“I have the builders sitting on my shoulder”

She is not averse to paternalism, firmly believes in collectivity and is very supportive of self-employed people and of members who are at their wits’ end: Eline Lundgren, the new chairperson of bpfBOUW.

“I’m more frugal with the pension fund’s money than with my own.”

Picking up bricks with her own hands while renovating her house, that was as far as Eline Lundgren’s personal experience with the construction sector went. That is, until she became the chairman of the bpfBOUW pension fund, the sector pension fund for the construction industry. Because of the corona crisis, until the photshoot she had not yet been to the building site to inhale the smell of cement and have a cup of coffee with one of the 147,020 active participants (annual report 2020).

BpfBOUW is one of the five largest pension funds in the Netherlands, with a total of over 776,000 participants and more than 102 billion euros in invested assets. Lundgren - an experienced pension administrator on behalf of the trade union federation FNV - considered it “honorable, fun and challenging” to be asked to chair such a large fund. Although it was “with pain in her heart” that she had to give up her chairmanship of BPL Pensioen, the pension fund for the agricultural and green sector.

From farmers to builders: what are the differences in pension administration between these sectors?

“First, an important similarity: both pension funds are aimed at providing participants with the best possible income for later in life. But there is indeed a difference: the agricultural sector is faced with a shrinking number of farmers. The number of active participants in the industry pension fund is therefore also declining. This has consequences for the continuity of the fund: with more participants, you can invest better and gain higher returns. By contrast, the construction industry is growing: the demand for construction workers is far greater than the supply. Especially now that the madness on the housing market means that many new homes will be built in the coming years. This is a huge challenge for the sector, but for the continuity of the pension fund, this growth is good news.”

Both sectors are also dealing with the nitrogen and PFAS crisis.

“Both the agricultural and construction sectors face a major sustainability challenge. But even there we are seeing different dynamics. For the agricultural sector, the sustainability policy has mainly negative consequences. For example, the future for pig farmers and farmers around Natura 2000 areas is uncertain. In the construction sector, however, sustainability has a positive connotation: the challenge of innovative and climate-neutral construction.”

The construction industry has many self-employed workers. They often do not accrue a pension. What role do you see there for the pension fund?

“Employees save for their retirement throughout their working lives and therefore have the security of an income for later. I really don’t begrudge self-employed people this either. I also think it’s important for society: one of the pillars of our wonderful society is our good pension system, in which we share risks together. As a fund, we therefore want to make it easier for self-employed individuals to save for their retirement. This would probably not succeed with an obligatory scheme: self-employed people feel like real entrepreneurs and, moreover, paying the premiums is difficult if their income varies. But a voluntary pension scheme might have a chance of success. At bpfBOUW, we are investigating whether and how that might be possible.”

BpfBOUW is the largest Dutch fund to index pensions as of January 1, at 1.76 percent; that’s 68 percent of inflation. Are you happy with that?

“Absolutely. We were one of the last pension funds eight to nine years ago that could still index and now we are one of the first funds that can largely offset the increase in consumer prices. And as a board, we also have full indexation on our minds. We still need to have more discussions about whether and how we are going to do that. In addition, you always have to keep an eye on the premium and the coverage ratio.”

On top of that, the new pension system is coming: what changes will that bring?

“Fortunately, a lot will stay the same. Dutch people will continue to save money for the future, pension funds will still have money in their coffers for everyone, and every participant will continue to receive lifelong pension payments, even if you live to be 124. We will also continue to share the risks with each other: the short and longevity risks, belonging to the generation of bad luck or good luck, the occupational disability risk and the investment risk.”

The latter is the case in the solidary premium scheme, which the social partners at bpfBOUW have provisionally opted for. Why was a flexible premium scheme not chosen, in which members themselves can indicate with which risk profile they wish their pension contributions to be invested?

“In the solidarity contribution scheme, you have a larger pot to absorb investment risks and the returns will ultimately be slightly better. For the lowest possible premium, you get the best possible benefit in return. What’s more, you share the differences between generations that are going through worse or better economic times, between the unlucky and the lucky. That’s what I feel most comfortable with. I am a fervent supporter of the idea of collectivity; I firmly believe in the principle of solidarity.”

But isn’t it a bit paternalistic to deny people the ability to make their own choices?

“I am not averse to a little paternalism. It starts with the obligation to accrue a pension: how paternalistic is that? But it does ensure that people don’t blow their contributions and that they have the certainty that they will have an income after retirement. Moreover, the more choices there are, the more stressful the choice will be. When you’re at the supermarket waiting for the checkout, you always feel like you’re in the wrong line. Murphy’s Law, right? I myself stood at the cradle of one of the first pension schemes in the early 1990s in which choices were introduced. What transpired: people didn’t know what to choose and were afraid they were doing it wrong. In the end, almost everyone chose the default option.”

