people are currently struggling to pay their energy bills, so should you be spending 15 million on the Vuelta?” Incidentally, one third of the expenditure is provided by private parties, so it costs the national and municipal governments “only” 10 million euros (for comparison, the total expenditure of the municipality of Utrecht this year is budgeted at over 1.5 billion). Nevertheless, partly due to the high costs of the energy crisis, Utrecht will not be organizing any more major sporting events for the time being, Mayor Dijksma announced in Trouw.

“If you look at it from a purely economic perspective, the organizers of major sporting events usually don’t end up in the black afterwards,” Kalshoven said. VAT and excise duty on the beer sold, for example, do not go to the municipality but to central government. But the benefits, he says, are also broader. “In Barcelona, for example, for the 1992 Olympics, they refurbished the whole neighborhood of Barceloneta and the beach and developed Port Olímpic as an entertainment area. So the Games were used there to kick-start urban development.” And there may be more such indirect benefits. “If, like Utrecht, you’ve hosted all three major cycling tours, you may be playing into the hands of conference organizers. And companies working in the sustainable mobility sector may see Utrecht as a suitable location. It may also generate more tourism. The aerial images of the Dom and the canals are a kind of ‘free’ advertising for the city. It is a way for a city to show its best-kept secrets to the world.”

Experience Economy

Costs incurred to organize a sporting event can also be seen as an investment in health or welfare policy. For example, Utrecht was recently named the most bicycle-friendly city in the world. “If people start cycling more often instead of taking the car or public transport, there will be fewer traffic jams. That saves society money. And perhaps in the longer term, healthcare costs as well, because a sporting event can encourage people to participate more in sport, thus keeping them healthier for longer,” Kalshoven says. “You shouldn’t exaggerate these indirect effects, but if you wait for scientific evidence of the economic benefits of a sporting event, you’ll never be able to organize anything.”

Kalshoven: “Organizing a sporting event also fits in with the trend that people prefer to spend money on immaterial rather than material things: so-called ‘de-cluttering’. If visitors spend 30 million euros during a sporting event, the question is: what else would they have done with that money? Perhaps they would have spent it anyway, in which case the economic effect is zero. But it is also possible that they would have spent it on, I don’t know, plastic toys from China. That’s not very sustainable and it also contributes very little to the Dutch economy.” Whereas the Vuelta is part of the experience economy, where people spend money on an experience rather than on stuff. “That’s more sustainable, because it requires fewer raw materials. People do have to get to Utrecht, of course, so there will definitely be some carbon emissions, but maybe many will come by train or bike.” The advertising caravan, which traditionally precedes the race, will at least have a sustainable character this Vuelta during the Dutch phases. The vehicles in this “Green Caravan” drive emission free and only hand out sustainable items to the public.

Olympic Games

Yet it seems that fewer and fewer cities are in favor of organizing a major sports event. This is particularly true of the Olympic Games, where there was only one candidate city for the 2024, 2028 and 2032 editions. Amsterdam toyed with the idea of standing as a candidate for 2028 for a while, but the government ultimately decided it was too expensive and withdrew its support for the plan in 2012. “Organizing an event like that does put a strain on collective resources,” Kalshoven continues. “There are the direct costs for the organization, but also indirect costs for the deployment of police, fire department and emergency services. What you see is that the economic benefits of the event itself are often negative. The profits end up somewhere else, for example with catering businesses.”

The fact that the budget is often out of control also does not contribute to the enthusiasm among the local population. Here, too, the Olympic Games are a good example. For instance, the costs of the so successful Games in Barcelona ended up 266 percent higher. In 1976, in Montreal, Canada, it was as much as 720 percent. What is the cause of this? “An important part is political. If you want to push through the organization of a tournament, you have to reduce the price tag. Large budgets would prevent surprises, but damage your chances. So, the organization pushes for low quotes from builders of stadiums and infrastructure, but the setbacks are being paid for dearly. The problem, of course, is also that the projects are always unique, because you never build the same stadium twice."  

Advertisement

Whereas enthusiasm for hosting major sporting events seems to be waning in democratic countries, autocratic regimes are actually eager to welcome international tournaments. “There, the political benefits are often huge,” Kalshoven argues. “Russia, with the Sochi Winter Games, and China, where Beijing hosted both the Summer and Winter Games, were thrilled to be able to show the world that they were capable of hosting something like this. A good opening and closing ceremony is advertising to the outside world and also contributes to popular pride in the national regime. The political benefits outweigh the economic costs there. For Rutte it would be difficult to explain why there is money for the Olympics but not for, say, purchasing power measures. For Putin this is less of an issue. If he organizes such an event, he does not have to explain to his people why there is money for organizing the Winter Games but not for raising civil servants’ salaries.”

After the Russian invasion of Ukraine, it became a commonly used term. The country was the 'granary of Europe'. As a result of the conflict, the export of Ukrainian grain largely came to a standstill. After mediation by Turkey and the United Nations, it seems possible to get grain across the Black Sea from Ukraine again. How is Netherlands affected by this? And what are the prospects for the grain price? Time to ask Peter Verbaken, Head of the Raw Materials Team at APG, some questions about the grain trade.

Grain is a collective name for the seeds of grasses and includes rice, barley, wheat and maize. Ukraine mainly exports the latter two. The global annual production of wheat is about 780 million tons, according to figures published by the United States Department of Agriculture. Ukraine accounts for 30 million tons of this. The EU is the largest producer, with nearly 140 million tons, closely followed by China. 1,200 million tons of maize is produced annually, nearly a third of which comes from the United States. With an annual production of 40 million tons, Ukraine seems to be living up to its name as the granary of Europe when it comes to maize.

Is the Netherlands self-sufficient when it comes to grain?
"The Netherlands isn't self-sufficient. This is because the agricultural land here is more suitable for growing other crops. We therefore import more than 80% of the wheat we use here, mainly from Germany and France. Incidentally, only 40% of the wheat used in the Netherlands is intended for human consumption, the remaining 60% is intended for animal feed. For maize this is as high as 65%. About 20% is consumed by humans and 15% of the maize in the Netherlands is processed into biofuel."

France and Germany are safe countries with stable exports. So why is it that the Netherlands also has to deal with higher grain prices?
"Grains are globally tradeable commodities. If a major supplier drops out, as currently is temporarily the case with Ukraine, this will have an effect on the worldwide price of grains, and therefore also on the price we pay here in the Netherlands. That's how such a market works. You can't say: "My imports from France haven't been affected, so I pay the same low price as a year ago." The price of grain from countries such as Germany and France is also determined on the basis of the world price, because grain can in principle be shipped anywhere. Because we mainly get our wheat from France and Germany, we won't have a grain shortage here any time soon. But grain prices immediately rose here as well at the start of the war in Ukraine."

Normally, Ukrainian grain is mainly exported to North Africa and the Middle East. Can they breathe a sigh of relief now that Turkey and the UN mediate in the export?
"The agreement signed at the end of July has yet to prove its worth. There is still a lot of uncertainty as to whether the flow of ships will really get going to transport the grain from the Ukrainian ports across the Black Sea to the places of destination, without incident. That will become apparent in the next few months. It is very important this agreement is in place, but the situation still looks fragile. We had the explosions a few days ago at the Russian base in Crimea, for example. Turkey has a direct interest in the warring parties adhering to the agreement, because the country is one of the major importers of Ukrainian grain. So, like Egypt and other countries in the region, it really needs that grain."

Do you know anything about how the price of grain will develop in the coming months?
"Currently, the wheat price is in any case lower than before the Russian invasion. That's still relatively high, but not as extremely high as in the first phase of the war. The coming months will show whether the grain agreement will be implemented. Observers are hopeful, as a result of which the wheat price has already dropped considerably. However, should the conflict escalate again, the price will certainly rise again. The new harvest in the grain-producing countries in the northern hemisphere will take place shortly after the summer. It will then become clear to Ukraine to what extent the war has affected grain production. All grain producers are dependent on the weather for their harvest. In Europe, for example, it has been hot and dry for a long time now, which can have consequences for the harvest. For the time being, we're hearing positive reports from America about this summer's grain production. The weather has the potential to provide relief if it leads to a rich harvest, but can also pose a risk and lead to further shortages and higher prices."

Topical issues in the field of economy, (responsible) investment, pension and income: every week, one of APG's experts provides a clear answer to this week's question. In this edition: Thijs Knaap, Chief Economist at APG, on the benefits of the much-discussed hub function of Schiphol airport for the Dutch economy.

Personnel shortages, long queues, the cancellation of flights. Schiphol airport has been a hot topic in the news again lately. An element of discussion here is whether or not the airport should fulfil a hub function. For a significant portion of the passengers, Schiphol airport is not their starting point or final destination but they only use the airport to transfer flights. In 2019 this involved more than one third of the 71 million passengers calling in at Schiphol airport. Are all of those transfer passengers really that beneficial to the Netherlands?

Network effect
According to Knaap, two elements are of importance. “The first element are the transport costs, meaning how much it costs to travel from the Netherlands to a foreign destination and vice versa. When a country has a large airport, such as the Netherlands has with Schiphol, the transport costs to that country are low because there's a bigger chance of direct flights and several airlines are competing with one another. Good accessibility is an advantage, economically speaking. The second element are the so-called network effects. That network effect enables a city or country to attract activities. If you are the first or most important company somewhere, the rest will come to you. There's not a lot to gain from the transfer passengers themselves, but the hub function does ensure that many airplanes travel through Schiphol, meaning we are well accessible as a country. Thanks to that network effect, more companies settle in the Netherlands providing more growth. If that's the goal, good connections are essential.”

Goal
It's difficult to say what the gain of such hub function is in a direct sense, Knaap says. “The few euros you earn for each transferring passenger will not make the difference. You could say that accessibility is the gain that eventually ends up with, for example, companies that benefit from it, with the Dutch holidaymaker who flies abroad easily and quickly and with the government by means of extra tax income. A part of that gain can be attributed to an increase of prosperity and that is difficult to measure. That also brings us to the point that the many flights from and to Schiphol airport also contribute to environmental pollution and noise nuisance. Those arguments are mainly presented when it comes to the transfer passengers at Schiphol airport, because they don't generate money for the Dutch economy. That's why many people ask themselves: ‘What is the actual usefulness of the hub function?’ But the goal is not the people transferring flights, the goal is the fact that the airplane flies to Amsterdam. The fact that an airplane departing from America or Asia arrives in Amsterdam is what makes the transport costs lower for the Netherlands and that's what it's all about.”

The considerations in favor of and against a hub function are changing over time though, Knaap says. “Thirty years ago, the general tenor was: ‘Let's build yet another landing strip’. The argument used in the past to make Schiphol airport grow, more employment opportunities, is less powerful since there are enough jobs available in the Netherlands. At the same time, we are currently dealing with housing shortages and more attention is paid to the environmental pollution and noise nuisance caused by Schiphol airport. That can also be seen in the debates where the general tenor now is: Just have Schiphol airport shrink.”

Balance
The millions of transfer passengers at Schiphol airport are therefore not directly beneficial to the Dutch economy. The hub function does ensure low transport costs and a possible network effect, advantages that are difficult to quantify. A balance between, on the one hand, the desire to maintain the hub function and, on the other hand, to decrease the number of flights, is difficult, according to Knaap. “You cannot say that by cancelling 50 percent of the flights, you will still have half of your hub. It would mean the hub no longer exists, because you need a minimum number of transfer flights. But it continues to be a guess how many flights would be needed to maintain the hub function.”

Who are these people who deliberately choose to work in the retirement industry? What do they do there all day for your retirement? And what do they like about their work? We take you behind the scenes to take a look.

Stan Russell (30) is senior engagement manager at Geldvinder. Along with his team it is their mission to make everyone in the Netherlands financially fitter. “Personal finance is still a bit of a taboo subject.”

What is Geldvinder?

“An online financial platform within APG, with which employers can help their employees structure and improve their finances in an accessible way. Think of it as an online financial coach. Users start with a fit test to map out their income and expenses, buffer and risks, assets and debt as well as their retirement savings. This results in a certain fit score of between 0 and 100, which provides information about someone’s financial situation. It gives a very accurate picture. You shouldn’t see the score as a conclusion, but rather as a starting point from which you can set your financial goals. Some goals are easier to achieve than others; sometimes you work on several goals at the same time. Because people’s financial situations change quite a bit, Geldvinder aims to guide users in the long run.

What is APG's interest in this?

“APG started this because the retirement saving system is changing. It is no longer one size fits all, people are increasingly gaining more insight into their own retirement savings. On the one hand, it is a good thing but on the other hand, it also comes with more responsibility. APG believes it is important to help their clients with this. Of all four financial domains in Geldvinder, people score the lowest on retirement savings. That is partly because of ignorance. We want to offer clear, reliable information so that participants can make good choices. Because making the wrong decisions about financial matters can have devastating consequences. Geldvinder is a non-profit start-up with no commercial partners, and that is quite unique. The details you fill in are also not shared with third parties. Employers can see what their employees have filled in and where their challenges lie, but they can’t see it at an individual level. So far it has been a tremendous success. In the first year, about 20 percent of employees with which we cooperate were using the platform.”

What does a senior engagement manager do exactly?

“On the one hand, I maintain contact with organizations that are affiliated with Geldvinder. On the other hand, I give presentations at qualifying organizations to find out whether Geldvinder can complement their vitality policies.”

How did you get into the world of retirement?

“Via LinkedIn. My current boss, who I already knew, posted something about Geldvinder and I thought it sounded interesting. I applied for the position and started a year and a half later. In the middle of the covid-19 pandemic, yes. I have only met my direct colleagues in person a few times, which is kind of crazy.”

What is your background?

“At first I was working as a recruiter for consultants, focusing on innovation. An enormous niche, but it taught me a great deal about innovation. At some point, I no longer wanted to serve those who make a change, but I wanted to make the change to the content myself.”

Working in the retirement industry doesn’t really seem very sexy?

“I can imagine that people might think that; it's not the best opening line at a party. But actually, the opposite is true, for me at least. At a start-up in a large corporate such as this one, you can do a lot of experimentation and innovation. I like the fact that on the one hand I can still speak to new people and on the other hand be involved in developing a platform. I can get involved in everything. That’s what’s so great about a start-up. In addition, communication lines are short and I work with resourceful people who are just as motivated to let our platform grow.”

What motivates you in your work?

“Personal finance is still a bit of a taboo subject. It is a difficult topic to discuss openly. When giving a presentation, I notice at the beginning that people find it difficult to talk about the topic, while afterward there is an avalanche of examples from HR departments. That is what I still like best about it. We literally make it possible to talk about finances in the workplace. It gives me energy. Moreover, I really believe in Geldvinder. The fact that it was built up from so much knowledge and expertise by users and organizations, makes Geldvinder unique.”

Why is financial fitness so important?

