A seamless transition: 1.4 million pensions transfer to PGGM

The assignment was to flawlessly succeed in this effort. Administering 1.4 million PMT and Merchant Navy pensions, collecting premiums from more than 35 thousand employers and paying out to the hundreds of thousands of pension beneficiaries smoothly, on time, all in one transfer to PGGM.

In the fourth week of January, the job was done: the largest IT transition in the pension sector in years, perhaps even several decades, had succeeded. Without any significant problems, in very close cooperation with MN Pensioenbeheer.

It's the irony of these kinds of mega IT operations. If they succeed, tomorrow the sun just rises again. Only when they derail - and many such transitions fail or result in large budget overruns - do they lead to negative news headlines, reputational damage and loss of trust.

It is also the fate of the IT factories in large corporations: their huge, complex operations are supposed to keep society running smoothly, with margins of error far behind the decimal point, for which - if they do their job well - they hardly ever get credit. After all, why should a pension participant be grateful for error-free administration of his or her pension?

The major transition of PMT and Merchant Marine pensions from MN to PGGM started at least four years ago. In 2020, the first conversations between PGGM and MN arose in which the proposal was made to make the MAP system, developed by PGGM for pension administration, available to MN. MAP was - and is - seen as a future-proof system that is very suitable for implementing the new pension scheme in the future. The cooperation was announced in 2021.

From this, the conviction gradually developed that for a sustainable solution, the next step would have to be taken: working towards a far-reaching integration of MN-Pensioenbeheer into PGGM's pension business, for which both pension funds PMT and Koopvaardij would transfer their mandate to PGGM. For this to be successful, the success of the IT transition was crucial, a complex task, particularly in order to avoid all the pitfalls that mega IT operations as mentioned above can encounter. There was also the pressure of time: in order not to get in the way of the IT-related efforts to implement the new pensions act (Wtp) MAP had to be up and running for PMT by early 2024.

Still being two separate companies as pension management until July 1, 2024, this led to a big challenge in terms of cooperation. To this end, the more than one hundred PGGM and MN colleagues involved in this process have spent months interacting with each other and solving issue after issue together. On January 2, the day that MN colleagues in The Hague had to work with all the functionalities on MAP for the first time, all vacations had been cancelled, traditional Dutch New Year’s cakes and sweets had been arranged, and PGGM staff were on site at the MN office in The Hague to help where possible.

Administratively, there was also heavy investment in this new relationship. Cristal clear agreements were made to keep the scope of this huge project manageable. Example: PMT agreed that the design of its pension plan would follow PGGM's MAP system as much as possible. This avoided costly additional administrative complexity, an agreement that of course always had to be confirmed in practice.

With careful agreements - from board level to the operational level - trust was built. PFZW had to remain comfortable. PGGM's most important and largest client, for whom the MAP system had been developed, naturally did not want this operation to come at the expense of its services in the transition to the new pension scheme which follows the introduction of a new pension law that has come into effect, and rightly so.

Edwin Velzel, PGGM CEO, points out that trust is the key word here. The PMT board, responsible for a pension scheme that affects the financial housekeeping of at least one in ten households in the Netherlands, trusted PGGM to do the job with MN. PFZW saw the benefits of economies of scale in pension administration with the entry of 1.4 million PMT administrations into MAP.

That creates a great responsibility, to quote Edwin Velzel again. It cannot be borne only by hard work and good thinking. We have, he says, been honest with each other at all stages of the long process. About what went wrong, and about what was within our means. Without such a transparent attitude with the underlying soundness of the company, this transition would never have worked out so well.