An option in the construction industry is the heavy work scheme: construction site workers can stop working three years before the state pension age. How much need for that is there for this occupational group?

“Construction workers often start working at a young age. People who are in their final years before retirement have sometimes been working for nearly forty-five years! Plus, they frequently used to have to do a lot of heavy lifting. And if you always thought you could stop working at age 64 and the state pension age suddenly goes up to 67, that can be quite a shock. Then it’s important for the fund to make it clear to older construction workers, who may be running out of steam, that they can choose to retire early.”

How challenging is communicating with construction workers about a complex issue like pensions?

“We need to communicate with all our participants. Our target group is very diverse: from low-literacy to higher vocational education and university. So we communicate with participants at different language proficiency levels. In addition, the sector itself is very diverse: our participants are not only construction workers, but also, for example, carpenters or natural stone workers. And don’t forget our participants’ partners. We also deal with both young and older participants; that’s another thing to take into account.  If you break it down, pensions are not rocket science: on one end you put money in and on the other end a pension is paid out. But as pension funds, we like to explain it in detail and also explain all the complexities surrounding it. Some people like to hear all the details, but there are also people who are unsettled by that. So we communicate with participants at different levels and through different channels.”

By old-fashioned letter?

“You can’t reach everyone by email. It was the same at PBL. During a meeting, I once asked participants to provide their email addresses. After all, this is the quickest and cheapest way for the fund to communicate. Afterwards, someone came up to me and said that he did not have an email address. He said he couldn’t read. I learned so much from that. So, at bpfBOUW we still communicate with some people by letter, which the son or daughter can then read to them on Sunday. We also have a helpdesk, which can take people by the hand when making pension decisions.”

The construction industry has a relatively large number of Eastern European employees, who work here temporarily but keep their home country as their domicile. What challenges does that create?

“A pension is something you have to apply for. You have to register with the pension fund as a participant. But we know that many participants don’t do that. So we try to provide as many pensions as possible to people who are entitled to them. But then you do have to be able to find those people. That is a challenge with people who live abroad. Fortunately, it seems to work quite well at bpfBOUW. Communication is also more difficult with this group of participants, of course.”

How do you, as a board, deal with the investment policy of bpfBOUW and what dilemmas do you experience in that regard?

“We do not experience a dilemma between returns and sustainability. On the contrary, we believe that the returns of organizations without a good sustainability policy can come under pressure in the long term because of the risks they run. We do have discussions within the board about responsible investment: how do we approach it, how far do we go? For example, we got out of tar sands and we removed many raw materials from our investment portfolio. This immediately excluded many investments in fossil fuels.”

ABP has decided to stop investing in fossil fuels altogether. Do you feel social pressure to follow that example?

“Action groups see ABP’s decision as a success. They’re focusing first on the largest pension funds, such as PFZW (Pensioenfonds Zorg en Welzijn, ed.)(Care and Wellbeing Pension Fund). But I expect they’ll eventually come to us, too. Will that influence us? Yes, of course it will. But we are already looking closely at our investments in fossil fuels. We do still invest in companies like Shell. As a board, we ask ourselves the question: are we most effective as a pension fund by withdrawing from investments in oil and gas companies, or by using our influence as a shareholder?”

What style do you use as the chairperson of the board?

“As  the chair, you have to encourage less vocal people to give their opinion and slow down others. A discussion may be heated, but the atmosphere must be one of mutual trust. Everyone must be prepared to support the final board decision, even those with a dissenting opinion. As chairman you have to create a real team. I learned that from my mother: what is good for the team is also good for the individual members. There you have that collectivity idea again. But I also have my father sitting on my shoulder: he taught me the importance of integrity. My father was very honest; at times brutally honest. But he also applied the standards he imposed on others to himself. I am a reflection of that.”

Can you give an example?

“For example, I think you should not spend someone else’s money as easily as you spend your own. I am therefore more frugal with the pension fund money than I am with my own. The bpfBOUW Board immediately felt like a warm bath, by the way: everything works well and the atmosphere is great. That’s really nice, because then you don’t have to worry about who’s pulling on you, and you can focus on the important things: offering people peace and security with a good pension scheme and clear information. I try to look at everything from the perspective of our participants. They are my touchstone: is this a balanced decision and can I explain it? I also have our participants sitting on my shoulder every day, whether they are saving for their retirement or already enjoying their well-deserved pension.”