“A pension fund cannot do everything on its own, but it's still ultimately responsible for proper administration, including through outsourced services.”

An interview with Anna Timmermans, board member of NN CDC Pensioenfonds since April. Anna’s areas of focus are pension, communications and governance. Sixteen years ago, she started at ING Group as a management trainee and switched to the domain of pensions one year later. Anna worked at Nationale-Nederlanden and then went to ING Investment Management (now NNIP), gaining more and more experience in pensions and investments, in domestic as well as international markets. After a brief intermezzo at Deloitte, she returned to NN in 2015 and has since been responsible for the domain of collective pensions at NN Pension Services.

What experience do you bring to the board of NN CDC Pensioenfonds?
Early in my career, I did some pension-related things and discovered it was a really interesting line of work. Over the past 16 years, I worked with pensions from all sorts of perspectives, including commerce, product management, investments and now operations, where the actual administration of pensions takes place. All that knowledge and experience helps me in my role as a board member.

What are you committed to as a board member?
We have a pension plan, which is an important employment condition at NN. Given the nature of their daily work, people working for our company know more about pensions than the average person. And yet, it’s important that we continue to raise pension awareness among employees. The employer made a conscious choice to switch to a CDC pension plan. This type of plan involves risks, which are borne by the participants. Although you can mitigate some of those risks, the external factors are beyond your control. For example, market interest rates, changes in legislation and the imminent modification of the Dutch pension system. These factors can lead to a sense of uncertainty among participants. Will our pensions retain their value?

The pension fund cannot control these external factors either, but what we can and must do is give you insight into expectations regarding your future pension income and the impact of certain events on your pension, and make you aware of the possible risk of a pension gap. Our aim is to help you understand your pension, take responsibility and do something about your pension if you feel that’s necessary. To achieve that, we need to communicate frankly and clearly.

“On the one hand I represent the employer on the board, but on the other hand I'm also a participant in the NN CDC pension plan.”

Why did you join the board?
I became a part of the pension world by coincidence. What I like about it is its complexity and the challenge of translating that complexity into plain language. I believe everyone can understand their pension if we break it down into smaller bits and make it more personal. What is the impact of risks and life events on your pension situation?

What made me say ‘yes’ to a position as board member was the social relevance of pensions. I can use the pension knowledge and experience I acquired throughout my career even more in this board position than in my current job. I can devote my efforts to the participants and at the same time enhance my personal development.

The first thing you were involved in was the implementation of a new pension plan…
To me, helping to set up the new pension plan was a dynamic learning process, during which the social partners and the pension fund worked together constructively. NN CDC Pensioenfonds carries out the administration of the pension plan, the terms of which are agreed upon by the social partners. Our contacts with the employer and the trade unions are good and our board bureau colleagues have been working hard to implement the new pension plan. The pension fund is responsible for communicating on the new pension plan. We help participants understand changes in their pension, why things change and how the changes will affect their pension situation. At the same time, there are lots of uncertainties. How will interest rates develop? Will we be able to increase pensions in line with inflation? What’s happening at national level?

To what extent is NN CDC Pensioenfonds affected by low interest rates?
Low interest rates have an impact on your pension accrual in NN CDC Pensioenfonds. As a result of low interest rates, the cost of your pension accrual has gone up. Every year as at 30 September, the pension fund assesses whether the 30% fixed contribution will be sufficient to cover the pension accrual targeted for the year ahead. Unfortunately, it won’t be sufficient for 2020. This means your pension accrual in NN CDC Pensioenfonds will be reduced by 17.20% in 2020. This is what we call a cutback. We've made a video to explain cutbacks in more detail, because I'm sure our colleagues would like to better understand this.

What is the impact of investments on pensions?
All pension funds invest the contributions that have been paid into them. The return they make on those investments enable them to pay out your pension when you retire. Preferably a pension that retains its value, so your purchasing power stays the same when you retire. Pensions need to be increased to ensure they retain their value, but whether or not a pension fund is allowed to increase pensions depends on the fund’s policy funding ratio. That’s the ratio between the pension fund's assets and the discounted value of its pension commitments, averaged for the preceding twelve months. Every year, the reference point is 30 September. As at that date, the pension fund determines whether or not it will increase pensions for the current financial year. In order to increase pensions (i.e. grant indexation), the pension fund's policy funding ratio must be higher than 110%.

What challenges will the pension fund be facing in 2020?
As said, pensions are dependent on many factors, many of which the pension fund board has no direct influence on. These factors require our constant attention, nonetheless. The issue of low interest rates will continue to be a challenge in 2020, as will the national pension agreement.

A totally different challenge is the transfer of former Delta Lloyd employees to our pension plan. From 1 January 2020, they will start building up pension in NN CDC Pensioenfonds. We want to ensure the transition runs smoothly.

“I believe everyone can understand their pension if we break it down into smaller bits and make it more personal.”

Communication is one of my focus areas as a member of the board. As far as I’m concerned, a user-friendly digital portal offering a Pension Planner for participants is key. We’re continuously working to improve that. We want to make every effort to make pension as easy to comprehend as possible, so you have insight, are aware of risks, know the context, can take responsibility and can make personal pension choices. I’d like to hear our colleagues’ opinions and experiences – so don't hesitate to get in touch with me at the office or via email.

Where can we find you when you're not at work?
In recent months, we’ve been very busy renovating our new house. I’m an avid do-it-yourselfer, so I enjoy that. To keep fit and stay in shape, I go to the gym. And if I have any time left, I invest in a rich social life!

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Pension accrual 2020