"50 percent of Dutch households are financially vulnerable, and 33 percent of these households do not make financial plans. These are frightening numbers. While we know just by making small adjustments can eventually make a huge difference. People tend to distinguish between mental and physical fitness, I think that’s an outdated approach. Many people don’t only exercise for their physical well-being, but also for feeling good mentally. Finances are part of this. If you have money troubles, it affects the way you feel. Many people will probably think: What does my employer have to do with my personal matters? But private and work-related matters are not so easily separated as they once were, you take your private life to work and vice versa. Worries don’t just disappear once you walk into the office. Therefore, it is also relevant for employers to focus on the vitality of their employees.”

How financially fit are you, exactly?

“The first time I scored something like 42, which is really terrible. I suppose you can say it’s a case of the shoemaker’s son going barefoot. My income and expenses were insanely out of balance, I did a lot of stupid things. For example, I had subscriptions that I barely used, and yet I let them continue for years. I also knew very little about the budgets to which I was entitled through my employer. So I started with Geldvinder and a year and a half later my score was at a much better 67. And it keeps on getting better.”

What does an average work day look like for you?

“We mostly get together as a team to discuss current issues, digitally or otherwise. After that, I usually have one or two presentations at organizations such as a municipality, province, or government department. Once there, I present Geldvinder and share the experiences of users and clients. I always enjoy lunch in our new Edge office, one of the most sustainable buildings in the Netherlands. Later in the day, I have telephone calls with interested organizations about Geldvinder. Those are without any exception great conversations.”

What do you do in your free time?

“I often go for hikes in nature, often while listening to a podcast. I love everything Gijs Groenteman does. In terms of music, I like listening to Bob Dylan or Elvis Presley. My greatest hobby is strolling through Amsterdam. Going to the market, and buying fresh ingredients, there’s nothing I like doing more than cooking. Just the other day I hosted a wagyu evening. Wagyu is a Japanese beef delicacy and in terms of quality the Ajax of the market. You should give it a try. Oh yes, and I’m an extreme fan of Italy. I’m thinking about going to Bologna for an extended holiday or sabbatical. It is one of my financial goals.”

What qualities make you suitable for this job?

“The courage to discuss money matters. I wouldn't have done this job if I were afraid of confrontation. I’m also someone who really wants to make an impact, which is particularly important in a start-up. You pretty much have to invent everything yourself - you have to like that. If you’d rather have someone lead you every step of the way, it will be agony. But freedom is exactly what I like.”

What retirement clients notice about your work?

“We offer them Geldvinder, which allows them to have a much better grip on their financial situation. Eventually, it also influences their retirement. I see it as our role to make people aware that more freedom in terms of retirement is not only great, but that it also involves a certain responsibility.”

Current issues in the field of economics, (responsible) investments, pension, and income: an APG expert gives a clear answer to the question of the week. This time: Marco van Eijkelenburg, Senior Portfolio Manager Commodities, on the question what the Netherlands will notice of Russian Gazprom discontinuing gas supplies to Dutch GasTerra.

The reason that the Russian state-owned gas company no longer delivers to the Dutch gas distributor as of June 1st is that it does not want to pay the bill in Rubles, something that President Putin is demanding. Poland, Bulgaria, and Finland have already been confronted with the Russian sanction. According to Environment Minister Rob Jetten, the decision by Gazprom will not have consequences for Dutch households. But not everyone is convinced of this. Mijnraad, an independent advisory body of the government warned that a gas shortage could have “very large social consequences”  The international energy agency IEA also warns for an energy ration.

Alternatives
Marco van Eijkelenburg points out that GasTerra already has alternatives for the Russian gas. “I therefore do not think that this action by Gazprom will have major consequences for the Dutch gas reserve, although GasTerra will have to pay more for those alternatives than for the Russian gas. With its gas roundabout [infrastructure interchange for transport and storage of natural gas], the Netherlands has a favorable position with respect to the gas supply. As a direct consequence of the Russian invasion in Ukraine, there will be an accelerated scale up of capacity to import liquid natural gas (LNG). Gasunie, the state-owned company that takes care of the Dutch natural gas transport has rented two floating LNG facilities to expand the new LNG terminal at Eemshaven.”

This terminal, with an annual capacity of 8 billion cubic meter, will become an important supply line, Van Eijkelenburg explains. “We use approximately 40 billion cubic meter natural gas in the Netherlands per year, of which approximately 15% comes from Russia. If needed, there is always the gas field below Groningen, although that is politically sensitive. If there is a shortage of gas this coming winter, the government will first disconnect large industrial users from gas so that the delivery certainty for households and specific essential social services, such as hospitals, can be guaranteed. So, the Dutch consumer does not have to worry about the delivery certainty; it does however have to worry about the gas price. Especially when there is a variable contract and a cold winter.”

However, that higher price is not specifically caused by Gazprom discontinuing its delivery to GasTerra, Van Eijkelenburg emphasizes. “The increased gas costs have more to do with the fact that the entire gas supply from Russia is decreasing, partly because European countries want to move away from Russian gas, and partly because Russia is demanding payments in Rubles. The developments surrounding GasTerra and Gazprom are therefore part of a wider trend that is happening, and that brings along a lot of uncertainty. And that uncertainty about future gas deliveries can already be felt in the price. Directly in the gas price, as well as indirectly in the prices of goods. If the situation in Ukraine escalates further, with all the associated consequences for the Russian gas deliveries to Europe, the gas price can increase even more.  But it is also possible that Gazprom will discontinue even more deliveries, but that there is a price decrease after all. Simply because the current price already accounts for a negative future scenario.”

Gas supply
So the relatively high price we currently pay for gas is partly because the future uncertainty is already included in the price. What is striking is that the Dutch gas reserves are filled less than 40 percent. The government wants to replenish this to 70 percent, but the Mijnraad advises to do this to 100 percent. According to Van Eijkelenburg it is indeed wise to replenish the Dutch gas reserves as much as possible in the coming months before winter starts. “You have to take into account the worst possible scenario where more Russian gas supplies to Europe are discontinued in the short term and that we will have a cold winter. If you have the option now to best prepare yourself for this, you should do that. Europe will only import less Russian gas in the coming years, so the extra natural gas that was purchased will come in handy.”

We should regard Gazprom’s discontinued gas delivery to GasTerra as a small step in the larger movement to move away from Russian gas. “By definition, such a sudden boycott is a disruptive process and will never be gradual. Because of this, the predictability of supply and demand will decrease, and the prices will increase because of the increased uncertainty. But the delivery of gas to consumers will not be compromised, partly because of the increased expansion of the Dutch capacity to import liquid natural gas.”

APG has been named a market leader in engagement by EY. This is evident from the consultancy’s Engagement Maturity Matrix. A good reason to ask Anna Pot, Head of Responsible Investment Capital Markets & RI Communications at APG, some questions about engagement.

According to EY (formerly Ernst & Young), characteristics of a market leader are actively driving positive change and setting the market standard for institutional investors. A good result for APG and its pension fund clients. At the same time, public opinion seems to be increasingly critical. For example, some pension fund participants want their funds to invest as responsible as possible.

How can this be reconciled?

“I think two things are important here. The first is that participants and the media in the Netherlands are critical.  When it comes to responsible investment, the expectations and ambitions among participants and our stakeholders in the Netherlands are high. And that’s actually very good, because fifteen years ago, when we were developing awareness around responsible investment on behalf of our fund clients, it was not such a big topic yet. Today, it is a very important consideration and people have high expectations around it. Pension fund participants are learning more and more about this subject. In that sense, you could say that the pension funds have succeeded in propagating the importance of SRI. And the critical part of the constituency is growing. That means we are offering something that the pension fund participants want from us. In fact, they want us to do even more in this respect.

Another important point is that we were compared to institutional investors abroad in this study. There are also many developments in responsible investment among the other big players but in the Netherlands, we are in the lead. As APG, we are seen as a leader that other parties are happy to work with and support. That leading position also helps us to align other parties with our goal of investing as responsible as possible. That cooperation with other parties is essential to our success and to achieving our sustainability ambitions as well as those of our fund clients. It is therefore important that we are also seen as a leader in the international field. So, I am very pleased with this result.”

When does APG see itself as the leader in responsible investing, when experts like EY think so or when the public thinks so?

“We are never satisfied. We are very ambitious and critical of ourselves and always want better results in responsible investing. After all, our goal is to make the world more sustainable. In any case, it’s nice to see that our efforts are being recognized. And not just by EY. Another example is the Principles for Responsible Investment (PRI), an organization supported by the United Nations. The PRI assesses us annually and it’s always nice when we see growth in that. And then there is the Association of Investors for Sustainable Development (VBDO), which assesses the fifty largest pension funds in the Netherlands in terms of sustainability. Our fund clients are in the top echelons there. Last year, for example, ABP was ranked number one for the fourth consecutive time. In that sense, external assessments are nice, but are they a yardstick? No, they are indications that we are doing well and that we are seen as a leader. Of course, what really matters is the impact of our efforts. For example, a company following up on our engagement requests. Or the fact that we are making our investment portfolio more responsible. Another example is that more companies are attaching green goals to the issuance of their loans (bonds), or that our real estate companies are operating in an increasingly energy-efficient manner.” 

There are many forms of engagement. What is an example of a form in which APG is particularly strong?

“EY specifically mentioned our so-called inclusion policy. This means that we can only invest in a company that lags behind in terms of sustainability if we expect that engagement can lead to improvement. It is a very systematic way of setting priorities in the engagement policy we pursue for our funds. We ask ourselves the question with which important companies in our investment portfolio we can still make gains in terms of engagement. Is it worth our time and energy? Or should we decide to stop engaging with a company if we feel it is not producing enough results? We also take into account that if a company becomes more sustainable, it is a better investment in our portfolio. We score high on this form of engagement, which is very closely related to our investment choices and portfolio. It also earns us a lot of appreciation. It is something in which we are unique, compared to other institutional investors.

We also have thematic engagement processes that we perform on behalf of our pension fund clients and that are seen as leading the way in the market. One example is an engagement path on the transition in the automotive industry. We are asking car companies to become more sustainable and to switch to a carbon-neutral business model. That means they have to manufacture electric cars instead of diesel cars. In this sense, sustainability is about climate targets, but in our commitment we also focus on these companies’ personnel policies. Because whereas manufacturing an internal combustion engine car requires five employees, an electric car requires only one. It also requires different skills. As a company, you can do two things. You can say: we’ll lay off our current employees and look for new ones. Or you can try to use your staff differently so that they can keep their jobs. And that’s what our engagement is all about: make sure that as a car company you also have a strategic personnel policy that focuses on training and retaining staff where possible.”

There’s probably still room for improvement.

“I think we can make the outcomes of our engagement more visible. Conversations with a company we invest in, for example, can lead to a new policy or committee. But how can you concretely reflect the impact of that? If you take the example of the car industry, it’s about how many people still have a job in the end. It is difficult to communicate that in an effective and honest way. Reporting on the impact of our engagement is therefore an important area for improvement. Making the results of our engagement more visible also touches on the point where we started this discussion: the critical note in the Netherlands. We must continue to bring our efforts into the limelight. Also because we think it is extremely important that participants know how we invest their pension money.”

Current issues related to economics, (responsible) investment, pensions and income: every week an APG expert provides a clear answer to the question of the week. This time: Thijs Knaap, chief economist at APG, talks about the consequences of the strong dollar for Dutch consumers.

At the start of 2021, one euro would fetch 1.22 dollars. At the beginning of this year, it was still 1.14 dollars and now the exchange rate of the euro has fallen to around 1.07. This means the euro is still worth a little more than the U.S. currency, but the difference is pretty small. Just after the introduction of the euro, at the beginning of this century, was the last time that the dollar was stronger than the European currency. At that time, you’d get a paltry 83 cents for your euro. Around the credit crisis of 2008, however, the euro was very strong again and was worth 1.60 dollars. So, the exchange rate fluctuates considerably. What factors play a role in this? And what does the Dutch consumer notice about the more expensive dollar?

More expensive vacations

With an exchange rate, three things come into play, Knaap explains. “Dutch consumers immediately experience the first one. That is because American products that you have to pay for in dollars, for example on the internet, become more expensive. Vacations to America also become pricier.” In addition, there is an indirect consequence. “Very generally, you can say that there are two large economic blocs that compete in the world market: America and Europe. Our power as Europe to buy products such as gasoline on the world market at a competitive price, for example, depends very much on what the euro is worth against the dollar. Now that the euro is weaker, we have to bid against the stronger dollar on the world market. That leads to products currently becoming more expensive for us than for Americans.”

The second force that plays a role in the exchange rate is the financial markets. “There is always a need to put excess money away somewhere in the world, for example in a bank or by buying a government bond. Then it matters what the interest rate is, and it is now quite high in America and quite low in Europe. So, it is more attractive to put money away in America, which increases the demand for dollars and makes that currency more expensive. The current high interest rate in the US is therefore the biggest reason for the strong dollar. Because although the global flows of goods are big, the financial flows are even bigger. These therefore have the greatest impact on the dollar exchange rate. If the European Central Bank were to raise interest rates now, the euro would become somewhat stronger, but that does not have a one-to-one effect. Financial markets also take into account expectations about the U.S. and European economies. The European economy is somewhat weaker, for example due to the war in Ukraine. The rise in US interest rates will therefore be stronger than in the eurozone.”  

Safe haven

The fact that the dollar is still seen as a safe haven is the third factor influencing the exchange rate. “Anytime there is a calamity somewhere in the world, like right now the war in Ukraine, investors get scared and take their money to the U.S. and buy dollars. They do so because they have learned through trial and error that at the time of misfortune, the dollar rises in value. There is some debate as to whether the US really is that safe for investors anymore. Think of the period under President Trump, for example. But for now, Washington has nothing to worry about. Just look at the beginning of this year: Russia invades a country and boom, all the money goes to the US.”

There is also a reason to be happy with a cheap currency. After all, European products are now cheaper on the world market and will therefore be sold more, which in turn can lead to more employment, for example. In that sense, Europeans can benefit indirectly from a cheap European currency. This also applies to the Netherlands, although additional employment can currently also lead to a further tightening of the labor market. “Despite the fact that a large part of our exports remain within the euro zone, trade with non-euro countries still plays a major role in the Dutch economy. A cheap euro is therefore not only good for exports of German and French cars or Italian fashion, but also for Dutch exporters.”

Long term

So, possibly extra jobs for the Netherlands, but also more expensive American products and vacations. Those prices will only go down again when the exchange rate of the euro rises. What is needed for that? “In the short term, a higher interest rate,” Knaap says. “In the long run, it will work itself out: the cheaper euro will lead to so much trade that demand for euros will increase and demand for dollars will decrease. An end to the war in Ukraine will also make for a stronger euro.” For now, the U.S. currency will remain strong, Knaap expects. “In the US, they’re really raising interest rates, which will further shore up the dollar. I would venture to say that the dollar will be a lot weaker in five years, but next year it may well be stronger than it is now.” So, for the time being, American products and vacations will remain relatively expensive for Dutch consumers.

