As chief executive officer at the Netherlands’ second largest pension fund, the €151bn Pensioenfonds Zorg en Welzijn (PFZW), Peter Borgdorff exemplifies the spirit of innovation, collaboration and commitment to steering the European pensions industry in the right direction. Before joining PFZW in 2007, Borgdorff was a director of VB, the Dutch industry-wide pension scheme association. In both roles he has tirelessly promoted transparency and accountability. His recent initiatives at PFZW will have far-reaching implications for both PFZW and the European pension fund industry at large.

 

PFZW’s annual returns since it was created in 1969 have averaged 8.2%. Its funding ratio is more or less back up to the required 105% and its socially responsible investing programme is award-winning. Ever the visionary, Borgdorff sees beyond this and believes that a whole new structure is needed if PFZW is to continue as a front-runner in the European pension pack. In Borgdorff’s eyes, the global economy has become more volatile, the role of regulators has changed and there is a growing sense that solid returns concern more than just money. The most effec- tive investment strategy for a long-term investor is a strategy that works well both now and far into the future. There may be nothing new in these arguments but no pension scheme in Europe has yet to implement them on a truly global scale. Until now – for under Borgdorff, PFZW has stripped back its entire investment policy to adopt a whole new framework. Six board members started with a blank canvas and one essential question to answer: What if we could invest the total asset base anew?

The result? One blank sheet of paper, six board members, 600 pages of documents, 30 interviews with external parties, extensive studies, six highly topical meetings attended by all members of the board and more than 2,000 hours. This brought about the establishment of a new investment framework anticipating the future. By always investing in a fully explainable and transparent manner and in a risk and cost aware culture, the new strategy commits to making more use of the huge financial resources at its disposal to positively influence its sustainable impact as much as possible.

 

PFZW’s new investment framework will thus be supported by three pillars:

Borgdorff’s vision for a new investment frame- work remains a dot on the horizon and will be an ongoing and time-consuming endeavour. But the work of overhauling PFZW has begun. At the end of 2013 it took a snapshot of its policy and its full roster of investments. This was used as the starting point and determine the next steps in the process. The aim is to have the new investment framework – an ever-evolving dynamic sustainable strategy – fully implemented by 2020.