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A changing landscape


Developments in the world (of pensions)

In the world around us, a lot of things happen that have direct and indirect consequences for pensions as well as for the work of APG. The year 2020, the year of COVID-19, is a textbook example of this. While APG does not, of course, have any influence on the pandemic, we must respond to it as quickly as possible. With respect to other developments, especially those in the Dutch pension world, such as the introduction of a new pension system, we can rely on expert input.

APG and COVID-19

The virus completely changed the way we work and interact with each other, including at APG. Almost overnight, we switched from an office-based organization to one in which almost everyone is working from home. First in Hong Kong. and then in the Netherlands and the US. We can be proud of that. At no time have our operations, the payment of pensions, or the collection of contributions been threatened in any way. Investors were able to continue to trade, analysts moved to their kitchen tables to study reports, and boards and advisors continued their discussions online.

We have to take into account that the crisis will last well into 2021, possibly even longer. All this time, APG also has to conform to what we call the “new normal”. We know that we can do it. However, the longer we work from home, the more employees experience problems because of it, although to varying degrees. APG keeps monitoring this closely through periodic surveys, for example, offering help where necessary. It is important for the organization that we maintain close contact with each other and preserve APG’s identity and culture.

Due to the changed situation, APG was not able to achieve all business objectives. The creative process is also under pressure because, in most cases, collaboration is limited to online meetings, email, and telephone.

Yet the crisis offers opportunities as well. Working from home will remain part of everyone’s work week even after the COVID-19 crisis. Working hours are becoming more flexible. Employees can also do work outside of “office hours”. For example, we will be reducing commuting and traveling between the branches, which, in turn, contributes to more environmentally friendly business operations.

COVID-19 and its economic impact

COVID-19 has also had a major impact economically. This in turn, has had an impact on people’s lives: many have lost their jobs because their company went out of business in the crisis. Companies in the hospitality industry, for example, were obliged to lock their doors, and the entire tourist sector was shut down for a large part of the year because travel was either impossible or strongly discouraged. The number of unemployed rose sharply. Then, another COVID-19 wave arrived. The ultimate impact of the pandemic on our lives and the economy as a whole will remain unclear for some time to come.

At a macro level, the initial figures made for some uncomfortable reading. Economic activity during the lockdown fell by 25% to 35%, according to figures from the OECD (Organization for Economic Cooperation and Development) and Insee (Institut national de la statistique et des études économiques). In the eurozone alone, the economy contracted by almost 15% in the second quarter compared to the previous year. Less production means lower collective earnings, lower profits. It also means the government is no longer able to balance its budgets.

The downturn on the stock markets was enormous but did not last long. The governments in the US and Europe came up with unprecedented relief programs, central banks like the Fed and the ECB opened the money tap. The financial markets recovered rapidly: at the end of August 2020, the Morgan Stanley Capital International (MSCI) world index closed at a new record high, as if nothing ever happened. However, the companies doing well are mostly American and, more specifically, companies in information technology and logistics. The recovery of other categories, such as commodities, real estate, and European equities, is much slower.

This also has consequences for the pension funds, our clients. APG is an institutional investor on behalf of these funds. It remains important for institutional investors to be entrepreneurial when investing. Direct investments, bypassing the financial markets, are becoming more interesting. The COVID-19 pandemic has also opened other doors, most notably doors to investing in projects aimed at mitigating the crisis. Examples include health care and infrastructure. Never before did the European Union issue so many communal green and social bonds. For example, in October 2020, APG invested €170 million in SURE bonds, which the member states use to protect European jobs.

Although the economic downturn is less severe than feared at the start of the first lockdowns, there is still a lot of doubt. It is unclear whether and when we can return to the “old normal”. Pension fund participants, too, are concerned. If the pension funds lose money on investments, this could have consequences for the amount that they receive now or later.