How do you deal with work and money for now and for the future? Do you live one day at a time, or are you consciously planning your financial future? And are you setting things up for your future yourself, or do you belong to a pension fund? Sandra Boon lives as a “digital nomad” and can work anywhere in the world – as long as there is Wi-Fi.

Sandra Boon (30)

Profession: online entrepreneur

Works how many hours a week: between 20 and 40

Income: between 1500 and 2500 euros (net)

Savings: 10,000 saved, 15,000 invested

Pension set up? Yes

What exactly do you do?

“I am an online entrepreneur, and I do web design and online marketing, among other things. I also have a blog, I wrote a book about how I deal with money and I teach a course on dealing with money. I started my own business at 16 and taught myself everything from building websites to coding. I never had a paper route or a side job in a supermarket.”

How many hours a week do you spend on your business?

“It varies. When I’m in the Netherlands it’s usually full time, but when I’m on the road it’s more like twenty hours a week. I earn part of my income passively through affiliate links on my blog, among other things. When people buy something through those links, I get a certain amount. And when people buy my book, it is sent by another company. That brings a lot of peace of mind. I love being able to plan my own time, it feels very free. When you travel, you don’t always have the option to work; if you’re an online entrepreneur and there’s no Wi-Fi, that’s it. I have a small camper that I travel around in. I just spent over five months away, with my dog, who unfortunately passed away a few weeks ago. The fact that I can now take some time to deal with this is also one of the benefits of the way I’ve arranged my life.”

How much money do you make?

“On average between 1500 and 2500 euros a month, net.”

Are you happy with that?

“I think it’s absolutely fine. I did earn more before; there were months when 8,000 euros came in, but then I would spend just as much. I traded in my old Toyota for an Audi, we moved from a small social housing unit to a large semi-detached house. Everything was upgraded, but that didn’t make me happier. I had to work very hard for it and outrun myself. It just wasn’t worth it to me.

A few years ago, when my relationship ended, I realized that I had nothing to show for all that hard work. That’s when I then changed my whole lifestyle in order to manage my finances a little better. I started saving for my retirement, bought a small house and started to watch my spending. Now I’m in the position of having things pretty well sorted out. That gives me a lot of peace and freedom. I don’t need to make a lot of money. The less I spend, the less I need to work. People who don’t know me think I’m a bit of a slacker. And there actually are weeks when I don’t do anything, but I can afford that. I created that luxury myself. I’m very glad I made that choice, because otherwise I’d still be living from paycheck to paycheck, so to speak.”

How much do you have in savings?

“I usually keep around 10,000 euros purely as savings, and in addition I also have about 15,000 euros invested.”

What are your basic monthly expenses?

“In total, they amount to about 1250 euros. The largest part goes to housing costs, my mortgage at 750 euros a month and the VvE at 125 euros. I also pay 105 euros a month for electricity, 89 euros for health insurance, 38 euros for insurance for my camper and I have subscriptions to Spotify (10 euros) and Netflix (8 euros). Depending on what I earn, I also put some away every month for my pension or on my investment account. But that’s not a fixed amount every month.”

What else do you spend money on?

“Mainly on travel, groceries and fun things, like eating out with friends or a day trip. I usually keep around 500 euros for variable expenses every month. When I'm traveling, I don't necessarily spend more than I do in the Netherlands. I have more fuel costs, but otherwise the costs remain fairly similar. I often stay at free campsites and I really don’t eat out three times a week. You can make it as expensive or cheap as you want. As much as possible, I want to spend my money on things that really make me happy.”

What do you save on?

“On anything I’m not interested in: clothing, makeup, getting coffee from a coffeeshop, furnishings, subscriptions, insurance. When it comes to energy in the house, I’m also super frugal; I take quick showers and rarely turn on the heating. But I would never sacrifice my quality of life to save money. You don’t have to, it’s up to you. You just need a lot less than you think. I noticed that again during my travels in the past few months. I didn’t have much with me, but I didn’t miss a thing.”

Are you making arrangements for your old age?

“Yes, for a number of years now I have had my annual margin invested by a pension provider for entrepreneurs. I have been working on it a lot lately, but not so much that I am putting in a fixed amount every month. I believe I have deposited 7,000 euros in two years so far. I put it off for a long time before, thinking I'd start putting in more when I was earning more. But instead of putting it into my retirement pot, I would spend it. It didn't feel right that I hadn’t accrued anything yet, so now I’m catching up in a big way. I don’t want to be poor when I get older. I want to live well and enjoy life, now and in the future. One doesn’t have to preclude the other.”

Do you see any improvement points with respect to your pension?

“I’m not where I want to be yet, I plan to put in more in the near future. But I think I’m on the right track and things will work out. Including the state pension, I’ll probably end up with around 2000 euros a month, and by that time I’ll have paid off my house, so I’ll be able to make ends meet.”

How do you picture your life by then?

“I would like to be on Gran Canaria or something, living the good life. Eating out a lot, doing things; anything but sitting at home and getting a cup of coffee at the snack bar once a week.”

Does money make you happy?

“Yes, especially because of the freedom it gives you. But it is a means, not an end in itself. Because I got my finances in order and rearranged my life, I don’t have to worry about money. As a result, I was able to escape the winter with my dog and experience the last chapter of his life with him in a special way. This would not have been possible if I had been penniless.”

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.”

Was everything better in the past, or does “now” also have its advantages? Different generations discuss social themes on the basis of propositions. This time, Karin van der Hulst (61) and her daughter Lotte Korpershoek (30). 

Lotte about herself: “I’m basically the rebel of the family; I do what I want. For example, I recently had my entire neck tattooed. Many people think that's intense, but I like it. Although my appearance might suggest otherwise, inside I am a soft-boiled egg. I work in home care three days a week and I am the mother of my 6-year-old daughter Saar.” 

Karin about her daughter: “It bothers me sometimes when she gets another tattoo - as a parent you think, is this what you really want to do? But on the other hand, it suits her and she can take anything. Besides, I used to be like that myself. I had a very short haircut and got my ears pierced, and my parents didn’t like that at all. Lot and I are very much alike. We have an incredible bond because of that. She lives in the same town and works just down the street, so we see each other almost every day. I admire Lot’s warmth and spontaneity. She always has an eye for what others need.”  

Karin about herself: “I am married to Peter and we have four children and seven grandchildren together. For many years I worked in childcare at a swimming pool, but when it closed during Covid, I decided to take early retirement. I figured I’d worked enough.” 

Lotte about her mother: “My mother is very sweet to me, and she is always there for me. We only need half a word to understand each other. It’s true that we are quite similar. Unfortunately, we also share our worst trait: we have zero patience.” 

Proposition: A good life is attainable for anyone in the Netherlands 

Lotte: “Yes, I agree with that. If you really want it, it is possible.” 

Karin: “The social safety net is generous. Maybe even a little too much. I think that some people abuse it sometimes. One of my daughters is a single mother with four children, but she works almost full time to make ends meet, while in her street there are many people sitting at home all day, doing nothing. I see cars parked outside their doors and I think: how is that possible? That bothers me sometimes.” 

Lotte: “Yes, I notice that too. Especially the slightly older generation, who benefit from a certain favorable scheme that they would lose if they went back to work. I don’t think that’s fair. I don’t understand why they don’t check it more carefully.” 

Proposition: Technological progress is inherently good  

Lotte: “In this day and age, when we are all so busy, we hardly know how to live without technological advances. I am already happy that there is a delayed start on my washing machine, for example, so that I can time it so the laundry is ready exactly when I get home from work.” 

Karin: “It’s all a bit much for me at times. I sometimes long for the old days, without all those technological gadgets. Everyone is on their phone all the time, children are often gaming on their iPads. Go outside, I think. It’s nice to have a washing machine, but I don’t use the dryer. I prefer to hang my laundry outside on the line, that makes me happy. All these things have been invented and we can’t go back. I sometimes regret that. Doing the dishes used to be quite an event. We did it together, we sang at the top of our lungs and had good conversations, so special. Those were good times.” 

Lotte, laughing: “Well, we were not all that excited about doing the dishes. But seriously: you did take the time to really listen to each other back then.” 

Proposition: People used to watch out for each other more 

Lotte: “For us, when I talk about our family, that doesn't apply. We look out for each other and for others a lot. But I do notice that outside of that, it’s not so much like that. To give an example: when I see someone eating, I always say ‘Bon appetit’. But when we were walking in the city the other day and I did that, the person I said that to just about fell off his chair in surprise.” 

Karin: “But we just keep doing that anyway. I have noticed that, especially since Covid, people live more in their own little world. That worries me.” 

Lotte: “I think, in any case, people could be a little more considerate of each other. The world would be a much better place for it.”  

Proposition: You have to be so careful when you say anything these days 

Karin: “Yes, at least it is said more often that you should not say something. People take everything personally and many subjects are sensitive. Sometimes you don’t mean anything wrong, but it is misunderstood. I think tolerance is hard to find.” 

Lotte: “Yes, you think extra about everything: is it okay to say this? Is it okay to do this? For example, my daughter will soon be having an event at school, with the theme ‘come as what you want to be’. She wants to wear an army outfit, but I find that a bit sensitive, with the war in Ukraine. That kind of thing.” 

Proposition: We are very prudish nowadays 

Karin: “When I look at today’s video clips, they don’t look prudish to me. I was not very prudish myself, even though I was raised that way.” 

Lotte: “You didn’t raise us to be prudish either.” 

Karin: “Well, I seem to remember that we had no problem with nudity, and you were the one that had a problem with us wanting to put a new glass shower door in the bathroom.” 

Lotte: “Hmm, I don’t know where I get that from, but I’m always conscious of what I want to show or not show. That is also how I am raising my daughter. I don’t mind if she makes videos for TikTok, but only fully dressed and she always has to show them to me first. Decency is important to me. Especially since I became a mom, public nudity seems to bother me more. I would never lie down topless on the beach, for example. I don’t consider that decent.” 

Proposition: The gap between the rich and the poor keeps getting bigger  

Lotte: “Absolutely. They should take more money from the rich. If you have a lot, you can afford to give more, I’d say.” 

Karin: “Then again, I find the discussion about taxing home ownership a tricky one. My husband and I have almost paid off our mortgage and have worked hard for years to do so. It wouldn’t feel fair to us if we were suddenly taxed more. But, on the other hand, it’s not fair for our youngest daughter to pay 2000 euros a month in rent and not be able to buy. I think that is really awful.” 

Lotte: “I have a good life. But it is getting more and more expensive. It’s practically impossible to live on one income as parents, nowadays. You both have to work, or you won’t be able to make ends meet. We basically spend an entire month’s wages on basic expenses like mortgage and utilities, and we don’t even have that big a mortgage.” 

Karin: “I had the luxury of being able to stay home when the kids were little. Once they were all in school, I went back to work. I’m noticing that we are often asked to babysit the grandchildren now. I love doing it and I love them, of course, but sometimes I think: my husband and I want to do things for ourselves too, now that we have reached this age. These days, there is a lot of pressure on grandparents because the parents work so much. And I see a lot of grandparents at the school, picking up the kids. I don’t think we are meant to be the ones raising the grandchildren.” 

Proposition: Kids these days, they will never amount to anything 

Karin: “I think every generation lumps the young people together. Our parents said the same thing: those kids will never amount to anything. And although you think you’ll never say that yourself, you end up doing it anyway. You are still inclined to think that it was better in your time. But I don’t really believe that today’s youth is so hopeless.” 

Lotte: “There are always a few bad apples; that’s just the way it is. But if I encounter a nuisance from a group of young people, for example, then I try to talk to them, in a positive way. To get them to change their minds. For example: hey, I understand that you are here and you’re having a good time, but would you mind toning it down a bit? Then the problem is solved. Everyone should have a place to develop themselves, especially young people.” 

Karin: “Lotte also went through a phase where she was hanging around the mall with a group of friends. I would hear about that from other people.” 

Lotte: “It was just fun.” 

Karin: “Other people didn’t like it. They’d say to me: I’d drag her out of there by the hair. But I knew: she’ll probably be into something else again in a couple of weeks. She was searching. I think we should put ourselves in their shoes more. If we all do that and we are all a little more considerate of each other, everything will be fine.” 

Proposition: Everything was better in the past 

Lotte: “I was a lot more relaxed when I was a child. Now I constantly have this sense of agitation and I experience quite a bit of stress. We used to communicate very differently and we used to enjoy playing outside. Yes, my experience is that things were better in the past.” 

Karin: “I think so too. We lived in a “woonerf” (living street); you don’t see those anymore either. The whole neighborhood played together, the children were always outside. In the neighborhood where we live now, hardly anyone watches out for each other. I don’t even know who our neighbors across the street are. That really bothers me. More and more municipalities are merging, which means that the village feeling of everyone knows everyone is disappearing. It is all becoming so impersonal.” 

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: Jan-Willem Ruisbroek, head of infrastructure investment strategy at APG, on when renewable energy can be stored for later use.

Last weekend it happened both days: the Netherlands produced more solar and wind energy than was used, weatherman Gerrit Hiemstra tweeted. The energy surplus went abroad, because storage of wind and solar energy is still difficult. This raises the question of when we will be able to start storing it.

Solar energy
“Solar energy storage is already happening,” Ruisbroek says. “For example, APG is investing in some solar parks in Nevada and California, where there is a predictable pattern of solar power generation and consumption. At the solar farm, there are a number of large batteries that store the excess energy. Such a battery is the size of a shipping container and looks like a kind of server room. During the day, energy is stored in them that people can use in the evening when they come home and the sun is no longer shining. The challenge lies in scaling up the use of these kinds of batteries. They are still relatively expensive, but they are rapidly becoming cheaper. In about five to ten years, they may be so cheap that you can put a small version in your garage. Then the excess energy generated by your solar panels will not be fed back into the grid, but can be stored in your own battery. That consumer product is going to come anyway. At present, there is a huge hype about solar panels, and in five or ten years' time there will be a hype about batteries. So, we can already store solar energy, but it is not yet being done on a large scale and the costs are still relatively high.”

Wind energy
It will also be possible to store wind energy within about five years, Ruisbroek expects. “But it is likely that with wind this will be in the form of large-scale hydrogen projects. Large offshore wind farms are being built now. These consist of gigantic turbines, about as tall as the Eiffel Tower. They produce an enormous amount of energy. When that comes ashore, it has to be stored when there is an excess of energy. And wind is a very good source for turning water into hydrogen, which can store energy and be released as energy again after combustion. Shell and Gasunie are currently building a hydrogen power station in Groningen. It will use energy from wind turbines to produce hydrogen. This is done on an industrial scale and, unlike a battery for solar energy, is not suitable for private use. The big challenge for hydrogen is that there is not yet a large infrastructure for transporting it, although the existing pipelines for natural gas may be a solution.” 

