APG brings investment results into view earlier

With the renewed pension system approaching, the way pension benefits are calculated is also changing. APG’s Verbindingsfunctie (Linking Function) plays a key role in this process: it translates cash flows into investment instructions and allocates returns with precision. To ensure that participants receive the correct benefit immediately, the Linking Function requires APG Asset Management’s performance figures earlier in the month under the Future of Pensions Act (Wtp). What does this acceleration mean for APG Asset Management’s processes?

Every month, APG processes participants’ contributions and pays out pensions on behalf of the funds it serves. In the new system, these cash flows are translated into a collective investment instruction for the asset manager, after which the realized returns are allocated to both the collective fund assets and the individual pension assets. This process follows two routes: incoming contributions and outgoing allocations. For these allocations, up‑to‑date performance figures are essential.

“For the first pension payment in the new system, individual pension assets must be established as early in the month as possible,” explains Beau Colle from APG’s Investment Operations. “The performance of the collective portfolio is leading in this. Based on the processing time across the entire chain, it has been calculated that AM can deliver no later than the seventh business day. That is the point at which everything can still be handled carefully and completely.” His colleague Rick Leenheers adds: “If we deliver earlier, the Linking Function has enough time to properly allocate returns. This prevents newly retired participants from receiving an incomplete payment in their first month that would need to be corrected afterward. And that is something you want to avoid at all costs.”

Stricter collaboration with external parties

Part of the valuation data comes from external suppliers. Even within the accelerated process, the goal remains the same: working with the most up‑to‑date information possible. What has changed is that the room to absorb late deliveries has become smaller.

Leenheers: “We therefore reviewed all suppliers again: when do they deliver, how does that align with our planning, and where is there flexibility or structural tightness? In some cases, data was delivered as agreed, but still too late to include it in the calculations on time. We re‑engaged with those parties. Not to enforce new conditions, but to adhere more strictly to existing agreements. The acceleration requires discipline across the entire chain.”

One uniform process for all funds

The accelerated month-end close applies to all pension funds for which APG Asset Management invests. This creates one uniform process that offers the same predictability and stability to every client. Leenheers: “In the first month, we demonstrated that the new planning works and that the seventh business day is achievable. The foundation is in place. Now it’s about fine‑tuning and continuous improvement.”

Although the acceleration may appear to be merely a technical process adjustment, it directly affects the pension payments of hundreds of thousands of participants. By delivering earlier, structural corrections are avoided, the Linking Function can allocate returns consistently, and participants receive the correct amount right away. “In the end, we’re doing this for the participant who is retiring,” Colle concludes. “They must be able to rely on an accurate and stable payment. And for that, our data simply needs to be available on time.”