As many of the Netherlands’ Industry-wide pension funds split their administrative and investment management departments, there’s a hub in Rijswijk where exactly the opposite is underway. Five company schemes and one Industry-wide pension fund, who last year announced they were launching a cooperative, have taken delivery of the keys to their newly-constructed office building and the funds are beginning to co-operate with their investment management and administration.
Although the six funds will collaborate under the new structure, they will continue to maintain their independence. Erik van Ballegooijen, director of the NGL3.5bn (e1.6bn) TNO fund, the largest member of the project, says the strategy will make the members considerable savings. “This move will make us far more cost effective, it’s all about economies of scale,” he says. The decision comes at a time when Dutch funds are facing increasing red tape and greater pressure from the authorities to provide greater disclosure.
Four of the six of the funds have already signed up to the same administrative system. For the time being, the pension fund for the dredging industry is staying with the system it purchased two years ago and the retailers’ pension fund has decided not to join as they outsource their administration and therefore don’t face the same kind of costs.
Eventually the remaining two are likely to join the same approach. “After all it will be very cost effective if all the funds use the same administrative system,” says van Ballegooijen. He also believes that as pensions become more personalised, the number of enquiries schemes face will rise making common administration all the more legitimate.
Van Ballegooijen says that for investment management the funds will start pooling their assets where appropriate but that they remain free to set their own investment strategy. Each fund will continue to do its own asset liability studies since the liabilities and the age profiles vary and render a joint study impossible.
In practice there is likely to be greater overlap on fixed income mandates than on equities but either way, larger mandates will enable the funds to negotiate en masse and secure lower fees from external managers.
It will be a further two years before the whole transition has settled down and is complete. “This transition has taken a while. It’s not simple by any stretch of the imagination,” says Van Ballegooijen. He maintains that the outcome of the move will come under scrutiny from other small and medium-sized company funds, not least as a possible solution to the increasing reporting and administrative requirements they face.
There are around 900 company schemes in the Netherlands and the majority manage less than NGL 500m . At present many of these smaller funds run administration from the employers personnel department, a procedure that looks increasingly untenable in the future given that insurance regulators are demanding more information from the pension funds. “If our project is successful, I think that it will be replicated,” says van Ballegooijen.
TNO is the largest fund and the other five manage between NGL1-2bn meaning that when the six are co-operating, total assets will stand at roughly NGL 10bn, taking the entity into the top 15 company schemes in the Netherlands.

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