Last weekend, the Netherlands had more than enough generated solar and wind energy. The question is whether that is the rule or the exception. “It didn’t surprise me that the days with excess energy were on the weekend, because a lot of industry is closed then so demand is lower. A lot of solar and wind farms still need to be built to meet the total demand for energy. Currently, only a small percentage of the total energy supply consists of renewable energy. In addition to the development of battery technology, many more wind turbines and solar parks will have to be built in the Netherlands. There are presently a number of large offshore wind farms that supply some 4 gigawatts of energy. By 2030, an additional 20 gigawatts will be generated and by 2050 the total should be 70 gigawatts. There are plans to build more as quickly as possible, but these are also needed to meet demand. Because a great deal of energy is needed.”

European network
In addition to investments in battery technology and hydrogen power plants, a lot of money is currently being invested in so-called interconnectors. These are connections between countries through which excess sustainable energy is transported to neighboring countries. “The Netherlands has these connections with England and the Scandinavian countries, among others. In order to ensure that the surplus of energy generated in Europe arrives at the place where there is a demand for it, many connections are needed between the national high-voltage networks. There is already a European network in place, which enabled the Netherlands to export its energy surplus last weekend, but it is now being further expanded.”

Larger scale
The storage of solar energy in a battery is already possible on a small scale, as the solar parks in America show. According to Ruisbroek, it is now mainly a question of applying it on a larger scale, so that the batteries become cheaper and eventually also affordable for private individuals. Conversion of wind energy into hydrogen for storage purposes, on the other hand, is still in the start-up phase. “For now, that is a matter of making it work in practice before it can be rolled out further. So actually, the development towards storing wind energy is a step behind the development towards storing solar energy.”

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: Peter Verbaken, Head of APG's Commodities Team, talks about the consequences of a boycott of Russian energy.

A gas and oil boycott is not part of the latest sanctions package against Russia, but it is a measure the EU is holding in reserve. According to a report by the Netherlands Bureau for Economic Policy Analysis, the Netherlands will be hit hard if Brussels imposes such a ban. Should we therefore be afraid of such a boycott? Or will the consequences not be as bad as expected, as professor of economics Sweder van Wijnbergen argues in de Volkskrant?

First of all, Verbaken says that the situation in Ukraine affects him. “It is terrible to see how the people of Ukraine are suffering from the violence of war and how the country seems to be slowly being devastated. I've been following it closely from the start, also partly because of the impact it has on my work, and I sincerely hope it ends soon."

Coal as an alternative
Because of Europe’s heavy dependence on Russian gas, a gas boycott will hit harder than an oil boycott, Verbaken argues. “In the Netherlands, we have been lucky with a mild winter. At the end of last year, even before the Russian invasion of Ukraine, there was already a huge increase in the price of gas because stocks were so low. The mild winter and an increase in Russian gas supplies enabled us to get through the winter. But now we need to replenish gas supplies in the summer. If a ban on Russian gas imports does not allow us to replenish stocks in time, an alternative plan will be needed. Van Wijnbergen mentions the use of coal as a solution. In theory, that is indeed possible, although it is, of course, contrary to current climate policy. But it cannot be ruled out that politicians might nevertheless decide to switch from gas to coal in this exceptional situation.”

The question is whether coal can make up for the loss of Russian gas. Verbaken does not think so. “In practice it will turn out that you also have to do something on the demand side. For example, there is already a government campaign called ‘Turn the Switch’, which aims to get households to turn the thermostat a degree lower. However, a third of the gas demand in the Netherlands comes from industry. In order to reduce this demand, it cannot be ruled out that large industrial gas consumers will be forced to use less gas. This is certainly conceivable if Dutch gas reserves are not to be topped up with Russian gas this summer. However, forcing industry to use less gas is a radical measure of the kind we haven't seen since the 1970s, with the oil crisis and car-free Sundays.”

Oil shortage
In the case of oil, it is a slightly different story. Should the EU no longer import oil from Russia, then China and India will buy up the Russian oil at steep discounts, Van Wijnbergen expects. As a result, both Asian powers will need to import less non-Russian oil from the world market and therefore there will be no oil shortage. In theory, Van Wijnbergen has a point, but in practice things may turn out more difficult, Verbaken believes. “It will certainly take Europe several months to switch from Russia to other oil suppliers. In addition, the West is putting pressure on China and India not to play Russia’s savior, especially after the latest news about the many civilian deaths in Ukraine. What also comes into play are the so-called letters of credit, the financing required to ship oil. Financial parties will be very cautious about issuing them due to the threat of sanctions and public opinion.” It therefore seems unlikely in the short term that an oil shortage can be avoided by China and India importing more Russian oil, leaving more non-Russian oil for the EU countries.    

Major interventions
Verbaken thinks that Van Wijnbergen’s view is a bit on the optimistic side when it comes to the consequences of the removal of Russian energy. “Among other things, he is missing the factors that make shifting oil flows complex, and that gas demand really needs to come down.” Most problematic remains the boycott of gas. “The elimination of Russian gas punches a hole in our supply. If it can't be replenished in the summer, the problem will become more and more critical,” Verbaken says. “It’s like driving towards a cliff. The gas supply can only be sufficiently replenished if sufficient coal-fired power stations can be started up, the demand for gas can be reduced, and the supply of LNG (liquefied natural gas) can be tapped here and there. At the moment all that is being asked of the population is to use gas more sparingly, but what if that proves insufficient? How far do you have to go to force industries to use less gas? And which industries do you start with? The crux of this situation is that the government cannot explain to the population that they will not be able to heat their homes next winter. Major interventions are needed to prevent that from happening. The concerns about the impact of a boycott of Russian gas and oil are therefore certainly justified as far as I am concerned. However, given the current situation, with all the suffering that Moscow causes, it would be a perfectly justifiable sanction against Russia. If it is actually implemented, the government, industry and the Dutch population will have to work hard together to minimize its impact on us.”   

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."

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.

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.”

Topical issues in the field of economy, (responsible) investment, pension and income: every week, one of APG's experts provides a clear answer to this week's question.

In this edition: Sjacco Schouten, Head of Emerging Market Debt, about the consequences when a country such as Russia is no longer able to fulfil its payment obligations. “Also in an economic sense, it is a scenario with only losers.”

In the beginning of March, a number of credit rating agencies expressed the expectation that Russia would possibly no longer be able in the short term to fulfil its payment obligations (interest and redemption of the national debt) due to the Western sanctions. Russian government bonds were given a so-called ‘junk’ status, which more or less means that creditors deem it very likely that a large part of their money will not be repaid. This raises the question what happens to a country in case of such ‘bankruptcy’. In what case is this applicable? And what are the consequences?

The first question appears to be relatively easy to answer. Schouten: “The interest payment and redemption of government bonds usually takes place on pre-established dates. If a country misses such date, a grace period takes effect first during which the country is given the opportunity to still make the payment. When that doesn't happen, the country officially goes in default.”

Virtually zero

The answer to the second question – about the consequences of such default – is much more complicated as it entails quite some ifs and buts.

“When a country is officially in default, all kinds of processes are activated. A government will usually propose a restructuring to the bondholders and make agreements on ‘how to continue’. These agreements depend on the conditions of the bond and the legislation of the country where the bonds are issued. In the most extreme case, when a country is truly unwilling or unable to pay, the bondholders are possibly forced to fully write off their bonds, to virtually zero. The price will not be entirely zero, because you can never rule out for a hundred percent that some money will still be repaid at a certain time.”

Russia has not yet achieved that point. The country has not missed any payments until now. Should that be the case in the future, it will rather be due to the sanctions making payment transactions impossible or Russia's willingness to pay than its ability to fulfil the financial obligations. “Given Russia's oil revenues, the country should be more than capable to fulfil its obligations. Whether the country is also willing to do so in the long term, is a different issue. In that respect, a distinction in conditions could arise between investors who are willing to participate in restructuring and bondholders who are unwilling or unable to do as a result of the sanctions. This provides Russia with the opportunity to give ‘friendly’ countries more favorable conditions than ‘unfriendly’ countries.”

Preferential treatment

However, the pari passu principle applies to bondholders, meaning they should be treated equally. Schouten: “In principle, bondholders from a certain country cannot be given a preferential treatment. But the conditions of bonds issued under local legislation may differ from the conditions of government bonds issued under international legislation. In addition to the legislative aspect, many other factors play a role in a possible restructuring of the Russian national debt. For example, the currency in which a bond is issued - dollars or rubles. Moreover, for certain investors it is simply forbidden to still receive payments from Russia or to make payments to Russian entities. All of those factors combined make restructuring very complicated when it comes to Russia.”

Consequences

What are the consequences should Russia decide to no longer pay its bondholders?

“In that case, the country would become even more isolated and restricted in gaining access to the capital markets. In the short-term Russia is able to absorb a lot through its oil reserves and proceeds from oil and gas supplies. In broad lines, the country is still able to keep its economy running reasonably well. But in the months to come, the Russian economy is expected to shrink and the financial situation of the country will become more problematic. To what extent the country will then be able to hold back the economic contraction depends on the willingness of other countries to help Russia. That willingness cannot be excluded. Even if all Western countries - such as the US - ban Russian oil, Russia can still sell oil to other countries.”

‘Adding insult to injury’

Nevertheless, it looks like Russia will be facing a doomsday scenario in an economic sense. “In terms of food, Russia should for a large part be able to continue to be self-sufficient. But once the supply of everything the country imports stops - technology, computers, chips, and so on – large parts of the economy will come to a standstill. The average Russian will go back in time. He or she may possibly overcome the fact that a visit to McDonald’s is no longer possible, but access to technological knowledge and certain parts for instance, is of great importance to keep an economy running and developing.”

Adding insult to injury, that's what it comes down to should Russia become a defaulter. Schouten: “The sanctions are already causing damage to the economy. The population already prefers having dollars instead of rubles. In the event of a default, a major cycle is triggered after which the Russian economy is expected to end up in a deep recession with high inflation. Also in an economic sense, it is a scenario with only losers.”

More than two weeks. That's how long the war in Ukraine is ongoing. A war that almost seemed unthinkable until recently. The horrifying images are now presented to us on a daily basis. The consequences are unforeseeable but it is clear that this war has drastic humanitarian, geopolitical and economic long-term effects for the entire world.

The people in Ukraine are in need of immediate and concrete help. So what's the value of words in a situation like this? What is the benefit of these words to people who are affected directly by this war? A statement doesn't change their situation. But at the same time, APG stands amidst of society and we feel a commitment to everything that's going on. We stand for long-term income security but always from a sustainable perspective of humankind, the climate and the earth. The invasion of Ukraine by Russia is an attack on that perspective and the associated values. 

Solidarity is an important part of the foundation underlying the Dutch pension system and, with that, an important, inherent value to APG. That value has now become even more important. Our thoughts are first of all with the victims, the people in Ukraine who had to abandon their homes and the ones who are now suffering directly from the acts of war. We also think about our employees from Ukraine, Russia and Belarus who have family and friends living in that area or who are otherwise affected by this war. As an employer we will do whatever we can to give them the support, guidance and attention they deserve. I also see the emergence of the prompt solidarity we witnessed in our society and across Europe within the organization of APG. Colleagues of different nationalities want to help the victims and have established some initiatives to this end.

The Board of Directors is obviously also looking at the impact of this conflict on the customers of APG. The pension funds and participants we work for can count on the required advice and the resulting actions. The decision made by bpfBOUW,  ABP and SPW to sell their investments in Russia (less than 1 percent of the total) is one example.

Although the impact can in no way be compared with the consequences for the people who are affected directly, we are all struck by what's happening in Ukraine right now. We are stunned, concerned and our collective feeling of security has suddenly been undermined. The disappearance of the obviousness of freedom and security makes us realize just how fundamental certain values are to us. These values are currently under pressure, but the unity with which society responds also shows that we are still willing and prepared to promote those values.

Annette Mosman, chairperson of the Board of Directors of APG

Topical issues in the field of economy, (responsible) investment, pension and income: every week, one of APG's experts provides a clear answer to this week's question. In this edition: Portfolio Manager Jean-Paul Koopmans on the question whether non-fungible tokens (NFTs) are the future or are just a hype.

Paying 200K for a digital image of a monkey wearing a baseball cap and a slice of pizza in its mouth. That doesn't come as a surprise anymore to anyone involved in the world of the non-fungible tokens. In this case, the digital ownership of the image also provides access to an exclusive virtual club: the Bored Ape Yacht Club. The monkey images belong to the most expensive NFTs of the moment, in a market where a value of 44 billion dollars was traded last year. The trade in objects that only exist digitally. In short: a non-fungible token is a digital ownership certificate of an object or event. This certificate is registered in the blockchain: an enormous database distributed globally across many computers. Such token can be bought using ethereum or any other cryptocurrency on a digital marketplace, like OpenSea.

The value of an NFT is determined by the application it offers, Koopmans explains. Think about access to a virtual club or a digital piece of clothing or attribute you can use for a digital avatar in a computer game. If an NFT is not offering a specific application? “The only purpose in that case only really is to show off being the rightful owner or resell it on a trade platform.” The possibility to buy or sell it through the blockchain is something the NFT has in common with a cryptocurrency. But the comparison should stop there. A cryptocurrency first of all is a payment instrument to pay for digital transactions, for example, while an NFT is a unique registration of a good.

Speculative
“NFTs are mined. During that process, people are in the race to obtain a virtual good, such as an image of a monkey,” says Koopmans. “In the case of the Bored Ape Yacht Club, 10,000 different images were involved. These images all had unique characteristics and the rarer the characteristic, the more popular the image. But it is totally arbitrarily whether you receive an image that appears to be popular or not. And that is exactly the major disadvantage of the trade in NFTs: it is highly speculative and therefore extremely difficult to attach a value to it. This is the difference with asset management where we utilize calculations showing the approximate worth of a company. Those methods are widely accepted. Every NFT is unique, on the other hand, meaning you just have to guess how much such image is or can become worth. New collections of these tokens are constantly issued and 99 percent thereof is worthless. That is why I absolutely consider this a hype. The same as baseball cards and stamps were a hype once.”

However, Koopmans sees a real future for the NFTs. “The activities of a notary in the Netherlands can be fully digitalized in a blockchain. The title deed of an apartment will in that case become an NFT. That can have major consequences for home ownership. It is difficult to divide a title deed into multiple smaller deeds at the moment going to a notary. An NFT makes it easy to split a house, for instance, among multiple owners. The monthly rental income is then distributed amongst them through the blockchain. That saves on notary costs and makes it possible to make very illiquid assets liquid. A house of 500K, for example, can be distributed among 100 NFTs with a value of 5000 euros each. To me, that would be a great, neat application of NFTs. But for the time being, an NFT has no judicial base and the notary's signature does.”

