APG wins licence for PPI joint venture

Hand-shake-femaleDutch pension giant APG and Dutch bank ABN Amro have won a licence to create a premium pension institution (PPI) called Pensional that will aim to manage defined contribution schemes.

The Dutch market has permitted PPIs, a new form of pension vehicle, since the beginning of 2011. The vehicle lets institutions other than insurers and pension funds operate defined contribution pension schemes.

PPIs may manage pension schemes but may not insure against risks such as longevity risk. This means they are suitable only for defined contribution plans, in which pension contributions are fixed but final benefits are not. However, APG said Pensional will help cover insurance risks thanks to links with insurers.

APG manages €275 billion of pension assets, as of November 2011, which is nearly a third of all group pensions in the Netherlands.

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