The Spoorwegpensioenfonds offers the companies, employees and former employees within the Railway transport sector a good, modern and flexible pension plan. The plan is a collective defined contribution plan, targeting a pension reflecting average salary levels. The Spoorwegpensioenfonds is a non-compulsory sector-wide pension fund. With plan assets of EUR 10,6 billion, 30,000 active participants, 25,000 pensioners and more than 70 affiliated companies, the fund is one of the largest pension funds in the Netherlands.
The Railway transport sector pension plan has been a collective defined contribution plan since 1 January 2006. This is a plan under which the employer is obliged to pay a fixed contribution. The accrual of pension is age-dependent. Participants born in or after 1950 are in line for a pension based on an average pay scheme applying a pension age of 65 years. And employees born before 1950 are in line for a moderated final pay scheme applying a pension age of 61 or 62 years. Employers are not liable for compensating for contribution or funding deficits at the pension fund.
Every year, the board decides whether and to what extent the pension is to be adjusted. This depends on the financial situation of the fund. No funds are reserved for this contingent adjustment. Accordingly, there is no automatic right to annual indexation. If the board decides to adjust the pensions, this is done on the basis of the development of contract wages in the Netherlands. This percentage is determined by Statistics Netherlands (Centraal Bureau voor de Statistiek - CBS).
The Spoorwegpensioenfonds has a collective defined contribution system with a fixed contribution of 20% of the pension basis. Most participants pay a lower contribution based on arrangements made with the employer. The contributions and the available capital are invested. The investment policy is designed to invest the pension capital in a responsible and sustainable manner and maximise returns.
The investment policy of the fund is aimed at maximising investment results over time within a set risk profile. The fund invests worldwide in equities, emerging markets, private equity, government and corporate bonds, products derived from them and in property funds. In the Netherlands the pension fund also invests directly in property and mortgage loans. The asset mix is selected with the aid of Asset Liability Management modelling. Socially Responsible Investing and corporate governance are both part of the investment policy of the Spoorwegpensioenfonds. The investment policy of the Spoorwegpensioenfonds is not geared exclusively to maximising returns, but also guided to a large extent by the social responsibility of the pension fund. Spearheads within the Socially Responsible Investing policy include companies’ performance on socio-ethical and environmental aspects, such as human rights, working conditions and corruption.
Socially Responsible Investing can be implemented in different ways. Previously, the fund followed the policy that European equity funds that did not meet the guidelines set by the fund were included in the share portfolio on an underweighted basis. Evaluation has shown that retrospective analyses in the field of Socially Responsible Investing are difficult to combine with forward-looking business-economic analyses.
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Summary of past five years
|
|
|
2010 |
2009
|
2008
|
2007
|
2006
|
2005
|
|
Indexations
|
2,07 |
2.00%
|
2.27%
|
1.33%
|
0.89%
|
1.08%
|
|
Funding ratio
|
126% |
135%
|
121%
|
189%
|
178%
|
166%
|
|
Return
|
11,1% |
16.3%
|
- 19.2%
|
5.0%
|
9.2%
|
15.2%
|
In addition we proved unable as a fund, due to this passive approach, to bring about desired change. That is why it was decided in 2006 to give social commitment a more prominent place in the policy. This means that companies are not excluded in advance in selecting equities, but they are actively reproached for their “misconduct”. Should a company despite its social commitment fail to adapt its policy in this field, the fund will sell (part of) the shares in the company concerned. The engagement approach aims to bring about improvements in business operations in the field of Socially Responsible Investing during the period when shares are held. In doing so the fund applies a distinction between tactical and strategic policy. In respect of shares included in the tactical share portfolio, votes are cast at shareholder meetings on subjects relating to the social responsibility of the company concerned. If companies have little concern for Socially Responsible, greater influence is sought by joining forces with other investors. For shares included in the strategic share portfolio, a more extensive dialogue is entered into with companies performing less well in the field of corporate social responsibility. This means that the fund will enter into and continue a dialogue with the company by means of formal or informal consultation.
