The pension sector has many stakeholders, ranging from social partners, administrators and politicians to supervisory authorities. What is their specific role, what is their view of the sector, and how do they perceive and respond to the renewed system? In the Krachtenveld series, these parties share their perspective.
Business as usual? No, the Future of Pensions Act (Wtp) is still anything but business as usual for Jochem Dijckmeester. Although, if everything goes according to plan, more than 90 per cent of pension assets in the Netherlands will have been transferred to the renewed system by the end of this year, the transition continues to demand Dijckmeester’s—and therefore DNB’s—full attention. “The transition is far from complete. We also expect many funds to transfer next year. This will continue to require a major effort from funds, administrators, advisers and supervisory authorities.”
Dijckmeester does see that both the sector and DNB have gained considerable experience in recent years. As a result, funds have a better understanding of what to expect and assessments can proceed increasingly smoothly. “This also creates room to look ahead to other developments that are relevant to the sector.”
Let us briefly return to the experience gained. What has DNB learned over the past year?
“One important lesson is that explicit and clearly defined transition objectives help substantiate a balanced consideration of interests. If a fund clearly articulates what it aims to achieve through the transition, many choices become easier to explain. We have also learned that it is important to engage with funds as early as possible. The sooner vulnerabilities become visible, the more scope there is to address them properly.”
In an earlier interview, you spoke about greater peace of mind for the ‘class of 2027’. Has that materialised?
“What has increased above all is predictability. Funds and advisers have a better understanding of the questions that may arise and the ways in which vulnerabilities can be addressed. That helps enormously. This does not mean, of course, that all challenges have disappeared. But the experience gained to date does provide greater guidance.”
Could you say that the major discussions about balanced decision-making are now behind us and that the real work is beginning?
“I do not see these as two separate phases. A well-substantiated transfer decision touches on several subjects at once. It concerns the balanced consideration of interests, but also implementation, IT risks, communication and participant confidence. These subjects are inextricably linked. Clear substantiation ultimately also supports communication with participants and confidence in the choices made.”
Trustees need to understand the environment in which they operate
Speaking of IT, we have recently been hearing more and more about digital sovereignty. Why is this relevant to pension funds?
“Virtually all critical pension fund processes now depend on technology, from administration and asset management to communication with participants. Moreover, a large part of the financial sector uses the same technology providers, most of which are non-European. A major outage, cyber incident or geopolitical disruption affecting such a provider could therefore have consequences for a large part of the sector at the same time. For pension funds, the question is not only whether a supplier is performing well today. It is also what happens if that supplier is temporarily unavailable tomorrow or comes under political pressure.”
In your presentations, you explicitly describe digital sovereignty as a governance issue rather than an IT issue. Could you explain why?
“Because ultimately it is about dependencies, choices and risk appetite. Technology is only one part of that. Trustees need to understand the environment in which they operate. Which risks do we accept? What alternatives do we have? And what do we do if circumstances change? These are questions that belong in the boardroom.”
You described a Europe that depends on a small number of foreign players for much of its critical technology. Is that a risk for pension funds?
“It may at least be a vulnerability. Geopolitical developments are making it increasingly clear that access to technology, data and digital services cannot be taken for granted. This does not mean that dependence on foreign parties is necessarily undesirable in the short term. In the longer term, however, investment is needed in innovation, technological development and fully-fledged European alternatives to strengthen the pension sector’s resilience and strategic autonomy. Our main message is that trustees need to map these dependencies properly and consider the associated risks.”
Pension funds are not only users of technology, but also major investors. In your view, do they have a role in the development of European technology?
“Pension funds’ primary responsibility is, of course, to their participants. At the same time, however, they are long-term investors that continuously assess developments that will shape the economy of the future. From that perspective, they may also consider what role they wish to play in an innovative and resilient European technology ecosystem, or what risks this potential development entails.”
In your view, where is the boundary between prudent pension management and broader social responsibility?
“It begins with the responsibility towards participants. But that responsibility does not end at the boundaries of the organisation itself. Trustees also consider risks and developments that could affect the economy, the financial sector and, ultimately, pension outcomes over the longer term. From that perspective, it is logical to also consider topics such as innovation, technological resilience and strategic autonomy.”