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2023: PME looks beyond today

Financial situation
Published on:

The 2023 annual report is all about the future for PME. PME invests in today and the decades to come. From those just starting out today, to our oldest pensioner of 106 years’ old. Our investment policy takes into account future returns and what that future looks like. PME helps shape these efforts by investing in innovative technology for the industry and in energy transition in accordance with our own Environmental, Social and Governance  (ESG) standards. This is how we work with our participants and their assets towards a positive and viable financial future. 

Looking back at 2023, PME achieved a nice return of 8.7 per cent, and pensions increased by 3.26 per cent. In total, this increased PME’s pensions by around 11 per cent over a year and a half. Unfortunately, this did not match the rate of inflation entirely. However, PME did try to do the maximum feasible every time, without taking unnecessary risks. These increases have given us a good chance of maintaining a healthy funding ratio to transfer to the new pension scheme in 2026. 

Eric Uijen, Chairman of the Executive Board: “Last year was an important year for making our pension scheme future-proof. The Future Pensions Act took effect on July 1, 2023. PME has been working for years to prepare for the new system. We are working in collaboration with TKP, our administrator, and MN, our asset manager. Our top priority now is properly implementing the new pension scheme.

Besides implementation, we are also working hard to provide information to our participants and pension beneficiaries. And, as far as PME is concerned, that is not a one-way street. By organising webinars and in-person meetings, we are engaging in conversations, answering questions and informing our participants about their pensions. Our pension consultants play an important role in this respect. They give presentations at companies and engage in one-to-one discussions with participants on company premises or at nearby locations. By taking this personalised approach, we aim to ensure that our participants and pension beneficiaries can embrace the new pension scheme with confidence.”

For the industry, current and future generations 

PME invests in a variety of categories, including equities, bonds, property and private equity. We always measure those investments against the benchmarks for return, risk, cost and sustainability. In doing so, we firmly believe that when we take sustainability into account, it does not come at the expense of our financial returns.

We also view investments through the lens both of social and industrial interests. On this front, we are paying close attention to innovations. PME has a huge number of affiliated employers that are innovating. They make circular mattresses, electric cranes and lorries, transformers and chip machines. Collectively, their products provide a glimpse into the future, where sustainability, technology and innovation will merge. For that reason, we like to invest in and on behalf of our own industry. 

In 2023 and early 2024, we further increased our commitment to these efforts by expanding our investment in the DeeptechXL fund to EUR 35 million, investing EUR 50 million in a new Strategic Partnership Fund providing additional funding to Dutch high-tech scale-ups, and EUR 75 million in Innovation Industries III. In total, PME now commits EUR 260 million to Dutch deep tech and innovation. 

Our results in 2023

At the end of the year, the current funding ratio was 109.4 per cent and the policy funding ratio 113.3 per cent. We achieved a return on our investments of 8.7 per cent in 2023. Expressed as a percentage of average assets invested during the year, total asset management costs fell from 0.49 per cent to 0.40 per cent in 2023. Expressed as a cost per participant, the total cost of pension management increased slightly in 2023 from EUR 100 to EUR 103. This may be attributed to temporary additional investment ahead of the transition to the new pension scheme in 2026. The carbon footprint of our equity and corporate bond portfolios will be reduced by 65.8% and 41.5% respectively by the end of 2023 compared to 2019.

Marcel Andringa, Executive board member asset and liability management: “In a troubled world, PME has found its way forward and achieved good returns. Assets have grown by almost five billion and this growth will continue in 2024. Nevertheless, we see (geo)political risks increasing in the world. This could have a negative impact on our returns, and hence our funding ratio.” 

Looking ahead

Eric Uijen: “The Netherlands is one of the world’s top 10 most competitive economies. Looking at our sector, I am not surprised. The metal and high-tech industries are working hard to find innovative solutions to the social issues of today and tomorrow. PME is doing the same. By  investing in energy transition, affordable rental housing and deep-tech start-ups and scale-ups. From and for the sector. 

However, the world has become increasingly complex in recent years. Challenges associated with climate change, energy transition, housing and the business climate are increasingly becoming intertwined. Solutions exist, but they require complementary policies and sometimes hard choices. PME is willing to further intensify its investments in energy transition, housing and innovation in the Netherlands, provided this can generate adequate returns. A sustainable future is within reach, and we can shape it ourselves. But we all need to roll up our sleeves to do so.”

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