How did the board perform?
The Accountability Body of the Pension Fund
The nine members of TNO Pension Fund’s Accountability Body (in Dutch 'Verantwoordingsorgaan' or VO) look critically at the actions of the board. You can read how they did in 2023 in the annual report in the opinion of the Accountability Body on page 91. But how does that work, actually? Why is that important and who’s on our fund's Accountability Body? And why are the stakes extra high in the transition to the new system? In this article, the VO explains the situation and Peter de Haan, Chair of the VO, provides an additional explanation.
Peter de Haan, Chair of the VO.
Supervision
Stichting Pensioenfonds TNO, as pension administrator, manages the funds raised by employees and former employees and affiliated employers to implement the pension scheme.
The policies and actions of the fund's board are overseen by various bodies. De Nederlandsche Bank (DNB) and Authority for the Financial Markets (AFM) are responsible for external supervision. They oversee the actions of all pension funds in the Netherlands, and have an important voice in how the funds must operate. Internal supervision is carried out at our fund by the Supervisory Board (in Dutch 'Raad van Toezicht' or RvT), which consists of three people from outside the pension fund. In addition, there is an Accountability Body (VO).
The tasks, responsibilities and interrelationships of the various bodies within the pension fund are prescribed by the Dutch Pension Act and the Pension Funds Code.
Key difference between Accountability Body and Supervisory Board
The pension fund board is accountable to the Accountability Body (VO) for the policy, the achieved outcomes of this policy and policy choices for the future. The legal role of the VO is substantially different from that of the Supervisory Board. The Supervisory Board oversees the policies of the board and the general affairs of the fund. The VO offers an opinion on the board's actions based on the board report, the financial statements and other information. The outcomes are described in the VO report, which is an integral part of the pension fund's annual report.
Additionally, it is a duty of the VO to assess whether balanced consideration of interests has taken place in (proposed) decisions of the board. In other words, whether the interests of all stakeholders have been taken into account. In addition, the VO has an advisory right on a number of issues (e.g. remuneration policy, premium, complaints procedure and so on), and under the Future Pension Act (WTP), it even has a strengthened advisory right on several issues. 'This is a responsible task. People who are further away from the fund scrutinize the decisions made by the board. In doing so, we look at the interests of young members, older members, former members and pensioners and to what extent they are balanced,’ explains Peter de Haan, chairman of the VO.
Back row from left to right: Koen Wapenaar, Jaap Koole, Daphne Urlings, Erica Bakhuis, Bernard Bulder. Front row from left to right: Peter de Haan, Caspar Lageweg, Tariq van Rooijen. Not present: Erik van ’t Geloof.
The faces of the VO
The VO of the TNO Pension Fund consists of nine members:
- three members representing the employer, nominated by the TNO Executive Board or following a decision of the TNO Executive Board by one of the affiliated employers. Currently, they are: Erica Bakhuis (vice-chair), Erik van 't Geloof and Caspar Lageweg.
- three members representing employees, elected by employees employed by affiliated employers. Currently, they are: Daphne Urlings, Tariq van Rooijen and Bernard Bulder (secretary).
- three members representing pension beneficiaries, elected by pensioners. Currently, they are: Peter de Haan (chair), Koen Wapenaar and Jaap Koole.
Members of the VO are appointed – after nomination – by the pension fund’s Board for four years and can be reappointed twice for the same term.
'When I was still working for TNO, I was also a member of the VO and now I am in the VO as a retiree,’ Peter says. 'Those are two different perspectives. You look differently at contribution levels, pension accrual and, for example, indexation. I believe it is important to be involved in the company in this way. At the time, I was also a works council member. When I stepped down after two terms, I looked into what I could do and that's how I joined the VO. They are topics that I find important. It also offers the opportunity to monitor developments. You do notice that the subject matter of the new system is complex. You deal with different sections, each with different roles and views. That creates a great deal of dynamism. The stakes are also high. It is good to be aware of those other interests, without neglecting the interest that you stand for yourself. That sometimes leads to quite a bit of discussion, but it is important to have that opportunity to ensure balanced choices.'
Intense and challenging
The VO has formal meetings with the fund's Board and Management Board at least twice a year. In addition, there is as much consultation as necessary, which is often in these times when the transition to a new pension system needs to be shaped. The Executive Board of the VO has monthly informal meetings with the chair of the pension fund and the Management Board. In addition, the VO has periodic meetings with the Supervisory Board and annual contact with the auditing actuary and the auditor.
VO members maintain contact with their respective constituencies.
For proper job performance, VO members attend courses at SPO Nyenrode.
The work for the VO is intense and challenging – especially at this time of major changes in the pension world – but also instructive and highly relevant. All bodies of the pension fund, Board, administrative office, SB and VO strive to ensure that the resources of members and former members and pensioners are managed in a proper and balanced manner.
The stakes are also high
Peter explains why this balanced consideration of interests is important at this particular time: 'In the old system, you need a high buffer as a pension fund. With the new system, the situation will be different. So how will you distribute the surplus? On the day that we move to the new pension scheme, we will know the exact amount. If the current funding ratio is then 120% and a 5% buffer is needed later, 15% remains to distribute. How high that amount is therefore cannot yet be indicated. But now we have approximately 3.5 billion, so it is a considerable amount. In normal VO opinions, such as on the premium, remuneration policy or composition of the SB, the "opinion by consensus" is therefore an opinion of the entire VO. In this case, when implementing the new pension scheme, each section of the VO advises the Board separately and the Board must then make the decision.'
If you would like to know more about the VO, be sure to take a look at the annual report. In addition, you can follow developments on the Pension Fund's site at News.
The opinion
Read the Accountability Body's 2023 opinion and board response in the annual report on page 91.