PNO Media: Dutch pensions deal to increase interest in lifecycle product

first_imgPNO Media is one of three voluntary sector funds in the Netherlands to offer a DC lifecycle option as an alternative to its DB scheme, with the others being PGB and SBZ.The Dutch government plans to convert all DB schemes to new DC lifecycle products between 2022 and 2016. This has increased interest in the PNO lifecycle product among employers, said Olde Scholtenhuis.“A lifecycle product fits very well with contemporary pension trends, and we have several tenders running at the moment,” he said. The €7bn voluntary sector scheme PNO Media has seen “strong interest” from employers in the defined contribution (DC) lifecycle product it introduced last year as an alternative to its defined benefit (DB) scheme.A “decent number” of companies have opted for the lifecycle product since it was introduced in May last year, said the scheme’s deputy president Patrick Olde Scholtenhuis.At the end of 2019, assets in the life cycle product – which invests mainly in liquid, passively managed investment funds selected by Kempen Capital Management – amounted to a modest €2m.This year, however, assets have grown further with the inclusion of new accruals from IT sector fund TrueBlue and the addition of several other employers. Patrick Olde Scholtenhuis, PNO MediaWhether the upcoming new pensions contract will really be a game-changer remains to be seen, he warned. “There are a lot of uncertainties remaining considering the implementation and the conversion of existing pensions to the new contract.”Legal constraintsThe current lifecycle product is also facing some legal constraints, resulting in risk being reduced much more gradually towards retirement than is commonly the case with lifecycle products.Even the most defensive option of the three risk profiles participants can still choose to have an allocation of 51% to the return portfolio at retirement.PNO Media was forced to choose this set-up because participants convert their DC accruals to the pension fund’s DB scheme at retirement, Olde Scholtenhuis explained.“The DB fund has an allocation of 50% to the return portfolio, and under the Dutch Pensions Law it is not allowed to increase investment risk after retirement. That’s why risk in the lifecycle product at retirement has to be at least at the same level as the risk of the collective investment mix of the DB fund.”To read the digital edition of IPE’s latest magazine click here.last_img

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