Blockchain
However, the question is whether trading an NFT is safe. “If a name or address on the title deed is incorrect, you can call the notary who can very easily correct the mistake. But the blockchain has no help desk or insurance. That means if you accidentally sent the NFT of your expensive image of a monkey to the wrong digital wallet, you lost it. A mistake is severely punished. And that's not just theoretical. A few days ago OpenSea was confronted with a hack, making it possible to send the monkey images from one account to another by means of a phishing mail. Even OpenSea is unable to reverse that because everything on the blockchain is immutable or unchangeable. In other words: the technology is robust but there's no room for error on the side of the user. Blockchain can however be considered as more open.” That open nature lies in the fact that NFTs can be traded day and night, and that there are no rules yet restricting the trade.

The lack of a judicial base and the safety risks are what stops an institutional investor, such as APG, from investing in NFTs. “Before authorization is given by De Nederlandsche Bank or the Netherlands Authority for the Financial Markets to invest in such instruments, quite a few hoops still have to be jumped through,” says Koopmans. “In order to make it widely applicable, a lot of research still has to be conducted. We are clearly in an experimental phase right now. The progress may be accelerated once the digital euro is introduced. It also stands or falls with the question whether or not it is backed by a community. But that community will only arise if NFTs can be applied in a practical way. I am an investor myself, so an application to me would be the development of cash flow from such digital ownership. This means, for example, music samples or news photos of which the NFTs can be traded.”

Van Gogh
Something similar is already happening in the world of digital art that clearly takes the lead when it comes to digital ownership. “It opens many opportunities for artists to gain more grip on what is happening to their creations, as an NFT allows for a transaction to return a part of the selling price to the artist. When Van Gogh sold a piece of art, he would only receive an amount once and some name recognition at best. NFT makes it possible for an artist to earn, for instance, 5 percent of the transaction amount each time, thus leading to cash flow from art. The same applies if you sell the digital ownership to a song. Everyone using the song has to pay a certain amount that ends up with the owner of the song and the artist. That's how you can exclude record companies.”

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 on whether the economic outlook should be adjusted now that it seems that Covid will be with us for the foreseeable future.

Just under two years after the Covid outbreak, the Netherlands is again in lockdown due to increasing infection rates. At the same time, reports are coming in from southern Africa of a new Covid variant. At the end of 2020, we still thought that vaccines would get the virus under control, but now that hope seems to have faded. How will the new developments around Covid affect government policy, consumer confidence and financial markets? "If the government decides to stop the support, it really becomes a less positive story and an economic blow with bankruptcies and rising unemployment is inevitable," said Knaap.

Impact

When Covid first took hold, the Netherlands benefited greatly from the support measures of the Dutch government. Central banks also took action, so the impact on companies and financial markets was lower than expected. In fact, the number of bankruptcies is historically low to this day. Investors did not lose their money because companies were able to survive thanks to the support. Knaap: "Government support measures make sense in a temporary crisis, as Covid was considered to be, until recently. But understandably, there will come a point where the government may think, 'enough is enough'. After all, you can't keep companies afloat until the end of the century if their existence is no longer feasible in the new situation." So, for the economic outlook, a lot depends on what the Dutch government and other countries decide in the coming period.

The longer the lockdown remains in place, the worse it is for economic dynamism. "At the end of the day, you need people to engage in business. But who is going to open a restaurant in this day and age? The economy is getting a hit regardless. That also argues in favor of not phasing out the support measures, so that at least the existing companies don't go bankrupt," says Knaap. The advantage for the Netherlands is that it still gets money when it issues bonds. "We can continue to do that for years to come without being affected," he says. For other countries, and certainly emerging economies, the situation is more dire.

Consumers

Consumer confidence also plays a role in the economic outlook. "Economic growth occurs when companies make a profit, and they do that when they sell enough of their products to consumers. This has been difficult in the recent period due to problems with product supply. However, there was a lot of demand for products and services recently because consumers hoarded money during Covid by not being able to go to the pub or go on vacation," Knaap said. "The new lockdown still constitutes another setback for many people, with the hairdresser and theaters having to close earlier. That leads to less consumer confidence, making consumers more cautious in their spending. And that's never good for the economy."

Shock

The news of the omicron variant had already led to falling stock prices. What does that say about the prospects for the stock market? "Investors always have the previous shock still in their minds," states Knaap. That was in March 2020. But after first going down sharply, stock markets rose to record highs. It is possible that investors expect that the new outbreak will not lead to an economic crisis. Still, Knaap takes into account that it will turn out differently than last time. "The falling prices could now persist for a longer time, because we no longer see Covid as something temporary." Should we therefore adjust economic expectations? "The storyline is changing now. The previous storyline started with the pandemic after which the vaccinations followed and we expected economic recovery with rapid growth within two years." With these latest developments, that chance of rapid recovery now suddenly seems a lot further away."

The next few weeks will show whether this is a last hiccup of the virus and this will be a short lockdown. If so, there is a good chance that the positive economic expectations of a few weeks ago can be sustained. This is also due to the fact that the government can still intervene for a long time and stock prices have not fallen extraordinarily hard after the emergence of the omicron variant. Still, the new lockdown is creating uncertainty, including among consumers. The longer Covid remains among us, the more likely it is that at some point the government will stop its generous support policy, causing bankruptcies and unemployment to rise and stock markets to take a hit as well. The story is not over yet.

The second-best pension system in the world. That's what we have in the Netherlands, according to the annually published Mercer CFA Institute Global Pension Index, in which 43 countries are included. Are the other countries really performing that poorly? Every two weeks and during twenty weeks, we delve into the system of a specific country. Episode two: Italy.

Would there be a better place imaginable to spend your old age than in the country where la dolce vita was invented? Italians enjoy their pension on average for a long time: men 20.7 years and women 25.7 years. That partly has to do with a high life expectancy but is also due to the fact that Italians stop working at an average age of 64. Since 2019, the statutory pensionable age has been set to 67 for everyone. Previously, men were able to retire at the age of 65 and women, remarkably enough, already at the age of 60.

The sky is the limit

Until 1992, the sky was the limit in Italy. People were allowed early retirement after 35 years of work (civil servants already after 20 years and married female civil servants even after 15 years)  with continuing payment of the last-earned salary. Nowadays men must have paid contribution for 42 years and 10 months in order to claim early retirement, and women for 41 years and 10 months.

The same as in Germany, the Italians predominantly rely on pension from the first pillar for their old age. This first pillar consists of a basic old-age pension (‘vecchiaia’) and an allowance depending on people's employment record and contributions paid (‘anzianità). Recent adjustments have made the future benefits less solid. The risk of the actual allowance being lower has therefore increased. The share of the second pillar pension (accrual of pension through a pension fund related to the business sector or enterprise) in the total pension amount is very small in Italy (1 percent).

Aging of the population takes its toll

The pension expenditures put a big strain on the Italian government budget. Estimates of the Court of Audit show that a peak of 15.9 percent will be reached in 2022 of the gross domestic product. In the Netherlands, the state pensions (AOW) are slightly less than 5.4 percent of the gross domestic product (2020) and this number is expected to increase to a little over 6.5 percent in 2040. And as the largest part of the Italian pensions is funded based on turnarounds (the working population pays for the old age of the pensioners), the aging population in Italy takes a toll on the government budget in the years to come. This is due to the fact that an increasingly smaller working population has to provide for the pension of a growing group of pensioners.

In terms of ‘durability’ Italy has the lowest score in the Mercer Index of all (43) investigated countries. That's a very unattractive perspective for young people. Time will tell whether the pension pot is still sufficiently filled when it's time for them to retire.

APG starts a platform for care-related Chinese real estate together with CBC Group, the largest healthcare investor in the Chinese market. Responding to the growing demand for healthcare, among other things due to aging, CBC Healthcare Infrastructure Platform (CBC HIP) invests in care-related real estate, such as hospitals, nursing homes and medical research and production facilities.

The Chinese expenditures on healthcare will most likely double to over 1,700 billion euros by 2026. It is therefore a lucrative growth market, in which real estate plays a significant role, is the opinion of APG and CBC Group. “The care expenditures per capita in China are currently lacking compared to other developed economies,” says Dominic Doran, Director Private Real Estate Asia Pacific. “The expectation is not only for the government to attribute more funding to healthcare, but we also expect the average Chinese to starting devoting more money to care-related matters, as they will be getting greater spending power. That is a long-term trend and, as APG is a long-term investor, investments in care-related real estate are therefore well-aligned with our strategy.”

Attractive
It is also important to mention that the Chinese government has recently equated the rules for research, testing and production of drugs in the same manner as what is internationally accepted. That has made it attractive for investors to start investing in Chinese research on medical applications. Partly because of that reason, the partnership between CBC Group and APG has established the company China Life Science Infrastructure Venture (CLSIV), the first concrete result of the platform. CLSIV managed to raise more than 430 million euros in investments in an initial round. The goal is to ultimately achieve an amount of approximately 1.3 billion euros. “Medical breakthroughs deriving from research in our facilities, could be of global importance which is positive for the returns of CLSIV,” Doran says.

CLSIV is aiming in China at the development of futureproof facilities for the so-called life sciences (biomedical sciences). This sector is currently mainly big in Western regions, where know players such as Pfizer and GlaxoSmithKline have their home base. “It is difficult to name a comparable Chinese company at the moment. But we expect that companies will be established in China within the foreseeable future that will become just as widely known as the major pharmaceutical companies in the west", according to Doran. He also bases his opinion on the fact that the importance of life sciences will increase further. “Due to the aging population, but also because many people will be in need of additional care as a result of an unhealthy lifestyle. And Corona has made everything related to vaccines and medical research even more important.”

Strategic
The Chinese government considers life sciences as a strategically important sector. Beijing is therefore more than happy to make territory available to parties looking to develop biomedical facilities. A lot of territory CLSIV is to purchase, will therefore be bought from the Chinese government. The company has already purchased 1 million squares meters (equivalent to about 140 soccer fields) of terrain in Shanghai. In the future, the country wants to purchase land and develop medical facilities in other Chinese metropolises such as Beijing and Wuhan. The platform CBC HIP may even expand outside China and maybe even outside Asia in the future, even though the latter will be difficult", Doran acknowledges. “A couple of years ago, large American biomedical companies tried to gain footing in Asia, but that appeared to be difficult. I expect it will also be difficult for Asian companies to acquire market share in America and Europe.”

The collaboration between APG and CBC Group is important in order to gain footing in the recently opened Chinese care market. The Asian investor is considered an important player in China and has experience in collaborating with medical scientists and entrepreneurs. “We have established the first investment vehicle, as far as we know, with CLSIV setting foot on the Chinese care-related market,” Doran says. “Parties in need of real estate will therefore certainly be able to find us. And, of course, for the platform it is very positive to be considered a market leader in the field of territory and facilities for biomedical research.”

Read the press release.

A pop-up store that only sells sustainably produced and second-hand clothes. That is the RE.love concept, the newest store in Batavia Stad. The Fashion Outlet in Lelystad is one of the shopping malls owned by real estate owner, VIA Outlets, which developed this sustainable shopping concept together with its tenants. The aim of these stores is to start a debate about sustainability. But is that the duty of a real estate owner? How does VIA Outlets envisage this kind of discussion about sustainability?

Geert Paemen (Group Sustainability Director at VIA Outlets) explains: “We have two types of customers: storekeepers who rent retail space from us, and their customers who buy clothes. We regularly talk to the tenants about their power consumption, for example, but with RE.love we also want to start a discussion about the sustainability of the clothing itself. The pop-up store is actually an excuse to spark a debate about sustainability with the customer. For example, the sales staff working in the pop-up store has been trained to answer customers’ questions about sustainability.”

Roland Mangelmans (Senior Real Estate Portfolio Manager at APG) adds: “By opening RE.love, VIA Outlets – which we invest in on behalf of ABP and of which we are full owners – will be killing two birds with one stone. They are actively discussing sustainability with the clothing store and with the customers who come to shop there.”

Among other things, APG called for the appointment of a sustainability manager at VIA Outlets. Thanks in part to its initiatives, sustainability at VIA Outlets has rapidly gained momentum, and the company gets high ratings for sustainability standards, such as GRESB [a certification mark that evaluates real estate companies on sustainability, ed.] Opening RE.love is probably the right thing to do in the eyes of the people who come up with these standards. Did that play a part when you were setting up RE.love?
“VIA Outlets has been working on sustainability for several years, even before I was appointed. But you need time before you can achieve anything. And we feel that we have now made enough progress to communicate with the customer about this. All the company’s departments have to operate sustainably if they are to achieve the right results. This year, for instance, we achieved the highest GRESB rating possible: five stars. Take, for instance, the results of our sector: we see that more and more companies are getting high ratings, and that is good news,” says Geert.

Roland adds: “At APG, we believe it is important that the companies we invest in integrate sustainability into their business operations, in all their processes. Consultants could be used for this, but by appointing a sustainability manager, we can rest assured that there is someone who gets up in the morning to go and deal with sustainability in the company.”

So it’s easy to get these good sustainability ratings?
Geert: “No, it’s not easy to get a high rating. Our results are compared with other real estate owners. Of course, they’re working sustainability too, so we need to keep on improving if we are to maintain those high ratings. At a building level, the entire portfolio of VIA Outlets now has a BREEAM In-Use certificate. This certification mark is used to measure the sustainability performance of existing buildings. This standard is also regularly fine-tuned and anticipates legislation, which is also becoming stricter.”

Roland adds: “I can imagine that Geert does have a point about the GRESB standard. But it is a means rather than an end in itself. It’s mainly an indication that VIA Outlets is doing well compared to similar real estate owners. We demand more of our real estate investments than merely having a good GRESB rating. And VIA Outlets is already going above and beyond in terms of sustainability than what the GRESB rating measures. What’s more, with a score of 92, there is still room for growth. And that room would still be there, even if we got a rating of 100. The GRESB criteria are ramped up a bit each year. That also motivates us to keep doing our best in the field of sustainability.”

The clothing industry has not always attracted positive news reporting in recent years. Is the opening of a sustainable pop-up store part of a trend towards paying more attention to sustainability?
“It certainly is a trend, in all sectors. A few years ago, the fashion industry realized that it ought to be concerning itself with sustainability. When, as a company, you start looking at sustainability, the first place you consider is where you can get the best results. For clothing brands, this involves the chain from production to consumer,” says Geert.

You mean like working conditions in Bangladeshi clothing factories?
“Yes,” says Geert. “And, more recently, clothing brands have also started to focus on reducing their carbon footprint. For instance, brands are now looking at what materials they use and how much energy it takes to produce and sell their collections. Most major brands are now working on improving working conditions as well as reducing environmental damage.”

Roland adds: “There is a race to the bottom under way in shopping malls to see who can offer clothes from low-wage countries that are made as cheaply as possible. Clothing that is sometimes made under appalling conditions. This is a trend we would like to break, even if it is difficult.”

And VIA Outlets is trying to promote the discussion with these pop-up stores?
Geert comments: “Yes, we do want to start a debate about sustainability. We felt like it didn't exist at all in the retail outlet environment. Sustainability is growing in importance, for us and for the customer. We, as VIA Outlets, can talk about standards and how much energy we save, but customers aren’t interested in that. If your aim is to make sustainability relevant to the customer, you have to communicate about topics that are relevant to them. That could be RE.love. Holding themed days on, say, reducing plastic waste can also get customers thinking.”

