Corporate Pensions: Providers

Regarding Dutch Corporate Pensions, the first question for a company always is:

Are there legal mandatory pension obligations which mean that a company has no choice but to join that plan?

As it can be quite complicated to check for those kind of legal obligations, probably advisable not to do it yourself.

If there are no legal obligations, the company can i.e. choose between three kind of providers:

APF

APF is Dutch and stands for ‘General Pension Fund’. General meaning that it is not only accepting certain companies or certain branches.

The APF has been introduced as pension providers as of 2016 and is relatively new. It was created in order to have more competition for existing and often much too expensive providers.

The benefit of joining such an existing plan as a APF is to have low costs as the company probably would join an already existing plan within the APF. It might also be practical to join an already existing plan.

The possibly substantial disadvantage or limitation of an APF is that in order to join, the company does not have much flexibility as the low(er) costs are achieved by means of streamlining and abstaining from options.

The APF is often an alternative for larger companies. The APF will often not be an alternative for the company that prefers to dictate the exact content of its own pension plan.

Insurance Company

Insurance companies have since long been the basic pension provider.

As many of them were too expensive and too inactive towards clients, they will have to improve their service as there are fine alternatives. Some insurance companies have proven to be up to this task. Also regarding international projects.

For sake of completeness it be mentioned that we are rather strict about our independence towards pension providers. We treat them in a correct but highly critical manner.

PPI

The Premium Pension Institution or PPI has been introduced as a pension provider as of 2011 in order to provide much more competition for especially insurance companies.

A PPI functions as an investment vehicle that also takes care of the complete administration. As the PPI is by law prohibited to insure any risks, each PPI outsources those risks at an insurance company. Which gives each PPI the chance to choose the best and least expensive coverages.

The Dutch PPI market is highly competative. Several providers have already dropped out of the market.

The great benefit of the PPI is that as they all are new, they have new IT Infrastructure which is a substantial benefit. They also focus very much on low costs, good investment options, fine personal portals and great communication and service towards clients.

Some of them are very fine but as always advisable to remain critical.

If a company would require a new corporate pension plan, one of the requirements is that the company can choose between at least three quotes. Thus pension consultants are obligated to give enough and objective information to the company.

If the corporate pension plan includes an own contribution of the employees or voluntary options for the employees, please make sure that there is a suitable process regarding inclusion of its effect on the monthly wages specification.