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Our benchmarkingThorough benchmarking, from definition to chart
A comparison that looks beyond the level of costs and takes into account the main factors that explain that cost level.
Seven principles
The IBI benchmark is built around a fixed set of principles. They determine what is measured, how it is calculated and what the outcomes must satisfy.
- Benchmarking that follows the needs and wishes of pension fund boards
- Based on Dutch legislation and regulation
- Seeing the costs of pension funds in the right context, in relation to risk and returns
- Audited input and reliable calculations based on predefined definitions
- Input largely based on uniform, already available and audited reports
- A product that fully meets the Recommendations on Implementation Costs issued by the Pensioenfederatie
- The benchmark covers all costs
A benchmark by and for the sector
Members of the sounding board group translate the wishes of the sector and help shape the content of the report, primarily for the benefit of the board. Through this link, IBI Benchmarking becomes a benchmark by and for the sector.
At the founding of IBI, the sounding board group consisted of PFZW, Pensioenfonds TNO, PNO Media, PME, Pensioenfonds Randstad and Pensioenfonds Vervoer.
Sounding board group at founding
The institute consults pension funds periodically about the content of the reports, so that these are adapted to developments in the pension sector.
The report was developed together with this group, on the principle that all bold-typed recommendations from the Recommendations on Implementation Costs (revised version 2016) are met.
View the 22 bold-typed recommendationsNot just the level of costs
At IBI we speak of thorough benchmarking. This is a comparison with other pension funds (peer group and universe) that looks not only at the level of costs, but also takes into account the main factors that explain that cost level. In this way a pension fund board can assess whether the costs are appropriate given the fund's policy, risks, scale and service delivery.
At IBI we also show “what the pension fund gets in return”, in the form of service levels, the complexity of the pension scheme and returns over the short and the long term. For pension administration we likewise take account of the fund's own characteristics, such as the composition of its membership and the number of value transfers. Using radar charts we then build the pension fund's profile for asset management and pension administration.
CFA Society Netherlands also described IBI's benchmarking as a way of arriving at a “nuanced comparison of implementation costs”, taking account of the specific characteristics of the pension fund. IBI was explicitly named in this context.
“A nuanced comparison of implementation costs, taking account of the specific characteristics of the pension fund.”
As much as possible from existing, audited sources
To limit the workload for the participating pension fund, IBI makes as much use as possible of data that is already available. These are reports to DNB audited by accountants, and the annual report.
It is important that the report ties in with the data as reported in the annual report. To obtain the asset management data, a spreadsheet is used that immediately shows whether the data reconciles with the figures in the annual report. For pension administration it is likewise established whether the costs per member reconcile with the reported costs. In addition, the pension fund receives questions through a digital survey, some of which originate from existing reports to DNB.
To assess the service level and complexity of the pension fund, mainly multiple-choice questions are used. On the basis of the answers, the service level and the complexity of the pension scheme to be administered are determined. As we understand it, the service level agreement with the pension administration organisation is a good basis.
Clients receive a verification copy of the report, so that it can be checked whether any corrections need to be made before the report is finalised.
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Existing reports
Reports to DNB audited by accountants, and the annual report, form the starting point.
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Reconciliation with the annual report
A spreadsheet immediately shows whether the asset management data reconciles with the annual report.
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Digital survey
Multiple-choice questions determine service level, complexity and degree of automation.
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Verification copy
The pension fund checks the input before the final report is drawn up.
A profile at a glance
At IBI we use radar charts because they show the profile of a pension fund at a glance, instead of separate figures only. A radar chart can display not only the costs, but also the factors that help explain them. Because we work with normalised scores (indices), the fund can be properly compared with a selected peer group and with the universe. This makes benchmarking more of a diagnostic instrument than a league table.
Asset management
Policy choices of the pension fund
- Spread of the assets (Asset Allocation Index)
- Degree of active management (Alpha Index)
- Investing through investment funds (Implementation Index)
Results
- Benchmark costs* (Cost Benchmark Index)
- 1-year return (1-year Return Index)
- 5-year return (5-year Return Index)
- 10-year return (10-year Return Index)
* Benchmark costs are the costs corrected for the investment mix using peer group data. This is not the same as the average costs.
For asset management, the sustainability of the investment portfolio is calculated additionally. This is not included in the radar chart.
Pension administration
Policy choices of the pension fund
- Level of service to the member, including communication strategy (Service Index)
- Degree of complexity of the pension fund (Complexity Index)
- Degree of process automation (Automation Index)
Characteristics
- Number of value transfers (Value Transfer Index)
- Number of deferred members (Deferred Members Index)
Results
- Pension administration costs per member according to the Pensioenfederatie definition*
- Pension administration costs per member (all)**
* According to the Pensioenfederatie definition: the sum of active members and
pensioners at year-end.
** The average number of members during the reporting year (deferred members,
active members and pensioners).
For pension administration, the percentage of governance costs allocated to asset management is also calculated. This is not included in the radar chart.
Curious what your profile looks like?
Curious what your asset management profile and your pension administration profile look like? We are happy to explain.