Is facilitating this discussion the duty of a real estate owner? Is making money not more important?
“First and foremost, we have to make money, otherwise we have no future as a company,” explains Geert. That said, we also have a role to play in society. People expect us to be sustainable. I think it’s dawning on companies that it’s becoming more and more important to be concerned with the long term, and not just with making as much money as possible in the short term. As a real estate owner, we are part of the chain in the clothing industry. We are only a link, but as such we can influence the chain.”

Roland adds: APG believes it is important that the real estate investments in which it invests show initiative when it comes to sustainability and reducing their carbon footprint. Because APG wholly owns VIA Outlets, we can encourage the company to lead by example in the fashion industry. The interesting thing about RE.love is that a real estate owner is sparking the debate about the products in the stores, where previously the conversations might have been only about the store’s power consumption.”

Is VIA Outlets alone at the top when it comes to sustainability or are there more major players in the real estate field that are rated as highly as you are?
“We are in ninth place when it comes to retail in Europe. That’s not bad when you consider that we are a small company. Listed companies are often further along in the process because they have to meet higher standards when it concerns reporting on sustainability,” says Geert.

How would you describe your partnership with APG in your pursuit of sustainability?
“This partnership is very important, because we know that APG values sustainability. We also have regular meetings in which we update them on what we are doing in terms of sustainability. We also have a dashboard that shows APG the results of our key commitments with them. And we discuss specific initiatives with them. So APG monitors our progress very closely and they also encourage us to be very ambitious. This is a very positive thing as far as we’re concerned,” says Geert.

Roland emphasizes that VIA Outlets is not the only company where APG is calling for the appointment of a sustainability manager. “We have a progressive policy, and we sometimes encounter resistance in the beginning. That is why it is necessary to engage in dialogue with the companies and funds in which APG invests. By engaging in that dialogue, we can ensure that we are not only raising GRESB ratings but also the overall awareness for sustainability. We are one of the frontrunners and, if we want to take the rest of the pack with us, it means that we have to spend time and focus our attention on this.”

Real estate contributes more than 30% to global carbon emission and 40% of global energy demand, and that is why it has a major impact on climate change. What is VIA Outlets doing to contribute to the Paris Climate Treaty goals?
Geert comments: “We are using the CRREM for this. It’s is a way to get insight, for each building type per country, into how much energy and carbon a building may consume and emit through to 2050. Shopping malls that comply with the CRREM are ‘Paris proof.’”

“Originally CRREM only applied as a method for commercial real estate in the EU. Along with two other investors, APG facilitated the development of CRREM for all global real estate markets. For APG, CRREM is the standard for measuring the extent to which a real estate or portfolio meets the Paris climate agreement. This approach chimes with ABP’s aim to reduce the use of fossil fuels in carbon-intensive sectors, and is our largest pension fund client,” says Roland.

Current topics with regard to the economy, investment (responsible investment in particular), pensions, and income: Every week, an expert at APG provides a clear answer to the “Question of the week”. This week: Joost Slabbekoorn (Senior Responsible Investment & Governance Manager) examines the probability of the Glasgow Climate Summit producing concrete results. “Financial support of developing countries will be one of the most hotly disputed items.”

On the eve of the Glasgow conference, news items are following one another at a hitherto unprecedented pace. If one thing has become clear from this cascade of reports, it is this: We are not in good shape. The countries participating in the Paris Climate Conference in 2015 had agreed that the global temperature should not rise by more than 2 degrees by 2100, and ideally by no more than 1.5 degrees. If we continue at our current pace, we will reach that 1.5-degree rise as early as in 2030. The UN’s UNEP environmental program warned that the 2.7-degree mark will even be in sight by 2100 if we do nothing.

First Step

There is plenty of work to be done. However, the question is: Who will be taking the first step? “Historically speaking, responsibility for CO₂ emissions lies primarily with Western countries. Nevertheless, countries such as China and India, above all, are currently registering a rapid increase in CO₂ emissions. These countries cannot develop in the same fossil fuel-driven way as Western countries did in the past. They are simply too big for that. However, the rapid increase in CO₂ emissions in those countries can also be attributed to the relocation of European steelworks to China!”

Countries such as India and China are able to partially shore up their development with renewable energy. Western countries at the Paris conference pledged 100 billion euros per year in climate development aid to support them in this. That promise has, however, not yet been kept. Slabbekoorn explains, “Chances are that this will also be one of the most hotly debated topics in Glasgow. Developing countries want rich countries to provide them with financial support in order to restore confidence. The ‘trade’ in targets between countries will be another topic of discussion. In this scenario, rich countries contribute to the reduction of CO₂ in developing countries, because it is cheaper and easier to reduce these emissions there than on their own territory. Unambiguous rules are needed to facilitate this trade and to be able to verify it.”

Priorities

Slabbekoorn can identify a number of points on which action is needed. “One of the most important priorities is to phase out the use of coal for the production of electricity. Coal produces quite a lot of CO₂, even though a good alternative is available: green electricity. Deforestation is another source of huge CO₂ emissions. A third priority is to set a realistic price on CO₂ and to stop funding the fossil fuel industry. It is remarkable that people in the Netherlands are currently provided government support to pay their energy bills. This is understandable, given the current situation, but it does mean that the government is indirectly funding fossil energy. Rising energy prices are also making many countries reluctant to accelerate the termination of coal use. And combating deforestation requires the support of Brazil. Unfortunately, Brazil currently has a president who is a champion of the logging sector. In short, things are not looking good in Glasgow when it comes to these three priorities.”

With the current gloomy outlook, it is inevitable that some measures will be impacting the lives of consumers. Slabbekoorn explains, “It is imperative that consumers are inconvenienced; otherwise, they will not change their behavior. And the sooner the transition to a more sustainable world is initiated, the less money and effort it will cost. Ultimately, this will also be more pleasant for the consumer. If we don’t take action now, we will have to intervene much more strongly later on. Then the break with our current way of life will be a lot more dramatic, through significantly higher costs for governments and consumers, for example.”

Reluctance

If the outcome of summit produces few or even no results, further global warming appears to be inevitable. “But there are many more roads leading to Paris,” Slabbekoorn argues. “If it nevertheless turns out that no agreement will be reached in Glasgow, this does not have to mean that remaining within the aforementioned 1.5-degree limit is impossible. A much stricter policy on energy and sustainability will therefore need to be imposed in the coming years. And the question is whether such policies will indeed be taken into effect, considering that countries are showing quite a bit of reluctance when it comes to adopting overly strict measures. In the meantime, we are already noticing the physical effects of higher temperatures.

It is ultimately up to the countries participating in the climate summit in Glasgow to incorporate possible agreements into their legislation. The Paris climate agreement is legally binding, but there is no international instrument to enforce it. “Once these agreements are embedded in national legislation, a country can be held to them by the courts. We saw this in the Netherlands in regard of the case brought by Urgenda against the Dutch government. Diplomatic contacts are very important during a summit like this. Still, this brings us back to the first point, which is who will be taking the first step. It doesn't look as if ‘Glasgow’ will produce any concrete results, but you can never predict what will happen at a summit like this. So, I’m keeping my fingers crossed,” says Slabbekoorn.

But he did not kill her, because in between dream and act 

there are hindering laws and practical issues, 

(from: Willem Elsschot, The Marriage) 

Pension may seem like something in the distant future to generations Y and Z, but they are the generation of the future. What do they dream of? What are they doing to accomplish that? And what stands in their way? In this series, we invite youth to talk to us about what now and the future look like to them. 

Marleen de Witte (21): "I don't always connect with peers who are busy with completely different things." 

Who Marleen de Witte (21). She describes herself as an enterprising young girl who is very busy with the future and has a positive outlook on life. 

Lives In Huijbergen in Brabant, near the Belgian border. She currently lives with her parents but soon, she'll be living at work. "I'm going to be a house parent, which means that I'm there day and night for the residents of the institution where I work." 

Works as a starting actress and as an educational counselor in an anthroposophical care institution for people with intellectual disabilities, autism and psychological problems.  

Loves: "Musicals, singing lessons, music at full volume, wandering around for hours in thrift stores and home improvement stores, developing myself, taking courses and having good conversations. Those are things that make me very happy." 

What are your dreams?  

"I secretly dream of getting a cool role in an exciting film or series. I'm working hard for it but it's hard to get into the acting world. Fortunately, I have another passion: I would never want to give up my work in health care. I would prefer to combine the two. A few months out of the year for filming and then back to my other job.  

I think about the future a lot. I want to have children and eventually want to become a foster parent. My parents still are. There are seven of us at home, but there was also room for others. I see that as an enrichment. We always took in various children at home. As a result, I realized early on that having a carefree childhood is not a given. It taught me to appreciate what I had and have. My parents taught me that behavior always comes from somewhere. At school, this helped me to understand bullies, for example, now it helps me in my work. It seems very special to me to be able to offer a safe environment to children who need it later on. No matter how heavy their bag, I can help lift it." 

How do you envision your future?  

"With a husband and a family. I also hope to see a lot of the world, and to be able to do what makes me happy. As long as I continue to listen to my gut feeling, I have every confidence that my future will be fine." 

What does your dream retirement look like? 

"I hope to be able to go where I want, without having to worry about money. I wonder at what age I can retire, if it won't be very different by then. Of course, I hope that my pension and state pension will be enough to live on, but just to be sure, I also want to invest some money myself, so that I have an extra kitty. I don't know if I would like to stop working. Maybe by then, I'll be teaching, telling others what I've learned. Or do volunteer work. Maybe I enjoy that a lot more than when I don't do anything anymore." 

What is your dream for the Netherlands? 

"I have several! For example, I dream of a Netherlands in which there is health care for everyone, without deductibles. I'm afraid that people who can't afford that deductible will postpone a visit to the doctor. A lot of money is now also spent on treating disorders and diseases, while it would make much more sense to prevent them. Healthier food should be much cheaper than unhealthy food.  

In addition, in my ideal Netherlands there would be many more foster families. I want every child that can't live at home to have a foster family. The youth is the future. Children need to have a good start in order to be able to make something of it later.  

Lastly, I would like it if the Netherlands would realize that every level of education is equally important. Why don't we think in practical and theoretical terms, instead of high and low-skilled? Isn't it cool when you start working with your hands? It shouldn't be seen as inferior. I'm glad my parents encourage me to do what makes me happy. Getting by is important, but being happy comes first." 

What do you think is going well in society, what makes you proud? 

"I think it's great that education here is accessible to everyone. Health care is also very good, although it could be better and cheaper. The fact that we have freedom of expression in the Netherlands is also something that makes me proud; it's not a given." 

What could be better in the world? 

"It shouldn't be all about power and money. If people allow each other a little more instead of always striving for more, I think that a large part of the world problem would be solved." 

What worries you, with a view to the future? 

"Sometimes, I'm afraid of the consequences of digitization. In my youth I came home covered in mud, I hung in trees, I was really a child. These days, children are sitting at home with a tablet, watching movies. On the one hand, it's easy that the world is becoming more digital, but it comes at the expense of other things. I also find social media difficult every now and then: isn't it sad that people become insecure if they get few likes? I often notice that peers are worried about it. Such a waste of your time." 

What makes you angry? 

"The division created by the government between the vaccinated and the unvaccinated. People should do what they feel safe and good about. Now, a vaccination is slowly being enforced and you're a kind of pariah if you haven't got any shots. I've not been vaccinated, even though I work in health care. I think that too little is known about these vaccines and it doesn't feel safe to me. Also, I had corona and I came out well. I fully understand people who do get vaccinated, but I also understand people who don't. But it seems the latter is an opinion we're not allowed to have. That makes me a bit rebellious. For me, the corona pass is no reason to change my mind. I also enjoy myself without clubs and dinners in restaurants." 

What stands in the way of your dreams? 

"Myself, mainly. Sometimes, I want too much too soon. At times, I think: come on, you're only 21, enjoy a little more. I don't always connect with peers because I already live a much more mature life than they do. College friends go to parties every weekend and worry about whether or not to buy designer clothes. There's nothing wrong with that, but I think about completely different things. My job, taking care of people, gives me much more satisfaction than a night at the pub. I don't just do anything. I wouldn't do a little dating anytime soon either. If I get into a relationship, it has to be with the future father of my children, otherwise I think it's a waste of my time. Sometimes, I wish I could be more in the here and now. Sometimes, I am too hard on myself."  

What are you doing to realize your dreams?  

"Listen to my gut feeling. I've always done that, and it's gotten me far. I'm proud of where I am now. I do what makes me happy and I work hard for it." 

And what do you do for a better Netherlands and a better world? 

"I've been in a panel for people who want to become a foster parent since I was 12. I tell others about my own experiences as a foster sister. I hope to inspire them. I also think that what I do means a lot to others. I'm beside the residents of the institution and help them to live their best possible lives. Soon, I'll be a house parent there too, so I'll be there for them day and night. When I see what a rock the current house parent is for the residents, I think it's very special that I can take on that role." 

Current questions related to economics, (responsible) investing, pension and income: every week an APG expert gives a clear answer to the question of the week. This time: equity investor Martijn Olthof, about the explosive rise in the price of gas and electricity. “We are not expecting the low price levels from just before and during the covid period to return.”

The current price for gas and the accompanying price for electricity are at a record high. Natural gas tripled in price in 2021. Now that gas production in Groningen has been scaled back, we have become more vulnerable to these kinds of extremes. Where will the rise of the energy price end? According to Martijn Olthof, who is responsible for equity investment in the energy sector at APG, the current prices for gas and electricity are probably at an extreme peak. In the short-term it could go even higher, for example, if Putin and the EU do not reach an agreement about the Russian pipeline Nord Stream 2. But after that, the energy price will lower again, Olthof expects. We are not expecting the low prices from 2020 to return.

The sharp rise in gas prices this year has four causes, Olthof says. The first one is: the relatively cold winter and spring, we just had. “That greatly increased the demand for gas, particularly in Asia, and as a result a lot of liquefied natural gas - LNG - went to that continent. Because the winter and spring were also cold in Europe, that pushed up the price of gas.”

The temporarily lower supply of natural gas from Norway - major maintenance on a number of gas fields caused production interruptions - also had an upward effect on the gas price. Olthof: “Certainly now that gas production in Groningen has been cut back, Norway is the main gas supplier in Europe. Because of the faltering production, Norway has supplied less gas than usual.” The third cause of the gas price explosion in 2021 was the economic recovery, which caused the demand for gas to rebound.

