Wtp and other factors
'The Wet toekomst pensioenen (Wtp, Future of Pensions Act) makes a reassessment of governance necessary,' says Anne-Marie Roth-Verweij, PwC expert in pension law and governance. The Wtp introduces new financial and non-financial policy frameworks, increases the complexity between pension and asset management, and changes the expectations of participants, employers and regulators. 'But it's not just about the system change. Due to external factors such as artificial intelligence (AI), sustainability (ESG) and geopolitical risks, it is also necessary to review governance. As soon as the new world for a pension fund emerges, the impact of these developments on the entire organisation of the fund must be mapped out.'
Remaining in control
To stay in control in a changing environment, fund boards need to redefine their management information, risk indicators and steering tools, including communication and investment policies. Monitoring and evaluating performance, opportunities, risks and actions is crucial to making balanced decisions. 'Effective governance is not just about the structure on paper,' says Jan Meijer, pension lawyer and strategy advisor at PwC, 'but above all about how an organisation operates in practice and the behaviour this prompts from board members and employees. This is also emphasised in the Visie op Toezicht 2025-2028 (Vision on Supervision 2025-2028) of De Nederlandsche Bank.'
Governance in the new system
A future-proof design requires a combination of knowledge of pension law, asset management, and actuarial science, as well as communication, stakeholder management, ESG, and IT. The board, board office and internal supervision must possess professional expertise and a balanced composition: parity (representation of interests), diversity and relevant expertise, as outlined below, are essential. Since the new pension contracts still contain solidarity components, it is crucial that parity is visibly embedded in the long-term strategy and the structure of governance and participation bodies. The existing governance models offer sufficient space to find a good balance between parity and professionalism. The further organisation of the institution and strengthening of the required expertise as part of the existing governance are addressed below.
From committees to results-oriented teams
Roth-Verweij: 'We advocate for multidisciplinary teams instead of the traditional committees. The existing silo approach is replaced by a more integrated management and execution. This brings together different perspectives and results in more innovative solutions.' In the new system, one team, for example, can operate at the intersection of asset management, pension administration and communication. The core task of this team is to ensure coherence between strategic investment policy, pension administration, and communication towards investors, active participants and pensioners. In addition, you can think of teams focused on innovation, digitalisation or sustainability.
Self-evaluation in the pension chain
There is also a need for broader (self)evaluation. The new frameworks and external developments require not only reflection within the board, but throughout the entire pension chain. This means thinking about cooperation with social partners, regulators, outsourcing parties and participants. Meijer: ‘This evaluation also provides the opportunity to periodically review the decision-making and accountability process. In our opinion, the current practice of self-evaluation only partially meets this need.’
Knowledge and competencies
The transition to the new system and societal developments require a broader set of knowledge and competencies among board members and employees, as well as a further deepened level of expertise in the various components. In addition to the traditional balanced consideration of interests and the creation of support, the focus is shifting to controlled and integral business operations, guidance in decision-making, and clear, balanced information. Board members need to become more business-oriented, with greater attention to communication, social engagement, and technological developments such as AI and cybersecurity, on top of the already existing ambitions regarding diversity.
Important competencies for the new system include:
- Adaptability and agility to respond quickly to new laws and regulations, technological developments and changing expectations of participants and employers.
- Digital resilience and IT knowledge to identify digital risks and opportunities and to manage data quality, processes and systems.
- Communication skills to explain complex choices, risks and consequences clearly and balanced.
- Stakeholder management to appropriately engage participants, social partners and internal bodies – both online and offline – with attention to diversity and representativeness.
- ESG expertise to firmly embed sustainability criteria in policy and decision-making.
- Professional behaviour and self-reflection to enable ongoing development and effective self-evaluation.
Where to adjust and stay on course?
'We see all kinds of positive developments on the above points among our clients,' says Meijer. 'ESG criteria, for example, are now a fundamental part of policy for many pension funds and asset managers. With the introduction of the Wtp, it is important for organisations in the pension sector to determine to what extent they are on track and on which issues they can make adjustments to better align governance with societal developments.'
'The governance of the pension fund of the future requires vision, expertise and clear direction,' concludes Roth-Verweij. 'Organisations that now invest in the right balance between parity, expertise and multidisciplinary teams lay the foundation for stable, transparent and sustainable pension management and are better prepared for the complex challenges of tomorrow. We are happy to contribute ideas here, with an integrated approach, in-depth knowledge of the pension chain, and an eye for social developments and smart digital solutions. Want to know more? Let's get acquainted.