The global uncertainty is fueled by developments that have been around for some time. For example, there is still a trade dispute between the US and China, although this has been pushed to the background somewhat due to the COVID-19 crisis. It is unclear what will happen in this area under the new US President Joe Biden. Brexit is also now a fact. An agreement between the UK and the EU has prevented the two partners from being without any trade deals. The consequences of the new relationship for the economy of Europe (and beyond) are yet to manifest themselves.

The Dutch economy fell into a deep recession in the first half of 2020. A cautious recovery has set in since. According to figures from CBS (Statistics Netherlands), the economy shrank by about 3.8% over the past year. The number of unemployed increased by about 66,000 to over 340,000. As a result, more people are concerned about their current income and the consequences of unemployment for their retirement later.

For now, the revival of the market has somewhat reduced concerns about the level of pensions. A reduction in pensions in 2021 was in the cards, but this has been shelved now. This did require an adjustment though: the Dutch Minister of Social Affairs and Employment temporarily lowered the mandatory coverage ratio for pension funds from 100% to 90% on account of the “exceptional economic situation”.

New Pension Contract (NPC)

A true revolution in the Dutch pension world: at the end of June 2020, the Dutch government, the unions, and employers’ organizations reached an agreement on a new pension system. In the new system, the pension entitlement makes way for individual pension assets; the coverage ratio will disappear, and the value of the pensions will fluctuate more, both up and down.

The New Pension Contract (NPC) must take effect no later than January 1, 2026. In principle, compulsory participation in a pension fund for employees remains, as well as the principle of a collective system where pension savings are pooled together. Saving collectively means, among other things, that the contributions can be invested on a large scale. All of the participants will have greater insight into how much they have in their “kitty”.

To provide that insight, we need less complicated regulations and a completely different way of administrating. The keyword in all of this is transparency.

The transition to a new system will affect all parts of APG. This will involve new processes and new IT systems and we will have to make (extra) investments in staff development. Our entire pension administration and implementation will be under review. We also have to “clean up the attic”. That means getting to grips with all the data we have now, moving away from all the exceptions and cleaning up all systems and data before we make the big switch.


Long-term trends

The NPC is the first response to changes in the short and long term. Even after implementation in 2026, certain developments will continue to affect pensions and our work. The general trend in the Netherlands: we are getting older, there are fewer young people, and we are changing the way we work. Jobs for which people are currently being trained will disappear and new jobs will emerge. Technology takes over tasks. We work longer, change jobs more often, and work from home more often. The livability of Earth is in danger. Measures are needed to combat climate change, such as cleaner forms of energy.

All of these changes affect society as a whole. They also have an impact on pensions and the pension system. That is why APG must continue to think about the Netherlands of tomorrow. We are increasingly participating in the public debate and leading it where necessary.

Diversity and inclusion

The Black Lives Matter movement triggered a broad public debate about discrimination and equality, including in the Netherlands. Although APG explicitly opposes any form of discrimination within and outside the organization, current events have highlighted that we still fall short. Our organization is not yet diverse and inclusive enough. We realize that we can and must go the extra mile when it comes to diversity and inclusion. We are consciously working on this, by, for example, combating implicit bias in recruitment and new candidate selection and by making hiring committees as diverse as possible.


The COVID-19 pandemic has shed new light on the global sustainability debate. Travel and even the daily commute suddenly ceased to be a given. As a result, discussions about things such as flying and driving have gained momentum. Working from home and online meetings have become commonplace and will remain part of the working week for many after the COVID-19 era, including at APG.

The 2020 economic downturn has reinforced the call for sustainable investment. When having to rebuild, why not be green and socially responsible from the start? For example, short-distance air travel is under pressure with the train being favored as a viable solution. APG is, therefore, raising its sustainability ambitions by working toward demonstrably climate-neutral business operations by 2030. However, the elaboration of international climate plans has somewhat escaped attention due to the seriousness and magnitude of the COVID-19 crisis. The climate summit in Glasgow, for example, which was scheduled for November 2020, has been postponed for a year.

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