Close the valve

And then there is a geopolitical factor. Olthof: “The amount of natural gas supplied by Russia is the same now as it was a year ago. But then, due to the lockdowns, demand was unusually low and the price was less than a fifth of the current price. Russia’s failure to meet Europe’s greater demand for natural gas has clearly had a driving effect on the price. Most people think Putin is doing this to force approval from the EU for the Nord Stream 2 pipeline, which Russia wants to use to transport more natural gas directly to Germany. Currently, gas already flows through the Nord Stream 1 pipeline directly but a lot is also being transported through the Ukraine. But for Nord Stream 2 to come into operation, the green light is still needed.” The question is, however, how soon more gas will be coming from Russia, even with Nord Stream 2 coming into operation, because Russia will first replenish its own storage stocks.

The price of electricity is partly determined by the price of gas. But there are two more effects on the pricing of electricity, Olthof explains. “Firstly, there was relatively little wind this year, which meant that the supply of wind energy was unusually low. But the high carbon price has also contributed to the rise in the price of electricity. After all, generating electricity becomes more expensive when emitting carbon becomes more expensive.”

Challenging winter

So much for the past. What can we expect in the near future when it comes to energy prices? Olthof: “It seems that the current prices of gas and electricity are outliers, with clearly identifiable causes. A number of them will play a smaller role, or none at all. Intermittent production in Norway will start up again and the supply of wind energy will rebound. And Nord Stream 2 will also be given the green light at some point, increasing capacity from Russia by 55 billion cubic meters per year. It will take some time to replenish the shrunken gas reserves. But these developments will bring energy prices back down, even though I see the high carbon price increasing rather than decreasing in the future, and energy demand will also remain steady for the time being. However, we should not expect the low levels from just before and during the covid period anymore. And if we get a severe winter without a deal with Putin, gas and electricity prices could skyrocket even further in the interim. That could make it a challenging winter for many European countries, but the UK in particular.”

Because in between dream and act
there are hindering laws and practical issues,

(from: Willem Elsschot, The Marriage)

Pension may seem like something in the distant future to generations Y and Z, but they are the generation of the future. What do they dream of? What are they doing to accomplish that? And what stands in their way? In this series, we invite youth to talk to us about what now and the future look like to them.

Indya Duivenbode (27): “We have to work together to make growing older in good health a priority.”

Who: Indya Duivenbode (27)

Residence: A rented house in the inner city of Rotterdam, with her boyfriend and her dog. “We would prefer to buy. But, even though we pay 1100 euros in rent every month, we were not eligible for a mortgage of 700 a month. It doesn’t even make sense.”

Work: Health economist Indya was a consultant in the care sector, but she quite her well-paying job earlier this year in order to start her own company, with which she wants to make more impact. “Zorgstelsel Unpacked” (The Healthcare System Unpacked) is an online community that is focused on the healthcare system. Indya has two aims: to make the healthcare system less complex and to connect parties with conflicting interests.

Enjoys: Sports (cycling, running, playing basketball), walking with the dog and nature.

What do you dream of?

“I dream of being able to design my life in a way that suits me, rather than conforming to what ‘society’ expects of me. Until recently, I was following the beaten path. Now I have quit my secure consultancy job to do something that suits me better. I’m trying to let go of limiting beliefs. For example, I thought that having a dog did not go hand in hand with a career. But when the corona virus broke out, I adopted one anyway. If I keep putting it off, I thought, I won’t have a dog until the time I retire. All around me I see people living for tomorrow instead of now. It is my dream to live more in the moment. I don’t always manage that yet, but I think it’s very important."

What does your future look like to you?

“It may sound a little vague, but I hope that I’ll be doing something that I can’t even imagine yet right now. The thought of knowing exactly where I’ll be in five years is not attractive to me and seems very limiting. In the future, I hope to have grown and learned a lot. Overall, I do see the future as bright. If entrepreneurship doesn’t work out, I know I’m privileged enough to be assured of salaried work for the rest of my life. I don’t know yet if I want children. I think not having kids gives you a lot of freedom.”

What does your pension look like in your dreams?

“I would like to be financially independent before I retire, just like many others of my generation would. I hope I won’t have any money worries and won’t need to work anymore, long before my so-called retirement time. I’d love to be able to keep doing what I enjoy most, and to help others. Not to get rich, but because it feels good. And I hope to grow older with my boyfriend in good health.”

What is your dream for the Netherlands?

"For everyone to grow older in good health. I am very passionate about this. Together we must ensure that healthy ageing becomes a priority for all Dutch people. I also dream of a Netherlands without discrimination and with more empathy and understanding. I identify as a feminist, and am still learning more about exactly what that means every day. I am a white, highly educated woman, I can speak from my own experience about male-female relationships, but feminism goes much further than that. I don’t know what it’s like to be discriminated against because of your background, religion or a disability. I think it’s important to be aware of your privileges, and to have understanding and empathy for people who are in a different situation. You should never feel better than anyone else, but certainly not less either. Those are principles I try to live by. I strive for equality.”

What do you see in society that you like and what makes you proud?

“I like seeing how many small initiatives there are at the grassroots level to connect people. In my neighborhood there are language cafes, for example, where different cultures can learn Dutch together, and there is a park that is maintained by the neighborhood. What also makes me proud is that my generation and the generation just after us are, in my view, much more concerned with making an impact than with making money and having a nice house. There are few young people denying the climate crisis, and I feel like we are thinking a lot about how everything can be better and more equitable. That gives me hope for the future.”

What could be better in the world?

“Haha, do you have a few hours? First of all, everyone should have equal opportunities and there should be less prejudices. That would improve the world. There is also a lot that can be improved in the healthcare world. There is an ever-increasing staff shortage, for example. It is expected that by 2040, a quarter of the Dutch population would have to work in healthcare in order to provide adequate healthcare services. In other words: that’s impossible. Healthcare must therefore be organized differently so that services can be delivered with fewer staff, and the demand for care must be reduced through prevention. We have reached a point where we have to get creative. Because we won’t be able to solve it by 2040 with a bit of polishing. It’s a complex issue that we should all be working on together.”

What worries you about the future?

“My biggest worry is still climate change. What is the most helpful thing to do? What can you affect? How can you contribute something? I find it very complex. But looking the other way and not doing anything is not an option.”

What makes you angry?

“Discrimination, inequality, racism, ignorance... Those are things that make me angry. I’m often asked, primarily by men: do we need feminism? Some people think I hate men. But men are not the problem. The problem is society, which is conditioning men a certain way. Once you see what’s wrong, you can’t unsee it anymore.”

What is in the way of your dreams?

“People without empathy. It’s also discouraging that at my work I’m not always appreciated for shaking things up in healthcare by making taboos discussable. That makes it harder.”

What are you doing yourself to make your dreams come true?

“I gave up my job in consultancy to make more of an impact in healthcare. That means I probably won’t be able to buy a house for a while, but I believe in what I'm doing so much that everything else has a lower priority. On the one hand, I’m trying to make progress this way, and on the other hand, I hope to inspire others to walk their own path as well. I’m already noticing that people around me are increasingly knocking on my door if they want to brainstorm about life choices. I love that. I believe that the world will be a better place if everyone does what is right for him or her.”

And what are you yourself doing for a better Netherlands and a better world?

“I believe that my company is going to make the Netherlands a better place. I am putting a lot of time and energy into it, to make the healthcare system more comprehensible and I’m working on a community to connect care professionals, managers and policy managers to each other. I want to create equality in a world that is still very hierarchical. I also try to stand up for people who are less privileged, even if that makes me less popular.”

But he did not kill, because between dream and act
there are hindering laws and practical objections

(from: Willem Elsschot, The Marriage)

Pension may be considered as something for the distant future by generation Z, yet they are the generation of the future. What are their dreams? What are they doing to achieve these? And what is standing in their way? This series is intended to let young people speak about the way now and later on is perceived by them.

Maarten Paauwe (25): “We have to live much more in harmony with nature.”

Who: Maarten Paauwe (25), born and raised in Zeeland. He studied engineering management in Tilburg and married Talitha three years ago, whom he already knows for ten years. “Promising each other to be faithful, is a beautiful thing in my opinion. We were pretty young when we got married, but why wait when you know you are meant to be together?”

Lives: In Gorinchem, where they ended up after a scheduled journey around the world fell apart due to the pandemic. “We sat down with a map of the Netherlands and asked ourselves what would be a nice place to live. Most people only know Gorinchem because of the traffic jams, but it truly is a great old, fortified town.” They are currently renovating the house they bought here in its old style (it was built in 1880). The house will be partly transformed into a bed & breakfast.

Works: At a green contractor, providing green management for municipalities, counties and the Netherlands Department of Public Works.

Enjoys: DIY, reading (mainly newspapers, history and philosophy) and trips to old cities.

What do you dream of?

“I dream of all of us living much more in harmony with the world and nature. Take the IPCC report, for instance. All evidence suggests that we live increasingly more distant from nature. I think this is something we could improve at different levels. On the one hand by means of better landscaping as we shouldn't adjust our planet to our demands. The topic ‘green’ now is the balancing item: we continue to build at every possible location and we plant a few trees should any space be left. This should be the other way around: nature first and some space for human beings here and there. Just look at a schoolyard for example, that almost entirely consists of concrete. Children should already be given the message that we are only guests when it comes to nature. I think humankind should focus more on that, also because it's simply better for our health. The average person is overweight, eats a lot of meat and consumes a lot of dairy products: that's not the way nature is arranged.”

How do you envisage your future?

“On the basis of things, I already have everything I want. I am happily married, own a house, have a great family and enjoyable work. In terms of work, I would like to manage a company someday, so I can implement my vision in a large-scale manner to the green industry. I would like to sit down with policymakers and make the Netherlands more sustainable. In my opinion, the company I am working for now is literally making the world a bit more beautiful by constructing green areas.”

What does your dreamed of pension look like?

“First of all, I hope to be healthy and energetic for a long time, so I can still make a contribution to society in the future. I am wondering if we will ever get a pension though. Many people my age want to become FIRE (Financially Independent & Retire Early), start investing or buy properties in order to be able to retire as early as possible. I don't think that is a healthy way of handling pension, given the costs we already have as a society. Moreover, all evidence suggests it is much better to continue work as long as possible. Albeit at a slower pace, not from eight to five in an office job. You can also contribute to society being a volunteer. So, I hope to be able to do so myself, but I also hope that this will be what society aims for in the future. Older people have so much talent and experience which will all go to waste if they just sit at home or are travelling the world. Of course people should enjoy their freedom, but I truly believe that we, as a society, draw insufficiently on those skills and abilities. I also think it would be great to remain relevant. You could still call it pension if you work twenty hours per week to leave a better society to the next generation. We shouldn't consider work as an obligation, but as something great.”

What is your dream for the Netherlands?

“I would like the Netherlands to become a healthy society, in the broadest sense of the word. We have to commit to a healthy planet, a healthy ecosystem and a healthier bio-industry. The way we are treating animals right now just isn't okay. I read an article a while ago, stating that if people would be slaughtered at the same pace as we slaughter animals, the entire global population would be extinct within seventeen days. I hope the Netherlands will become a frontrunner and shows there is another way to do things. The Dutch could also live a lot healthier. While we are living longer, we also live unhealthier. And finally, I dream of a healthy economic system. The mountain of debt is getting higher and higher. Study loans, national debt; it all increases. That is cause for financial stress. Wouldn't it be great if our country could demonstrate that it's unnecessary to accumulate debts in order to ensure continuity?”

What do you believe goes well in our society?

“One of the greatest things of the Netherlands is that the opportunities here are huge. That also applies if you grow up in a less favorable neighborhood, if your parents have a non-Dutch background or if you were born into a poor family. Everyone here is able to get an education.”

What could be improved in the world?

“Equal opportunities. Talitha and I visited slums in India and that truly is another story. If you grow up there, there's no chance whatsoever to make something of your live. Here, in the Netherlands, hard work usually pays. In India, you can work as hard as you'd like without achieving anything. Isn't that a sad fact?”

What are your matters of concern in view of the future?

“That we still don't seem to recognize the urgency of certain issues. Take, for example, the climate report of the IPCC. Climate change will eventually become irreversible, but when will we realize this? Everything is happening so slowly. I am also worried about the increasing polarization. An endless amount of information is available, we are able to communicate with one another all over the world, but we hardly ever do that. We take more and more refuge in our own bubble. Forum voor Democratie (Dutch political party) wants to start its own society with its own crypto currency, dating app and schools. When I hear that, I think we are truly losing grip on each other. This way we return to a fragmented society. And we should furthermore not forget a generation proud of its cancel culture, in which people are cancelled at the slightest lapse. That leaves us with a cramped society in which everyone chooses their words carefully and is afraid to speak openly, because we are trying to avoid insulting someone. We could take ourselves a bit less seriously. Tolerance is harder to find these days.”

What makes you angry?

“What especially makes me angry is that many things are well arranged in the Netherlands, but that 'we’ don't really care about everything that's going on beyond our national borders. We construct oil pipes in the Middle East, but not water pipes where it's much needed. We use large chunks of land to feed the cows, but we prefer not to do the same for another population. Moreover, what I find particularly disgusting when it comes to the corona policy, is that we buy all vaccines in massive quantities in the West and start vaccinating young people, while vulnerable people over the age of 60 in India are begging to please be vaccinated. And, of course, the pharmaceutical companies are not releasing their recipes. There are more crooked things. I recently read an article stating that the prices of healthy food are rising faster than the prices of unhealthy food. This makes it more difficult for people with a low income to buy healthy food, while that's a basic need.”

What is standing in the way of realizing your dreams?

“Not so much when it comes to my personal dreams. I will mainly have to work hard to realize everything I dream of. I do notice that there are all kinds of things that annoy me, but I find it hard to give these issues substance. I don't know where to turn to with my combativeness. Would it be possible for me to join some sort of climate committee? Are there more younger people like me, full of energy and activism, facing the same problems? Could we debate about these topics together and commit ourselves to make society a better place to live? I am eager to take action, but how do I get in touch with the right people to really accomplish something?”

What is your own contribution to a better world?

“I drive an electric car and I am vegan. That was a deliberate choice as I am trying to demand as little as possible from our planet. Due to that choice, I often discuss the impact of our meat and dairy consumption on the climate with others. It is not my intention to force anyone to become vegan - if you have barely anything to eat, like in some African countries, you just eat what's available - but meat and dairy are not necessary in the Netherlands.

Besides that, I use my talents at a company that's contributing to a better world. It would be very difficult for me to work for a company such as Shell for instance. This is my way to do my part at a small-scale. It would be fantastic should I be able to address these issues on a larger scale, together with others.”

The report by the United Nations’ IPCC, Intergovernmental Panel on Climate Change, underscores the rapid, human-induced increase of global warming. If we don't take action now, temperatures could rise by nearly six degrees Celsius towards the end of this century. If we do act now, the goals of the Paris Agreement are still achievable. Large companies and investors can make a difference. The question is: Are we currently doing enough to turn the tide? According to Joost Slabbekoorn, senior responsible investment & governance manager at APG, at least we're on the right track. “We have long seen the need to take action and that's exactly what we're doing."

