“For us, literally everything is changing”

The definitive adoption of the new Pension Act was an important moment for APG in 2023. This eventful year was also marked by a political landslide. With the publication of the annual report, Annette Mosman, APG’s CEO, looks back at 2023, as well as ahead to what is coming. “Finally, after many years of preparations, the plans can be implemented.”

Anyone who walks into APG’s office immediately sees the large countdown clock that counts the working days until January 1, 2025. That’s the day when APG’s first two pension funds will transition to the renewed pension system. On the day of this interview, there are still 195 working days on that clock. Less than nine months, in other words, before the members of PWRI and APG’s own pension fund PPF APG start accruing and receiving their pensions under the rules of the new Pension Act.

How challenging is this year for you?
“I’m feeling challenged, but in a healthy way. Those 195 working days sound like there is not much time left, but we have been working on the preparation for the past 3 or 4 years. Of course, it is a bit nerve-wracking that it is really happening now, but we are ready for it. Finally, after many years of preparations, the plans can be implemented.”

The title of the annual report is “A New Reality”. How new is that reality?
“It is completely new, because literally everything is changing for us. We are going to work in a different way, with different products and systems, and different rules. The results of our work will be clearer and more transparent for the members of our funds. They will soon see a single overview of their pension accrual, the returns earned and the costs of asset management and pension administration.”

In the foreword to the annual report, you mention the resilience that will be expected of APG in the coming years. In what areas?
“As an organization, we have long been used to working in a stable pension system with familiar schemes. And that is all going to change. Many things are uncertain. That’s why we need to find stability in our expertise as pension professionals. Whether that’s in investment, administration, IT or communications. Dealing with that requires resilience.”

What is the greatest challenge in that?
“Our greatest challenge is the fact that we have a very tight schedule, and depend more than ever on the decision-making of pension fund boards and coordination with regulators. We are all working together on a socially relevant issue with the whole of society watching. Collaboration, both internally and externally, is essential to making this transition successful. Making clear agreements with attention to the interests of the participants is more important than ever. The fact that everyone in the sector has the same goal and wants to go through this transition successfully and in control does make it easier to work together.”

Can you give an example of what that collaboration looks like?
“Until now, the collaboration with all parties happened mainly at the policy level, to align our intentions. Now we are really working together and making very concrete agreements about what we want to achieve. About the way we communicate and record things.”

The 2023 Pension Act was finally passed. Yet the renewed pension system remains an issue; many of the parties that became the biggest in November are critical of the law to varying degrees. How do you deal with that as the chair of the executive board?
“That new law is in place, and there is nothing for us to do except to implement it. Of course, we are closely monitoring what is going on in politics, and providing information to various parties as needed for their understanding and to conduct proper debates. But our full focus is on implementing the law.”

While work is in full swing on the new pension administration systems, the old ones are still fully in operation. You often compare that to a store that stays open while undergoing renovations. How do you ensure the right balance?
“We have made some clear choices. Building the new systems and training people in the new process is an absolute priority. We were able to make that choice because the current systems and schemes are pretty stable. We won’t be making any changes to them anymore, now that we’re building all these new systems. That combination of regular work and the transformation to the renewed system puts considerable pressure on our staff. I have a lot of respect for the positive attitude and perseverance of all those colleagues who are working so hard on this.

In addition, we are putting the quality of the data in our old systems in order. Every fund that transitions to the renewed system can only do so if all their participants’ data is in the systems without errors. This is an enormous challenge that our pension specialists have been working on for years.”

How is Asset Management, APG’s investment unit, affected by all the changes? And how are they anticipating the new reality?
“In Asset Management, too, we are affected by external factors that urge us to call on our resilience. For example, the renewed pension system requires more transparency in terms of costs. So we need to be able to clearly explain those costs and returns. In addition, the funds are asking different things of us. For example, they are placing greater emphasis on investing in the Netherlands and on impact investment, which involves pursuing positive social or environmental effects. ABP’s demands in terms of responsible investment and index investing, for instance, mean that we focus more on those areas.”

We are on the eve of one of the biggest social reforms in recent Dutch history. And yet confidence in and knowledge of pensions among the Dutch is low. Doesn’t that worry you?
“We are substantively informing our funds’ participants about the renewed system, which is being prepared in detail. But above all, I hope that the communication about the changes will also encourage people to increase their pension awareness. My concern is that we are not sufficiently successful in seizing the moment of transition to inspire people to think about their personal financial situation. Some people, especially women, have a pension gap of over 40 percent. You don’t close that when you’re 10 years ahead of retirement, but at a young age, people can really still affect that. If we can make that clear to people, we will also increase women’s financial independence.”

Speaking of which, 2023 was also the year you worked hard on this issue as Top Woman of the Year. Are you satisfied with the effect of your efforts?
“What the year has brought me are a lot of great conversations, good insights and a huge drive to continue with this in the future. I want to continue to create awareness of this problem and, together with the entire society, think about what facilities we need in order to achieve an equal distribution of financial independence between men and women. Although, of course, it is an illusion to think that in one year you will solve that problem or even contribute substantially to that solution. We are not nearly there yet, and I will continue to put it on the agenda and work for it.”

Looking back to 2023: what are you proud of?
“Despite all the uncertainty last year, we fully committed to execution power and collaboration. By continuing to work decisively and not being distracted by the outside world, we have shown that we have what it takes to bring the transformation to a successful conclusion. We are also getting better at using our knowledge and expertise to select the right investments for our funds to make a real impact. The development of wind energy in the North Sea, for example: Noordzeker. Another great example is the investment in houses in Rotterdam that are rented out with priority to candidates with a social profession. Teachers and police officers, for example, or care workers.”

And what could be better?
“The transition poses significant challenges. We are working with great drive to implement the plans effectively and meet all the goals. But through that hard work, we tend to lose connection with those around us a bit. We need to keep communicating with the parties around us and include them more in what we are doing and what our next steps are. That takes time, but it is absolutely necessary to address the concerns of external stakeholders such as the funds, regulators and suppliers.”

As we look ahead to the period after the transition, how do you picture APG’s role?
“Over the next five years we will be focusing entirely on the transition, but we are already thinking about how to proceed after that. We want to strengthen the funds we work for. To do that, we need to have a very clear picture of what those funds’ strategies are, because what we do will be an extension of their needs. We’ll support them to the max with what they need in order to take responsibility when their 4.5 million participants are transferred to the renewed pension system.”

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