The Dutch Central Bank (DNB) has approved a joint venture between asset manager and pension administrator APG and ABN AMRO's pensions department, to create a premium pension institution (PPI). The new PPI will be called Pensional. 

The two parties began to set up the joint venture, into which APG contributes its expertise in pension administration and ABN AMRO its expertise in managing investments, in the middle of last year, but had to wait for approval from the DNB.

"The aim of both parties is to become a major player in the market for defined contribution (DC) pension schemes," a statement from the two parties says.

Since the beginning of last year, it has been possible to place collective pension schemes with a so-called PPI; the Dutch DC vehicle established in compliance with new European regulations. The option of a PPI sees to it that the management of DC schemes are no longer reserved exclusively to insurers and pension funds.

PPIs, however, are forbidden to bear any longevity risk and therefore work closely with insurance companies. The institutions may also not give guarantees on the amount of capital or the value of the accrued benefit.

APG currently manages over 30% of all group pensions in the Netherlands, including the pensions of Dutch pension giant ABP, and has pension assets totalling approximately €275bn (figure correct November 2011).

ABN AMRO has been active in the sector through ABN AMRO Pension Services, which focuses exclusively on company pension funds.

The joint venture will focus on the second pillar of the pension system for employers with over 500 employees.

azeevalkink@wilmington.co.uk