Aegon is the first company to receive approval from the Dutch Central Bank to launch a General Pension Fund in the Netherlands. This offers a cost-effective alternative for new and existing company pension schemes.
General Pension Funds are a new concept in the Netherlands. They provide an alternative for company pension schemes currently administered independently or via an insurer.
How does it work?
Stap, is a pension pooling vehicle that enables separate financial administration for multiple pension plans. In effect, a company's pension fund is ring-fenced, unless they choose to combine collectively with other funds. This approach enables smaller schemes to comply with complex pension regulations, without the cost of individual administration, meaning that a greater percentage of the employees' pension premium is invested.
With interest in Stap already being expressed, and the first contracts expected early 2017, Stap Chairman, Erno Kleijnenberg, explains: "A General Pension Fund can offer economies of scale as it invests on behalf of multiple pension funds within the general fund. And all of the funds within the general fund fall under the supervision of just one independent board."
Funds are administered by TKP, an Aegon subsidiary responsible for administering the pensions of 3.1 million employees and pensioners in the Netherlands.
Stap also allows individual schemes to benefit from the investment expertise normally only available to larger pension funds. Investment for Stap will be carried out by TKP investments, a subsidiary of Aegon Asset Management, with around 23 billion euro of existing assets under management.
Erno Kleijnenberg also recognizes that considerable efficiencies can also be achieved when it comes to communications with customers. "Employees have to learn to understand their pensions, to enable them to make the right choices."
Stap was established with startup capital from Aegon and TKP, but operates completely independently, under the direction of an independent board of directors, overseen by a supervisory board.
Employees, pensioners and employers are represented in each ring-fenced fund or collective fund, by a body of stakeholders. This body can influence the direction, charges, premiums, and communications. Each ring-fenced fund is financially independent and has its own coverage ratio.