The purpose of our investment policy is to secure the pensions and generate sufficient returns. This ensures that the pensions can continue to be paid out and increased in line with prices.
How does it work?
The employer pays the pension contributions to the pension fund. The pension fund invests the contributions in the best manner possible.
How do we invest?
1. We diversify the risks in our investments.
We do this by splitting the investment portfolio into two parts:
- Matching portfolio
The matching portfolio is designed to hedge risk and generate sufficient returns to pay the pensions both now and in the future. The value of the pension obligations is constantly changing due to interest rate movements. The duration of the matching portfolio is linked to the duration of the obligations, so that the return from the matching portfolio follows the growth of the obligations. We do this by investing in government bonds and interest rate swaps.
- Return portfolio
The return portfolio is designed to generate sufficient returns to increase the pensions annually in line with prices (indexation). These investments carry a greater risk. We invest in, for instance, equities and corporate bonds.
2. We pursue a dynamic investment policy
The amount of risk we are prepared to run with the investments depends on our financial position. This is determined on the basis of our funding ratio. When the funding ratio is low, we take less risk and invest less in the return portfolio. When the funding ratio is extremely high, it is easier to fulfil our ambitions and we reduce our risk exposure. In this case, too, we invest less in the return portfolio. The allocation ratio between the return portfolio and the matching portfolio can be rebalanced at pre-determined intervals during the year.
3. We take sustainability into account
The pension fund aims to ensure a good pension for the pensioners and members. Our investment decisions are not just based on financial information. We also assess the company's sustainability record, with a particular focus on the environment, society and governance. These are known as the ESG criteria.
How do we apply the ESG criteria?
The ESG criteria are applied in the following ways:
Who are responsible for the investments?
The Board is responsible for the investment process, the investment portfolio and the organisation of the investments. The pension fund has a small team of investment professionals with broad-based expertise that works intensively with strategic specialised partners.
The Asset Management and Balance Sheet Management Committee advises the Board on all aspects of the strategic investment policy.
Various external asset managers invest on our behalf. Each of these asset managers have signed a contract with us for the management of part of the investment portfolio. All asset managers are continuously monitored to make sure they adhere to their mandate.
More information on our purpose, organisation and investment policy can be read in our Statement of Investment Principles