Over four years ago, APG set in motion an ambitious project: preparing for the transition to the renewed pension system. It was known at the time that a new law would most likely be introduced, but the exact details were not yet clear. Due to APG’s choice for a new policy and equity administration, not only the pension entitlements had to be converted to the renewed system, but the data also had to be migrated to an entirely new IT system. A double challenge that required thorough planning, precise execution and intensive cooperation between the teams involved.
To this end, a team was created to tackle the transition, including the data migration, as part of APG’s broader Pension of the Future program. “From the very beginning, we knew we couldn’t waste any time,” says project leader Joost Petit. With sufficient preparation time, the team was able to gather the right expertise internally and externally.
In the initial phase, the focus was on the design of a transition process. How was the transition process, associated systems and data structures to be set up so that funds could later transition safely and in a controlled manner? That design, for which all departments - from IT to Compliance and Security - provided input, formed the basis of a data migration plan. This plan described in detail how data would be extracted from the old systems, transformed, and then read into the new administration system. A lot of attention was given to managing the risks associated with such a large operation. Petit compares it to building a completely new highway. Not only did the highway have to be built, but so did all the required infrastructure, such as lines, signage, and crash barriers.
Intensive preparation and test migrations
Prior to the actual transition, numerous rounds of practice and trial migrations were conducted. “We practiced every piece endlessly and went through the whole thing four times extensively from front to back to ensure that all pension entitlements and benefits were converted correctly. This was crucial to ultimately ensure quality,” Petit says. With each round of practice, the quality of the data and software continued to improve, and the team was able to make timely adjustments.
The transition team’s role and the two-step approach
Within APG, the “transition team” - the team coordinating the transition - played a crucial role. Thanks to close collaboration between the various disciplines, the transition was achieved on time. A detailed script was drawn up to ensure that everything went smoothly. This playbook helped ensure that APG was able to carry out a flawless migration. For the final transition, APG deliberately chose a two-step approach: the fund clients were switched to the renewed system in two steps. In the first step, in early January, basic payments were completed in the new system to ensure the continuity of crucial business processes. In the second step, which took place two weeks later, the funds’ entire buffer was distributed. Read more about the two-step transition in the article Two-step approach at APG: a careful and efficient transition | APG.
Actuary: the guarantee of accuracy
The role of the actuary was also essential. The actuary did both the preliminary work and the crucial checks during the transition. The actuaries translated policy rules into concrete calculation rules and established the calculation factors for the ‘transition calculation’. Actuary Matthijs van den Brink explains, “We ensured that all calculation models were correct. That means that the calculation was done in accordance with the agreements in the transition plan and the statutory regulations. In this way, every participant received what they were entitled to when converting to the new system. Each part of this calculation had to allocate exactly the right assets. We checked this at the individual level, and we showed through verification that it was also correct at the total level.”
The calculations were both double-checked internally and submitted externally to the special auditor on behalf of the pension funds: the key actuarial officer. “That external agreement is a legally required part of the transition, and, on top of our own checks, gave us even more assurance that the calculation was done correctly,” Van den Brink explains.
Collaboration and accountability
The transition to the renewed pension system has been a joint effort of many departments. That intensive collaboration has ensured a smooth, transparent and controlled implementation of the transition. Petit returns to his comparison with the highway: “Driveway by driveway, and exit by exit, we managed to finally get the first cars driving on the highway. And that road is here now. We may need one or two additional lanes, but we have laid an excellent foundation for the transitions that still lie ahead.”