Stap: ‘As a General Pension Fund, we benefit from the scale on which TKP Investments invests’
Stap started over a year ago as the first General Pension Fund [Algemeen Pensioenfonds, APF] in the Netherlands. Huub Popping, chair of the Stap investment committee, looks back on a year of working in the vanguard, in collaboration with TKP Investments. ‘We have achieved even more than we had in mind beforehand.’
En route to three billion in managed assets
In the summer of 2016, Stap, as an independent institution founded by insurer Aegon and pension provider TKP, received permission to start its innovative pension fund, which implements plans for affiliated collectivity circles. ‘Naturally, that didn’t mean that clients were already affiliated from day one,’ says director Huub Popping.
As of October 1, Stap set to work for the thousand participants in the pension fund of Eastman Chemical, which had its CDC (collective defined contribution) plan implemented in its own circle. The retirees and ‘sleepers’ of Stichting Voorzieningsfonds Getronics followed, and since January 2017, there is also a multi-client circle, with employers from in particular accountancy who are letting their employees accrue new rights. With the most recent entrants, Holland Casino (9000 participants and 1.5 billion in pension assets) and the 4000 former participants and retirees of Sanoma Pension Fund, Stap is en route to jointly managed assets of three billion euro. Popping: ‘We have achieved a lot in a year. We are ahead of the schedule that we had in mind ourselves.’
Economies of scale for pension funds and employers
That growth is not unimportant, because one of the major advantages of the General Pension Fund is that company pension funds and employers can benefit from economies of scale that this collective aspect provides. At Stap, there is a choice of your own circle with your own stakeholders’ body that oversees the independent APF management, or a multi-client circle with a standard plan and a joint stakeholders’ body. Stap has organized these multi-client circles for three levels of ambition, Popping explains. ‘There is a choice of a nominal plan with the ambition of a price indexation of 25%, 50% or 75%. These circles are attractive for SME companies with an annual premium scale starting at one million euro.
Control via stakeholders’ body
We see that the bigger company pension funds want to continue their autonomy and therefore choose to have their own circle. Many things are standardized in an APF, including the investment policy. If you have a highly anomalous portfolio, it is attractive in the short term to choose to have your own circle due to the costs. But there is also an emotional aspect to it; you like to have a say when it comes to matters like the indexation policy.’
Stap has now gained a year of experience with that control via the stakeholders’ body. ‘Our policy needs the agreement of the stakeholders’ body from the start, and in general any topic can of course be discussed between the representative body and the management. If good ideas are on the table, why wouldn’t you listen to them?’ Contact proceeds via meetings, as the Stap directors were already familiar with from their experience with other pension funds. ‘We have also already brought out our first annual report, including reporting from the stakeholders’ body. In that respect, the practice doesn’t differ so much from the accountability body of other pension funds.’
Participants benefit from efficiency
His participants benefit from the expected economies of scale from day one, says Popping, thanks to the efficiency with which his APF operates. ‘But also consider how you relieve the burden on your people who previously managed the pension fund and put a lot of time into it. And as Stap, we benefit in turn from the scale on which TKP Investments manages the assets for us.’
The choice of TKP Investments – an affiliate of cofounder TKP – for asset management was obvious. But that relationship isn’t set in stone, asserts Popping. ‘From the time it was founded, Stap has been a completely independent institution. That means that contractually we can take all our asset management elsewhere tomorrow if necessary. If the quality of the service or the rates should give cause for it.’
Reliable partner with transparent products
But for now, Stap has no complaints about the way TKP Investments is carrying out the mandates it has received per circle. ‘Whenever we are in discussion with a new client, the experts of TKP Investments conduct a thorough analysis of the portfolio, in the ALM context too, and there is also work involved in the portfolio transition. Often, it’s a question of agreeing on a strategic investment policy, seeing how and when you can converge on the portfolio that suits our policy. In the multi-client circles there is greater standardization; there, things are usually converted at the front door.’
That standardization means that Stap does not make use of the full range of the products and services of TKP Investments, Popping confirms. ‘They can do much more than we ask of them, but as an APF, we are fully satisfied with a reliable partner that offers products that are simple and transparent and whose costs are at a reasonable level.’