Socially responsible investing
Return goes into your pension
All pension funds invest the contributions that have been paid into them. The return they make on those investments enable them to pay you your pension when you retire – preferably a pension that keeps up with inflation so your spending power stays intact. After all, it is likely that thirty years from now one euro won’t buy you as much as it does today.
Prudent investment policy
ING CDC Pensioenfonds has in place an investment policy (Dutch only) with a long-term horizon. While part of your eventual pension benefits will be paid from contributions paid into the pension fund, the largest part will be funded from return on the pension fund's investments. To ensure that there will be sufficient return, ING CDC Pensioenfonds has in place a prudent investment policy which is neither fully risk averse nor fully risk prone, but rather a mix of the two. Based on this policy, the pension fund works with two investment portfolios: a matching portfolio and a return portfolio.
Matching and return portfolios
The matching portfolio accounts for approximately 50% of the pension fund's invested assets. The pension fund uses this portfolio to match its investments with its current and future commitments. This portfolio consists of mainly highly rated European soevereign bonds, which have relatively low risk profiles.
Distribution matching portfolio
Source: Annual Report 31 December 2023
The return portfolio, accounting for some 50% of the pension fund's invested assets, serves to enable indexation. Through this portfolio, which has a higher risk profile, the pension fund aims for higher returns by investing in equity and property.
Distribution return portfolio
Source: Annual Report 31 December 2023
ING CDC Pensioenfonds and Sustainability
In 2021, Europe adopted rules for disclosure of sustainability information in the financial sector. These rules also apply to ING CDC Pensioenfonds. The following topics are explained below:
- How we address sustainability risks.
- Why we don't take into account key adverse effects on sustainability.
- Remuneration policy and sustainability risks.
How we address sustainability risks
Investments always involve risks. The value of an investment may change due to fluctuations and events on the financial markets. Sustainability risks could also affect the value of investments.
Sustainability risks are ecological, social and/or governance related risks that may cause the value of an investment to decline. For example, the value of real estate may decline if it is situated in an area where the sea level has risen and the risk of flooding has increased.
ING CDC Pensioenfonds has incorporated the assessment and monitoring of risks into its decision making procedures and risk management. ING CDC Pensioenfonds assesses sustainability risks when making investment decisions, just as it does for other risks.
If ING CDC Pensioenfonds finds that an investment involves high sustainability risks, it may decide to replace the investment by an investment with lower sustainability risks.
This is the case when, for instance, ING CDC Pensioenfonds believes there is a major risk of unexpected or early write-offs due to new regulatory requirements relating to climate and environment issues (stranded assets).
Adverse effects of investment decisions on sustainability factors are not taken into account
ING CDC Pensioenfonds does not take into account the adverse effects on sustainability factors when making investment decisions. This means the pension fund does not assess the negative impact of its investments on humans, the environment, society and habitats.
ING CDC Pensioenfonds invests pension contributions with a view to making enough return to pay out pension benefits. Calculating the adverse effects on sustainability factors requires large quantities of data. This type of data is expensive and the quality is often inadequate. Moreover, this data is not available for all investments. ING CDC Pensioenfonds does not know whether or not it will include the adverse effects on sustainability factors in its future investment decisions. ING CDC Pensioenfonds will review this from time to time.