Stichting Pensioenfonds ABP Explained

Stichting Pensioenfonds ABP is a Dutch pension fund that's one of the largest in the country. It was established in 1957.

The fund is responsible for managing the pensions of over 2.5 million employees in the Netherlands. This includes workers in the public and private sectors.

Stichting Pensioenfonds ABP is a collective pension fund, meaning it's managed by a board of trustees on behalf of its members. The fund's main goal is to provide a stable income for its members in retirement.

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The Stichting Pensioenfonds ABP, or ABP pension fund, has a rich history that dates back to 1887 when it was founded by a group of railway workers in the Netherlands.

One of the earliest milestones in the fund's history was the introduction of the "pensioenregeling" in 1913, which provided a guaranteed income for employees in their old age.

The fund's growth was rapid, with the number of participants increasing from 15,000 in 1913 to over 100,000 by the end of World War II.

ABP was nationalized in 1957, becoming a public pension fund that was responsible for providing a pension to all Dutch civil servants.

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The governance and oversight of Stichting Pensioenfonds ABP is handled by two main bodies: the algemeen bestuur (general board) and the verantwoordingsorgaan (accountability body).

The algemeen bestuur consists of 16 members, including 3 executive directors, 12 non-executive directors, and an independent chairman. The executive directors are independent professionals who handle the day-to-day operations.

The non-executive directors represent workers (4 members), employers (5 members), and pensioners (3 members), and they oversee the executive directors. They are responsible for strategy and policy, taking into account the interests of all participants.

The verantwoordingsorgaan, with 48 members from workers, employers, and pensioners, advises the board on policy and evaluates their performance after the fact.

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The governance structure of the organization is quite complex, but let's break it down. The general board consists of 16 people, with three executive directors, 12 non-executive directors, and one independent chairman.

The executive directors are independent professionals who handle the day-to-day operations. They're responsible for the daily management of the organization.

The non-executive directors represent the employees, employers, and pensioners, with four members from each group. They oversee the executive directors and ensure the organization is working in the best interest of all stakeholders.

The general board is responsible for setting the organization's strategy and policy, taking into account the interests of all participants. They make decisions that impact the organization's direction.

The accountability body, also known as the ABP, consists of 48 members from the employee, employer, and pensioner groups. This body advises the board on policy decisions and evaluates whether the board has acted properly.

The role of a forzitter at ABP has seen its fair share of changes over the years. Bert de Vries held the position from June 1997 to September 2001.

Here's a list of the forzitters who have led ABP, along with their tenure:

Elco Brinkman's appointment in 2001 was a deliberate choice by ABP to have a forzitter with a strong network in The Hague.

The Europese Staatsschuldencrisis of 2010 was a major financial crisis that hit Europe, causing significant losses for pension funds like ABP. The crisis was triggered by Greece's hidden state debt, which led to a sharp decline in the value of the euro and Greek bonds.

ABP, a Dutch pension fund, had invested heavily in Greek bonds, which lost significant value due to the crisis. The fund also had a substantial investment in BP, which was responsible for the 2010 oil spill in the Gulf of Mexico.

The combined effect of these losses led to a decline in ABP's dekkingsgraad, or coverage ratio, to 96% in May 2010. This meant that the fund was not able to index pensions, and the Dutch central bank, DNB, prohibited ABP from participating in a system that transferred value between pension funds.

In 2012, ABP's dekkingsgraad was still below the required level, prompting the fund to announce a possible pension reduction of 0.5% and an increase in premiums by 2%.

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ABP has a large pool of participants, with a total of 3.1 million members in 2023.

About 1.3 million of these members are active participants who pay premiums, while 0.8 million have built up pension credits and 1.0 million are pensioners.

The participants form the personnel of what's known as O & O, which stands for overheid en onderwijs, or government and education.

The sectors that fall under ABP include the Rijk, provincies, gemeenten, waterschappen, defensie, politie, rechterlijke macht, and publiekrechtelijke ZBO's, with the exception of the UWV.

This personnel has an administrative appointment and falls under the Ambtenarenwet.

Other sectors that fall under ABP include MBO and HBO, and privaatrechtelijke ZBO's that are B3-lichamen.

These personnel have an employment contract, not an administrative appointment.

The sectors PO, VO, WO, onderzoekinstellingen, and universitair medische centra are also included, with each sector divided into a public law and private law part.

ABP manages its investments in-house through its captive investment unit APG, a privately owned investment manager. APG operates as a subsidiary of Stichting Pensioenfonds ABP.

