Chairman of the Board, Annette Mosman talks on BNR about the new pension contract
Annette Mosman joined the BNR program Zakendoen (Doing Business) yesterday to talk about the introduction of the new pension contract (NPC), as well as the tight planning and the cost price per participant. APG’s investment policy also came up. One thing’s for sure: as pension administrator, APG needs to step up.
A hundred years of pension system is being overhauled: A huge reorganization. Moreover, as Mosman pointed out, we need to deliver a product in 2026, while we currently have no idea what this will look like. “In the meantime, we just have to get on and get ready for this.”
Certainty about the pension amount is making way for greater individual responsibility. However, as pensions are not really a topic that concerns most people, transparency and clear communications are more essential than ever, explained Mosman. We need a contract we can implement and justify. Certainly because there’s already a concern for that so-called unlucky generation - between 35 and 55 years - who won’t benefit from the old system but are confronted with commitments in the new one. The term ‘pension theft’ came up in this connection.
“It’s not pension theft; it’s more of a redistribution. There will still be a pension pot of some 1,800 billion but we’ll be distributing that across different generations. Those in political circles and employers’ and employees’ organizations - we are only the administrator - need to make sure that this continues to be fair on participants.”
Two variants
The law must be adopted on January 1, 2022. There are two variants: the new contract and the Improved Defined Contribution Scheme Act, which is arranged in a more individual way. It’s up to the funds and employers’ and employees’ organizations to make a choice. Mosman says, “As administrator we’re contributing ideas and making calculations. We work for eight funds and will be implementing both schemes. I think that the large funds will probably choose the new contract including the collective buffer.” This variant requires a lot of explanation to participants. “The other contract is simpler, which makes it cheaper. If you have a membership with small pensions, it’s perhaps a logical choice to go for the Improved Defined Contribution Scheme Act. Because the size of the pension is much more important than all the communications around this.”
Investing in Shell
The interview then focused on APG as large investor. Risk, return, costs and sustainability are criteria that APG considers when investing. “We’re about providing a good pension for everyone. Not only financially, but also in a sustainable world. We’ve made a conscious choice for engagement and inclusion and don’t only invest based on return considerations. By continuing to meet with Shell, we can also exert positive influence.”
Competition
“We have 100 years’ experience and 3,000 pension and investment experts in house.
And we’re really good administrators. So the more complex the system, the easier we can retain our competitive position. But when I think about the eight funds and the four-and-a-half million participants we work for, then all that complexity just undermines confidence in the new system.”
Capgemini, which has drafted the pension fund for the retail trade, claims that it will soon cost fifteen euro per participant in pension administration. Mosman: “We’re comparing apples to oranges here. You can compete on price, manage a simple pension pot and announce an amount to the participants. I’m not going to get into whether you can do that for fifteen euros. But I agree that our price needs to go down if the product becomes simpler. However, if you say that there needs to be more focus on income for later, you need to do something before it becomes a societal problem. Fortunately, our funds are of the opinion that participant communications, both during the transition and afterwards, are the top priority. And that’s included in the price.”