Dutch pension environment is changing
With the introduction of new pension regulations (‘Pensioenwet’ and ‘FTK’) in the Netherlands, the fiduciary responsibilities of pension funds and sponsors have been increased. In addition, changes in accounting rules (IAS19/FAS158) now mean that pension funds have added a new element of volatility to company balance sheets, directly affecting a sponsoring company’s profit and loss. Due to the financial crisis, the funding ratio of Dutch pension funds fell dramatically. As a result, pension funds are increasingly looking for efficiencies in handling investments and managers. Fiduciary management can provide an effective solution.
What is fiduciary management?
Fiduciary management – also called implemented consulting in the UK or investment outsourcing in the US – allows an outside provider, the fiduciary manager, to manage a pension fund’s entire investment portfolio and risk. It includes portfolio construction and asset allocation, asset manager selection and monitoring, asset and liability management, custodian selection, risk budgeting and/or reporting. The pension fund still sets the risk and return targets for the overall plan.
Who is it for?
Companies that are most likely to be considering fiduciary management are those with pension assets of between €250m and €10bn. A report in July 2009 by the Dutch central bank (DNB) said fiduciary management will be one of the major themes driving the Dutch pension markets for the future.
What are the benefits?
Companies can benefit from lower asset management costs, an improved risk and return profile achieved by carefully selected asset managers, and time savings – as they only need to communicate with a single fiduciary manager and receive a single consolidated set of reports. The partnership of pension fund and fiduciary manager enables the company to focus on the high-level strategic objectives of its pension fund, leaving its fiduciary manager to execute all investment-related duties.
Contact us
To take advantage of fiduciary management or to find out more, please contact us.