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In 2006, ABP and PGGM considered a spinoff of their investment management businesses, but ultimately decided against it. Instead, they coordinate their activities in private equity through AlpInvest Partners, one of the largest investors globally in the private equity asset class.

ABP's investment portfolio is a significant part of its operations, with a total value of €500 billion as of 2023. The portfolio is divided into various asset classes, with a focus on return, risk, costs, and sustainability.

Here's a breakdown of ABP's investment portfolio as of 2023:

ABP has made significant investments in various sectors, including private equity, real estate, and infrastructure. However, the fund has also faced criticism for its investments in Israeli banks that fund settlement construction in the occupied Palestinian territories.

In recent years, ABP has made efforts to increase transparency and accountability in its investment decisions. For example, in 2025, the fund decided to remove Tesla from its portfolio due to concerns over Elon Musk's planned salary package.

The Pension Crisis was a major issue in 2000. The stock market crashed at the end of the year, causing a decline in returns that led to a decrease in the coverage ratio.

This decline in returns meant that the coverage ratio fell below 100%. In response, the government demanded more security, and pension funds were required to maintain a coverage ratio of at least 105%. This 105% ratio only applies to safe investments, such as bonds.

For riskier investments, De Nederlandsche Bank demands a higher buffer of 125%. The coverage ratio had recovered to 119% by 2005, but the pensions had not been indexed for five years, and premiums had increased as well.

Indexation of existing pensions and premium reductions were only allowed when the coverage ratio reached 125%. If the coverage ratio exceeds 140%, the ABP can fully adjust the pensions to match the wage growth.

The Stichting Pensioenfonds ABP has undergone significant changes to its financial framework. The Nieuwe Financieel Toetsingskader (nFTK) introduced in 2015 altered the way buffers are calculated for pension funds.

In 2015, the coverage ratio of the ABP dropped from 101.1% to 97.1% due to the nFTK. This change led to the introduction of a 'beleidsdekkingsgraad', which is the average of the coverage ratios over the last 12 months.

A 'beleidsdekkingsgraad' was introduced as a replacement for the traditional momentary coverage ratio.

The Kredietcrisis Van 2008 was a global financial crisis that began in the United States and quickly spread to other countries.

The crisis was triggered by a housing market bubble that burst in 2007, causing a massive increase in defaults on subprime mortgages.

The collapse of Lehman Brothers in September 2008 was a pivotal moment in the crisis, as it led to a freeze in global credit markets.

The crisis led to widespread job losses, home foreclosures, and a sharp decline in economic output.

The US government responded with a series of bailouts and stimulus packages, including the Troubled Asset Relief Program (TARP).

The global economy contracted by 1.7% in 2009, the worst performance since the 1930s.

The crisis led to a significant increase in government debt, with the US national debt rising from $5.7 trillion in 2007 to $10.6 trillion in 2009.

The crisis also led to a shift in global economic power, with emerging markets such as China and India gaining influence.

The Nieuwe Financieel Toetsingskader (nFTK) was implemented in 2015.

This new framework changed how buffers were calculated for pension funds.

The dekkingsgraad of the ABP dropped from 101.1% to 97.1% on January 1, 2015, due to the nFTK.

A "beleidsdekkingsgraad" was introduced, which is the average of the dekkingsraden over the last 12 months.

The "oude" dekkingsgraad, used until the end of 2014, was a snapshot of the financial position at the end of the month.

The ABP had to submit a recovery plan by July 1, 2015, with a required own capital of 128%.

The ABP submitted its recovery plan on June 30, 2015.

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The Stichting Pensioenfonds ABP offers a range of pensions and benefits to its participants.

Pensions are a supplement to statutory benefits, such as the old age pension AOW, surviving dependents' pension, and incapacity benefits. If you stop working between the ages of 60 and 70, you receive the ABP Multi-Option Pension.

The ABP Multi-Option Pension is based on your average salary during your career, with benefits accrued before 2004 based on the salary on 1 January 2004. Members of the armed forces have pensions based on their final salaries.

You can choose to receive your pension earlier, but not before the age of 60. If you choose to receive your pension earlier, your pension will be lower than if you had waited until the age of 67.

The ABP KeuzePensioen allows you to choose a variable pension, which can be higher in the early years and lower in the later years. This can be useful if you want to compensate for a period without AOW or if you want to pay off your mortgage.