The conclusions drawn by the UN report don't really tell us something new: Humans “unequivocally” play a role in climate change, the earth has warmed by more than 1 degree in 100 years (much faster than before), the effects of climate change are felt all over the world, and temperatures will definitely continue to rise in the next 30 years. Whether that's by 1.5 degrees in the best-case scenario or 5.7 degrees in the worst-case scenario depends entirely on the actions we take globally.

Reassessing policies

“Yes, the IPCC report makes for very uncomfortable reading," says Slabbekoorn, the person who, together with his team, is responsible for implementing sustainable and responsible investment policy for the ABP pension fund, among others. “But actually, we already knew that things haven't been going well." We have known about climate change for some time. It's with good reason that our focus has grown substantially in recent years in terms of sustainable and responsible investment policies for fund clients such as ABP. But sometimes you know that our approach must and can be more effective, says Slabbekoorn. Conclusions such as those drawn by the IPCC report may then actually be decisive for revising policy. "That's what ABP did recently. We realized that accelerating the energy transition is the only option – and current policies do not adequately make that happen. That's why we’re setting our climate ambitions higher in 2022." ABP is taking this issue very seriously. A panel of scientists at universities is helping us create these improved policies. 

Fossil fuel

In addition, APG, along with 32 other large investors, collaborated on the “Net Zero Investment Framework” – a framework that provides guidance on how to tackle climate change. “It's exactly these types of initiatives – as well as our engagement efforts – that allow us to contribute to a liveable world by using our influence as investors to encourage companies to make more sustainable decisions.” But as Slabbekoorn emphasizes, one doesn't make an impact on their own. “As an influential pension investor, I think we have an obligation to do everything within our power. But everyone must do their part.” One option that climate organizations often propose is moving away from investments in fossil fuels. Does the IPCC report mean that APG will advise its clients to completely stop investing in fossil fuels? "Not necessarily," says Slabbekoorn “Ideally, the fossil fuel industry also needs to be part of the solution. But oil and energy companies will need to accelerate their transition from fossil fuels to renewable energy in the coming years. We are paying close attention to their actions in this regard. If things aren't moving fast enough for us, or we lose confidence, we will stop investing in fossil fuels.”

Mapping out risks

One of the report's other conclusions is that the effects of climate change can be seen all over the world. The floods in Limburg (the Netherlands), Belgium, and Germany are a case in point, and these sorts of phenomena are also influencing APG's investments. “Changing weather conditions are already impacting our investments. In any case, temperatures will continue to rise. This means that climate change will continue to affect our investments. That's why, for our real estate investments, we're already mapping out risks in case of floods, droughts, forest fires, or rising sea levels. We have also developed a dashboard that shows us the physical risks of climate change by country,” says Slabbekoorn.

Ray of hope

“The report, or rather the report's conclusions, truly impact the way we invest. We are taking the right steps, but there is always room for development," says Slabbekoorn, who, despite the report's bleak message, also sees a ray of hope. “The report also states that we can still meet the climate goals by 2050. But to achieve those, we'll really need to get moving.”

Current topics with regard to the economy, responsible investment, pension and income: every week, an expert at APG provides a clear answer to the “Question of the week”. This week: Asset Management professional Steve Goossens discusses the impact of climate change and environmental disasters on real estate investments.

Hundreds of millions of euros: this amount alone represents the damage caused to the city of Valkenburg when the surrounding region was hit by severe floods in mid-July. This says a lot about the total financial impact of the flooding – and environmental disasters in general. Due to climate change, crises like this are becoming more frequent as well as more severe. With all the consequences – and damage – that this entails. To what extent does this affect investments in both the short and long term?

“The impact of climate change on investments is bigger than you might think,” says Goossens, who works in the real estate asset class. And he should know. Together with his team and co-workers from the Responsible Investment Team, he has been focusing on climate-related risks concerning the investments made by APG’s fund clients for more than two years now, primarily for his own department: real estate investments. “If at all possible, the data I collect will also be used in relation to investments in other areas, such as infrastructure.” After all, the impact of natural disasters is not limited to real estate alone. Goossens also examines risks associated with floods, forest fires, droughts, or rising sea levels in relation to real estate, for example. “Look at Amsterdam: droughts have been causing the piles on which the city is built to be exposed above water level for long periods of time. This, in turn, causes the wood to rot and the ground to subside more quickly. This is accompanied by an enormous investment task, which has a direct impact on some real estate investments in Amsterdam and the surrounding area.”

Direct and indirect risks

Goossens distinguishes between two types of risks related to climate change on investments: direct and indirect risks. The subsidence in Amsterdam, the flood damage in Limburg, as well as the devastating effect of forest fires on homes elsewhere in the world are all examples of the direct impact that climate change has on investments. “This is quite easy to explain: investment properties suffer damage and part of the costs in relation to this will always be borne by the investor. That, in turn, affects an investor’s returns: the higher the costs, the lower the return.”

Then there is indirect damage: “When a disaster occurs, stores may need to stay closed or hotels may not be able to receive guests, which brings certain costs with it. A natural disaster may also force people to move. Not only that: insurance contributions, for example, will also be subject to considerable increases in response to environmental disasters, or certain types of environmental disasters will no longer be covered by insurance. Property owners pay the price of this. Insurers, like us, estimate the risk of disasters like these and base their prices on that. You can count on insurance contributions becoming much higher in the future.”

Transition risk

Goossens therefore also draws up risk estimates for the investments APG makes for its funds. This is urgently needed, because it enables estimates to be made of the financial consequences of climate change in the longer term. Investors take this into account when estimating the value of an investment. At least as important is what is referred to as the transition risk: “This is the risk of rising costs in response to the energy transition. In other words: what additional investments are needed to achieve the goals of the climate agreement? Better insulation or new heating systems are examples of this. Climate change is causing the Earth to heat up faster. If we want to combat this and limit the ensuing rise in temperature to 1.5 degrees, as stated in the agreement, this will bring certain costs with it.”

Legislation & Regulations

According to Goossens, how much money and which investments are needed in the coming years also depends on legislation and regulations. The requirements set by governments for energy labels is a significant factor in this. “We have no influence on that, but we do know what the ultimate goal is for 2050 and that we need to keep reducing the amount of CO₂ we emit.” APG and other large investors have developed the global CRREM standard to measure the transition risk and, in doing so, gain a clear overview of that ultimate goal. This provides insight into whether a real estate investment complies with the Paris Agreement. An office building in the Netherlands complies with the climate agreement if it consumes no more than 14 kWh/m² of energy, for example. CRREM is stricter with regard to this than the Dutch Green Building Council (the network organization for sustainable construction practices), which applies 50 kWh/m2 as a standard, says Goossens. “Aside from that, the CRREM standard is scientifically substantiated. By applying this standard, we go much further than other organizations in the sector."

“Our calculations allow us to estimate what it will take to meet the goals at individual investment level. We then examine the various aspects involved in relation to our long-term real estate investment plans.” Goossens believes that these additional investments are necessary. “The alternative is that the Earth will heat up by more than 2 degrees and that even more environmental disasters will occur. The damage caused by that is many times greater than the cost of accommodating the energy transition.”

The Rolling Stones, Bruce Springsteen, Coldplay and Pink: they all performed here. The Malieveld was their outdoor concert hall. That said, protesting trade unions also regularly take over the “Haagse grasveld,” the famous field in The Hague. There’s no doubt that Tuur Elzinga has also left many footprints in that field. His history with the trade union movement stretches back to 2002, when he was appointed as a policy officer at the Netherlands Trade Union Confederation. Almost twenty years on, he is now chairman of the trade union and employers’ and employees’ organizations since March 10 of this year, to be precise. He also represented the Socialist Party (SP) in the Upper House of the Senate for nine years. This means that he is as familiar with the green polders of the Netherlands as the green benches of the Senate.

Getting fat on the bones

Elzinga believes that things need to change in the Netherlands. In his opinion, the pandemic is a tipping point: the market-driven approach that has gone too far must make way for a revaluation of society. The pandemic has revealed how indispensable certain sectors are to our society, like health care, education and childcare.. “It is precisely those vital sectors that have fallen behind in recent years,” Elzinga reckons. Schools, hospitals and kindergartens have been run like businesses, and cut backs have been the order of the day. This has led to a shortage of ICU capacity, protective equipment and staff during the pandemic. “We need to get fat back on the bones again; we need proper reserves. That may not be very efficient, but it stops the whole of society from grinding to a halt when times get tough.”

Fears for the future 

The pandemic has also widened the gap between the poor – those with few prospects – and the rich. The Netherlands has become more prosperous in recent decades, but not everyone has benefited from this. The flexible labor market has put permanent jobs at risk and wages have not risen enough in line with profits. “Inequality has widened, and imbalances have occurred,” Elzinga tells us. Not to mention the climate crisis, from which there is no escape, both literally and figuratively, as we face extreme weather, forest fires and floods across the planet. Elzinga points out that this leads to unrest. “People are concerned about their own future and that of generations down the line. As a country, your sole aim may be to make as much money as possible, but what kind of home will we be leaving to our children and grandchildren if social cohesion is under pressure and our planet is being eroded?”

Plus another one million permanent jobs

Fortunately, the pandemic has also prompted politicians – from left to right – and some employers to realize that the Netherlands of Tomorrow demands change, believes Elzinga. He believes that we can start rebuilding the country without delay. We already have the blue print: broad-based prosperity for the whole of the Dutch population. That is the approach underlying the Social and Economic Council’s draft advice that trade unions and employers presented together this spring: a package of measures for the new cabinet. First and foremost, the labor market must be reformed: we must return to more permanent contracts, instead of flexible employment. Elzinga would like to see at least another one million permanent jobs. “People need job and income security. They want bread on the table, they must be able to pay the bills and have enough disposable income for their leisure time.”

The climate change price tag

Broad-based prosperity also calls for greater investments in public funds for vital sectors, like health care and education. For example, better terms of employment must stop the trend of having unmotivated employees: it may be more enticing to get out of bed in the mornings and take up the task of teaching if wages rise and work-related pressure is reduced. More must also be invested in the quality of public services, such as the Employee Insurance Agency, the tax authorities – here we have in mind the childcare benefit scandal – and yes, also pension administration. Elzinga says, “Better performance from institutions may also help to close the current gap in confidence.” For the long term, there needs to be substantial investment in tackling climate change. “We have to stop procrastinating and start addressing the issue. The longer we kick the can down the road, the higher the price tag will be.” So we need more funds to accelerate the energy transition, while at the same time being socially accountable by helping people who lose their jobs to get other work.  

Strong government required

Given the long societal wish list, the government can no longer keep its distance, Elzinga believes. Since the eighties, the maxim in The Hague has been: strong market forces, small government. “A market is a good for ensuring that there is enough to round, but you can’t leave everything to market forces,” Elzinga reckons. “We are now faced with the mess that the mantra of liberalization, privatization and deregulation has left us in.” Rebuilding the Netherlands calls for a stronger state, one that actively helps shape the society of the future through public participations and targeted investments, and legislation and regulation must ensure that market participants accept their social responsibility. This need for a government with a firm hand on the rudder does not stop at the borders. For example, Elzinga welcomes the G7 plan for a global minimum tax rate of 15 percent for multinationals. It will make tax avoidance through tax havens more difficult because it will put an end to competition among countries that lure foreign investors by having the lowest tax rates.

Tech giants

It is also crucial to have international regulations that curb the influence of Big Tech and Big Data. Elzinga adds, “Big tech companies are capitalizing on data that we as consumers are producing ourselves. They are using existing digital infrastructure, without giving anything in return.” The same is true of multinationals that are getting patents for innovations that they were not solely responsible for conceiving. After all, their smart employees are educated at publicly funded universities and draw on the body of knowledge that our knowledge-based society has accrued in centuries past-. We are standing on the shoulders of giants. “Data, knowledge, but also for example raw materials and energy sources such as the sun and wind and ultimately our entire planet: it belongs to all of us. What gives a handful of companies the right to claim ownership? Why should managers and shareholders be allowed to become wealthy beyond description from it, while employees and the rest of society have to make do with the crumbs?” says Elzinga.

“Give employees control”

The pyramid must be turned upside down. That doesn’t call for revolution; instead it calls for a radical change in direction, through gradual, democratic means, according to Elzinga. He believes that the first tentative steps down this new path have been taken. Governments are slowly starting to take back their traditional role, companies are taking more responsibility for their environment and consumers, citizens and major investors are more inclined to hold them to account. The next step is to give employees and society a real say, Elzinga argues. “'Give those people who come up with all those innovative ideas a voice, the ones that do the real work, who are the actual rightful owners of companies’ products and services: all of us, in other words. Who’s the boss? Who decides? As it stands now, they are managers and shareholders; in the future we should all be able to be in charge.”

From shareholder return to social gains

In recent years, Elzinga has been conducting the negotiations for the pension agreement on behalf of employers’ and employees’ organizations of the Netherlands Trade Union Confederation. It’s a historic agreement; designed to keep old-age provisions affordable going forward, without abandoning the principle of solidarity. “In the new system, the contributions you have accrued are reflected more directly in your own pension accrual, but we will still ensure that people who are not so fortunate in their careers will also be able to have a good pension, and we will spread the risks across the generations.” That said, Elzinga believes that the pension discussion is far from over. If interest rates remain this low in the coming years and investment returns structurally decline in the future, as predicted, then it will not be possible to keep the promise of an indexed-linked pension and the trust gap in society will widen. Pension funds could then take the next step: from shareholder return to social gains.

Pension benefits in kind? 

Elzinga explains, “Pension funds should examine the needs people have later in life. Do they then only need money? Or would they rather have a nice place to live, good care and quality of life? Invest in that directly as a pension fund; put pension money into new kinds of housing for senior citizens, good care for the elderly and restoring social infrastructure, so that it is to hand when people need it.” This would be a type of pension in kind. And why only invest in provisions for old age? Pension funds can also be used to improve today’s society. Here we have in mind investments in the tight housing market – which mainly affects young generations – or in good education, for a robust Netherlands of Tomorrow. Elzinga adds, “Pension funds have major assets and that means they bear a huge responsibility, for the Netherlands of today and the future.” 

An end to strikes

During the pension agreement negotiations, the Netherlands Trade Union Confederation, together with the National Federation of Christian Trade Unions in the Netherlands and the Trade Union for Professionals, halted train traffic for a day to apply pressure for a slower rise in the state pension age. What does Elzinga think: will there still be strikes in the Netherlands of Tomorrow? “I suspect so. In the meantime, there will be conflicts of interest between employers and their workforces. But I hope that one day it will no longer be necessary to strike: if employees are given a real say, they can be part of the decision-making process and conflicts of interest will become a thing of the past. If you are the boss, there’s no need for you to strike.” So the Malieveld of the future will be solely for the successors of The Stones and Coldplay, in other words: the ultimate festival grounds? Elzinga laughs, “Yes, that’s where we’ll gather to simply have a good time, do stuff we enjoy or celebrate together, for example, the great pension system that we have in the Netherlands.”