The Pension Fund endeavours to achieve an optimum balance between a high return at a low and stable premium, full supplementation and a good funding ratio. It is necessary to make investments in order to achieve that aim and the Pension Fund has therefore drawn up an Investment Policy.
Investing is not without risks. The Board of the Pension Fund has determined the required risk attitude in consultation with its social partners. This risk attitude means that the required capital has to remain within specific limits. These limits are set on the basis of the feasibility test. This test shows the relationship between the financial configuration, the expected pension result and the associated risks. In other words: Can the Pension Fund realise its expectations in the long term?
Investment and Audit Committee (BCC)
The Board of the Pension Fund makes the strategic decisions for the Investment Policy. It delegates the investment implementation and auditing tasks to an Investment and Audit Committee (BCC). The BCC provides advice to the Board.
The BCC consists of three internal members, a representative of the pension beneficiaries and two external experts. Its most important tasks and authorities are:
- Monitoring the Fiduciary Manager. The Fiduciary Manager implements the policy that is set out in the Investment Plan.
- Auditing the implementation of the Investment Policy set by the Board.
- Analysing and evaluating on a quarterly basis the investment results achieved on the basis of the Fiduciary Manager’s report.
- Reporting the results of the formulated policy to the Board each quarter.
- Making solicited and unsolicited proposals to the Board with regard to adjusting the investment strategy and policy to be followed.
Strategic investment policy basis for Annual Investment Plan
The Strategic Investment Policy is geared to the liabilities of the Pension Fund via the aforementioned feasibility test and by conducting an ALM study. The ALM study allows the Fund to monitor the relationship between the investment developments and the pension liabilities over time (ALM = Asset Liability Management).
The Fund recalibrates the Strategic Investment Policy every three years by conducting a new ALM study. In this way it is possible to take into account the pension commitments at that time, the risk profile that is appropriate for that, and the current financial position. The Fund then refines the Investment Policy further, which is set out in an Annual Investment Plan.