The total amount of pension capital you've built up remains the same, but the variable pension can be higher in some years and lower in others. The lower pension must not be lower than 75% of the higher pension, excluding any compensation for missing AOW.

The pensioenopbouw, or pension buildup, is a crucial aspect of the ABP pension system. It's a percentage of the premiegrondslag, which is the basis for the pension premium, that's used to calculate the pension amount.

The percentage used for pensioenopbouw varies depending on the pensioengevend inkomen, or pension-earning income, with a range of 1.701% to 1.875% as of January 1, 2015. This percentage is then multiplied by the pensioengeldige tijd, or pension-earning time, in the opbouwjaar, or buildup year, and the meetelwaarde, or measurement value, which is normally 1 but can be lower in cases of disability or unemployment.

The pensioen per uitkeringsjaar, or pension per payout year, is the total pensioenopbouw over all opbouwjaren, or buildup years. This is a middelloonsysteem, or middle-income system, where the pension amount is calculated based on the total buildup over all years.

If the pensioner chooses to retire earlier or later than the standard pension age, the pension amount is adjusted using a factor that's based on the age at which the pension is taken. This factor can be higher or lower than 1, depending on whether the pensioner retires earlier or later than the standard age.

It's worth noting that the pensioenopbouw system is relatively unfavorable for younger individuals, as the relative growth through indexing is typically lower than the average return on investment by the ABP.

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In the Netherlands, there's a concept called "pensioengevend inkomen" which is the maximum gross annual salary, currently set at €137,800 for 2024. This is the maximum income that counts towards pension contributions.

A key aspect of this concept is the franchise, which is the amount of income that is exempt from pension contributions. The franchise depends on the pensioengevend inkomen, and it's either €14,050 or €17,550, depending on whether the pensioengevend inkomen is €51,765 or less, or more than that.

Everyone living in the Netherlands is entitled to an AOW-uitkering, which means they don't have to contribute to pension for that part of their income. This is because the AOW-uitkering is a universal pension that's granted to everyone who meets certain criteria.

Prior to 1986, the AOW-uitkering was incorporated into the pension system through a system called "inbouw", which involved a 2% verrekening of the AOW-uitkering for each opbouwjaar. However, this system was replaced by the franchise system in 1986.

From 1986 to 1994, there were different franchises for married couples and single people, with married couples paying a higher franchise of 2.5% of the AOW-uitkering of two people, and single people paying a lower franchise of 2.5% of the AOW-uitkering of one person. Since 1995, the franchise has been the same for everyone, regardless of marital status.

If you're a single person without a partner when you retire or partially retire, you'll receive a special supplement to your pension.

You won't qualify for this supplement if you've given up your survivor's pension with your partner's consent, perhaps because your partner has a good pension built up.

You can only exchange your survivor's pension for a higher old-age pension if it was built up from 1 July 1999 onwards.

The supplement amounts to 12% of the pension built up between 1 July 1999 and 1 January 2004, and 6% of what was built up afterwards.

If you retire before the state pension age, your survivor's pension that can't be exchanged will remain important if you become a single person again before the state pension age.

Pensions are a crucial aspect of the Stichting Pensioenfonds ABP. The pensions supplement statutory benefits such as the old age pension AOW, surviving dependents' pension, and incapacity benefits.

The ABP Multi-Option Pension is available to participants who stop working between the ages of 60 and 70. This pension is a great option for those who want to continue working part-time or pursue other interests.

If a participant dies, their partner and children may receive an ABP Survivor's Pension. This pension provides financial security to loved ones in the event of a participant's passing.

ABP pensions are based on average salaries during the course of the pensioners' careers, known as an average-salary scheme. This means that participants' pensions will be calculated based on their overall earnings throughout their working lives.

A threshold of €10,100 per year is applied to both contributions and accrual of benefits. This threshold ensures that the pension is a supplement to the AOW and other statutory benefits.

Here's a breakdown of the types of pensions offered by ABP:

The ABP Survivor's Pension includes partnerpensioen (partner pension) and wezenpensioen (children's pension). The partner pension is a lifelong benefit paid to the partner after the participant's passing.

ABP has faced criticism from environmental organizations for its investments in tar sands oil companies and pipelines, which it claims is more effective than divestment.

Some critics argue that ABP's investments in Israeli banks that fund Israeli settlement construction in the occupied Palestinian territories are a concern, as this activity is considered illegal under international law.

ABP has responded to these criticisms, stating that its active engagement with companies delivers more results than divestment.