Dutch pension asset manager APG has shared its annual report, confirming plans for four key transitions that are designed to help "future proof" the organisation amid a changing pensions landscape.

In particular, the group highlighted the transfer of Pension Fund Work and (re)Integration (PWRI) and its own pension fund PPF APG to the new pension system as an “absolute highlight" in 2024.

The switch to the new pension system was the first of four simultaneous and interlinked transitions, which are intended to "justify" the existence of the firm in the new system, and ensure it remains a healthy and solid business.

Some of these transitions are already underway, as APG revealed that, at the beginning of 2024, ABP, its biggest pension fund client and major shareholder, amended its investment principles.

As part of this change, the fund opted more explicitly for index investing, and wants to invest more in social impact investments, including in the Netherlands.

To shape these investment principles in the best way possible, APG also modified its strategy, which led to a number of organisational changes in 2024.

Building on this, the group identified its plans to invest exclusively for ABP from around 2030 as the next transition, although it emphasised that this will not be done before a good alternative is found for APG's other clients.

When it comes to administration and mandatory communication, APG also reassured the industry that the shared service provision environment should remain intact, serving all the funds and enabling them to benefit from economies of scale.

However, the firm revealed that, because ABP has increasing ambitions when it comes to providing service to its participants, it also wants APG to set up dedicated customer service teams, as the fund suggested that there is space for APG to play a role in consolidating the pension sector after the transition.

APG said that this vision "of course" has consequences for the organization, and in 2025, it will start working on our strategy, taking into account ABP’s new vision.

However, APG clarified that this third transition will also not be achieved overnight.

"We are taking the time – the expectation is three to five years – to get a good picture of the options, make choices and implement them in a controlled way, with input from our stakeholders," the report stated.

The fourth transition identified by APG was work to cut IT costs, in order to help maintain a healthy business model at market rates under the new pension system.

"APG is also digitalizing on all fronts," the report stated, revealing that, in 2024, ABP kept working on a more secure and future-proof IT environment.

"We took the first steps towards working with AI, we are already working in the cloud, and we have set up a data platform where we can easily save and provide access to all relevant data," the report said.

"A new IT environment will give us the capability of further gearing up automation and showing that we are in control. This is of strategic importance for retaining confidence in the pension system.

"After all, our work is about the financial future of many people in the Netherlands, and that means we have to be accountable. In 2024, we built the foundation; in 2025, we’ll be taking further steps. Our priority is that data concerning funds, participants and employers is secure with APG at all times."

However, APG pointed out that, despite the investment in IT, the cost per participant increased by only €11 in 2024, with an average cost per participant of €128, including €86 for regular service and €42 for transition-related costs:

"Our ambition is to reduce the average cost price per participant after the introduction of the renewed pension system. We have to become less expensive, but still deliver APG quality,” APG CEO, Anette Mosman, said.

APG Asset Management manages assets worth €616bn (as of year-end 2024) on behalf of four funds, of which ABP is the largest.

According to the update, around €67 of every €100 of pension paid out comes from investment returns.

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