The Board expects 2020 to be a year of transition for pension management as we move toward a new pension system. The social partners (government, employers' federations, and trade unions) in The Hague have agreed on a pension agreement, which calls for further elaboration of a new pension contract. It is estimated that during ongoing negotiations between the parties involved, changes in legislation and regulations and developments will be limited in scope.
This does not alter the fact that far-reaching regulations such as IORP II need time to become engrained. The Board made the necessary adjustments in 2019. This will be reported to De Nederlandsche Bank in 2020, and an evaluation will take place in the autumn of 2020. All this will require the necessary energy and attention from the Board of SPF in the coming year.
Governance
The composition of the Board is changing in two respects:
Furthermore, Giselle Verwoort is joining the Risk & Compliance Committee and becoming a member of the Asset Management Committee. Further changes will follow and come into effect from July 1, 2020, in connection with the implementation of IORP II.
In Q1/Q2, the function of Key Function Holder for Audits will be assigned to an external person.
COVID-19 & financial markets
The outbreak of COVID-19 and the resulting measures taken by governments all over the world to curb the spread of the virus have already had a significant effect on SPF’s activities in the first quarter of 2020.
The funding level fell by 15.0% from the end of 2019 to Q1 2020 (107.6% at the end of 2019 to 92.6% in Q1 2020). The further development of the funding level during 2020 depends, among other things, on the effectiveness of the measures taken by several countries to combat COVID-19.
Financial markets plummeted in March 2020, with negative returns on shares and other investments. The reasons for this were twofold. On the one hand, a pandemic broke out that prompted governments to take drastic measures to halt the spread of COVID-19. On the other hand, a latent oil dispute between Russia and Saudi Arabia escalated, leading to a free fall in oil prices at the beginning of March and a 55% drop in the course of March. All other markets followed suit: Global equity markets fell on average by 25% to recover somewhat in the second half of March. Market volatility increased sharply as a result of major uncertainties, and liquidity and trading volumes dried up, particularly in the bond markets. Governments in Europe and the US responded with support measures for citizens and businesses on an unprecedented scale. Central banks in Europe and the US are also trying to support the economy as much as possible with monetary policies (buying government bonds and lowering reserve requirements) and stimulus packages, but little can yet be said about how long the current situation will last and what impact developments and measures taken to support economic growth and financial markets will have. The Board is closely monitoring ongoing developments.
Brexit
The United Kingdom’s withdrawal from the European Union is planned for 2020. The Board is investigating the consequences of a hard Brexit for SPF and taking the necessary measures to mitigate these as much as possible. Issues such as central clearing and contracts with external asset managers are receiving the highest attention and are a top priority for SPF.
Socially Responsible Investing
The current Socially Responsible Investing policy will be evaluated in 2019. In 2020, the Board will reassess its level of ambition and also evaluate whether the Socially Responsible Investing policy needs to be amended or broadened. This evaluation will take account of the fact that SPF signed the Covenant on International Socially Responsible Investment (in Dutch: “IMVB-covenant”) in 2018, and the necessary steps to be taken will be determined as a result of this. Finally, the subject of climate policy will also become part of the Board's agenda in 2020.
Community policy from 2020 through 2022
The communication policy for 2020 to 2022 will be adopted on and apply from January 1. The policy from the previous period is effective, as evidenced by various studies and contact moments with members. The policy will be adapted to reflect new insights and developments. Developments in pension communication in the field of communication and technology will be taken into account, as will developments in legislation, external developments, best practices, and other relevant developments, Spearheads of the new policy are the further digitization and connecting with the employer (SABIC).
In addition to drawing up a revised policy, one objective is to integrate the other documents relating to communication into it. The annual Communication Action Plan and the Relationship Communication Plan (previously called Relationship Management Plan) form part of the Communication Policy as an appendix.