A positive interview with André Hollenkamp

“This is actually going to be quite a positive interview,” André laughed while taking a sip from his coffee. “At the end of this year, we'll be announcing some relatively good news. In recent years we were unable to grant participants full pension accrual because the fixed contribution wasn't enough to fund the targeted pension accrual rate. But now that interest rates have risen, we will next year be able to let pensions accrue at the maximum level allowed under Dutch tax regulations. So that's really good news. Pension is accrued on a year-by-year basis. In other words, if you were to work for 40 years and your pension always accrued at the maximum level allowed under Dutch tax regulations, you would build up a pension of 40 times 1.778%. In the past, the rule of thumb was that your pension benefits would amount to 70% of your average salary. And that’s also the fundamental idea behind the accrual rate of 40 years times almost 1.8%.”

Is the board worried about the impact of inflation and what can be done about it?
“Well, yes, of course we are. We are seeing an overall trend of prices going up everywhere. We've always done whatever we could, but we're facing multiple challenges, including interest rates. It goes without saying that we are also following the CLA negotiations, which are currently focusing strongly on the issue of inflation. The pension plan is merely one of the topics they are discussing. The social partners, the trade unions and ING have decided to extend the current pension plan by one year, until the end of 2024. And then? The debates concerning the new Pension Accord are still ongoing, and this is causing a lot of uncertainty. Members of Parliament are currently sifting through the articles one by one, which is an enormous task. We are following their discussions, but we don't have any say in the pension plan itself. That's for the social partners to decide. We’re just a third party executing the pension plan. We've been doing that for nine years now, and we will continue to do that. We act in the best interests of the participants. Contrary to insurance companies, pension funds don't have a profit objective, so all gains go into the participant's collective assets.”

Is there any good news to report with regard to the increase of pensions for 2022? 
“Indexation is allowed if the pension fund's financial buffers are robust enough. We are bound by legal requirements in this respect. If the pension fund's funding ratio is at least 110%, partial indexation is allowed. We are relatively well-positioned, given that our policy funding ratio was 117% as at 30 September. I'm saying relatively, because full indexation is not allowed until the funding ratio is at least 143%. At the end of December we'll make a decision on this. The outlook is currently good, although we won't be able to grant full indexation. In early January we will communicate more about this.”

You yourself are a participant of the pension fund. What issues are you concerned about and which of those do you take with you to the board table?
“I started working at ING back in 2002, so a lot of my pension is in the old pension fund and part of it is in the new one. I'm really interested in pensions, which is why I joined the pension fund’s board in 2013. I had already built up a lot of product expertise in my work and my focus was on risk management. That's very useful in this position. Of course, I am also concerned about my own pension. I recently turned 58 and bought a new house two years ago. I'm not considering retirement yet because I enjoy my work, but I always keep close track of my pension. I would urge everyone to do the same. Time is an important factor when it comes to pension. The sooner you realise that, the better. We carried out a customer satisfaction survey recently, which quite a lot of colleagues responded to. Nine out of ten people are aware that they themselves are responsible for ensuring they will have enough pension and eight out of ten know how much pension they'll be getting when they retire. That's good, because pension awareness is one of our goals. And half of our colleagues are setting aside additional savings for their retirement, so I think our message has come across clearly. Nevertheless, we keep calling on our colleagues to take action.”

How do you see the future now that the ball is in the social partners’ court? And would you want to have a bigger say in their talks?
“Sure, I would personally like to, but there are rules we need to observe. Our task is to assess whether the pension plan complies with the law, whether we will be able to execute, fund and communicate the new pension plan and whether it is legally sound. Actually, I am happy we have those mechanisms. The new pension plans, which are emerging from the new national Pension Accord, will be more personal. On the other hand, I'm worried that people will believe they truly have their own individual pension pot. That's partially the case, but not entirely. For example, it isn't going to be a pot of money that would stay in your family if you were to pass away. We will need to communicate about this very thoroughly.” 

Is there anything you'd like to add to this interview?
“In short, we can confirm that we will know in January exactly how much indexation we'll be able to grant. And it's good news that next year our pensions will be accruing at the maximum level allowed under Dutch tax regulations. Looking to the future, the ball is firstly in The Hague. After that, it will go to the employers and the trade unions, who are already having tough talks about the pension plans and wages. For the time being, the social partners will ask us to extend the pension plan for a while. We're happy to do that. And I hope the new pension plan will take effect by 1 January 2027 at the latest, and that we will continue to be the administrators of the pension plan.”