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At year-end
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2010 |
2009
|
2008
|
2007
|
2006
|
2005
|
|
Number of participants
|
26,169 |
29,847
|
30,252
|
29,104
|
28,662
|
31,743
|
|
Number of pensioners 1
|
25,355 |
25,137
|
24,865
|
24,340
|
24,038
|
23,774
|
|
Number of inactive participants
|
17,037 |
16,809
|
16,918
|
20,499
|
19,634
|
18,127
|
|
Affiliated companies
|
63 |
70
|
68
|
66
|
65
|
61
|
|
Pension contributions 2 (x 1 million €)
|
80 |
71
|
68
|
51
|
37
|
90
|
|
Pension payments 3 (x 1 million €)
|
362 |
358
|
356
|
343
|
339
|
286
|
|
Investments (x 1 million €)
|
11,056 |
10,628
|
9,467
|
12,027
|
11,798
|
11,159
|
|
Investment result (x 1 million €)
|
1,163 |
1,475
|
- 2,270
|
548
|
966
|
1,491
|
|
Return on investments
|
11,1% |
16,3%
|
- 19.2%
|
5.0%
|
9.2%
|
15.2%
|
|
VPV* 4 (x 1 million €)
|
8,638 |
7,667
|
7,516
|
6,136
|
6,553
|
6,676
|
|
Funding ratio (FTK-principles)
|
126% |
135%
|
121%
|
189%
|
172%
|
161%
|
|
Pension indexation
|
2.07% |
2.00%
|
2.27%
|
1.33%
|
0.89%
|
1.08%
|
|
FState pension offset in €
|
12,673 |
12,465
|
12,209
|
11,872
|
11,566
|
|
*VPV: Provision for pension obligations
1 The number of pensioners is stated excluding persons receiving invalidity pension. This adjustment has also been made for prior years in the table above.
2 In the years 2003 up to and including 2005 a portion of the amounts stated was charged to the capital designated for the NS railways. In 2003 the amount concerned was €14 million, in 2004 €21 million and in 2005 €33 million.
3 In the years 2005 and 2006 excluding special payments for the Transitional Scheme for Early Retirement OVUT40 and the Individual Income Scheme for older Workers IPIO.
4 The provision for pension obligations was calculated on the basis of 3.75% for 2005. A rate of 4.3% and financial assessment framework principles (FTK-principles) were used for 2006.
Socially responsible investment
An important element of the investment policy of the Railway Pension Fund (The Spoorwegpensioenfonds) is socially responsible investment (SRI). The board sharpened its SRI policy in 2007. The board has embraced the principles of the United Nations Global Compact as a basis for its SRI policy and signed the Principles for Responsible Investment. In addition, the board has developed supplementary sharper requirements in the areas of child labour, the environment and human rights. The board has decided to debar investments in controversial weapons, such as cluster bombs, land mines, biological, chemical and nuclear weapons and weapons containing depleted uranium.
Engagement
The board can decide, on the basis of the Global Compact principles and the additional conditions in the areas of child labour, the environment and human rights, to engage in an active dialogue with the management of the business in order to persuade the business to improve its performance in the areas of human rights and the environment. We call this engagement. We adopt as a guideline a realistic period within which the first results must become visible. If a business does not make any improvements, we will not invest in it.
Exclusion
The board can decide, on the basis of the Global Compact principles and the additional conditions in the areas of child labour, the environment and human rights, not to invest in certain businesses. We call this exclusion. The board takes this decision in respect of businesses that produce controversial weapons. The fund defines controversial weapons as cluster, nuclear, biological and chemical weapons, weapons with depleted uranium and anti-personnel land mines. The board can also decide to sell the shares of businesses which, after a dialogue with them, still systematically turn a blind eye to child labour, environmental pollution and serious infringements of human rights, and the shares of businesses whose management does not undertake any adequate actions to resolve the problems in line with the Global Compact principles.
Exclusions are published if shares have been actively sold. In 2010, 32 companies were included on the fund’s list of exclusions.
Public exclusions list:
General Dynamics
L-3 Communications
Lockheed Martin
Northrop Grumman Corp
Raytheon
Textron
Inclusion
The board can decide conversely to invest in companies that do business primarily on the basis of their social responsibility. For example, the Railway Pension Fund, together with the Royal Tropical Institute (Koninklijk Instituut voor de Tropen), has established a factory in Mali for the production of biodiesel. The Railway Pension Fund is also active in forestry, day nurseries and micro-credits.
Corporate governance
Corporate governance concerns the manner in which businesses are managed and the manner in which that management is supervised. The point of departure is that executive and non-executive directors must be accountable for the performance of their task. The Dutch Corporate Governance Code (the Tabaksblat Code) is, inter alia, a working out of the social responsibility that Dutch pension funds owe towards their participants and beneficiaries.
The Railway Pension Fund has formulated its own corporate governance code, on which the voting policy is based. This code consists of eight principles, which are summarised below. These corporate governance principles conform with the ICGN Global Corporate Governance Principles and the Tabaksblat Code. ICGN stands for International Corporate Governance Network.