Investment beliefs play a crucial role in shaping our investment policy and determining how we allocate funds across different categories. The investment philosophy of SNPS provides a framework to assess our approach to certain investments and helps determine if they are suitable for the pension fund. The pension fund has formulated a list of 10 philosophies:

1. Taking calculated investment risks is necessary to generate a return, but unrewarded risks must be hedged as much as possible where this is (economically) useful;
The fund wants to take on investment risks consciously because this type of risk offers (sufficient) remuneration. For other risks, a decision is made to assess whether the pension fund is willing to take on the risks. This consideration also includes the cost of hedging.

2. Diversification of investments improves the risk-return profile of the entire investment portfolio while explicitly taking into account the underlying sources of risk and return;
Diversifying the risk and return sources improve the profile of the investment portfolio. In doing so, the fund looks very closely at identifying the eventual sources of risk and return and to spread exposure.

3. Age-related investment provides participants with a solid basis for an optimal risk-weighted (pension) result;
The pension fund believes there is a correlation between a participant's age and how much risk he or she can and wants to take. In other words, a participant’s investment horizon has a fundamental influence on the pension fund's investment proposition.

4. The governance of the pension fund must match the degree of complexity of the investment strategies and underlying portfolios;
The pension fund only invests in asset classes that it understands and for which there is sufficient expertise within the organisation to manage those classes and understand the underlying risks. The guiding principle of the investment policy is that all investment choices can be explained at all times.

5. Internal and external expertise, combined with robust countervailing power, results in well-considered investment decisions;
The pension fund actively leverages both internal and external investment expertise to deliver strong investment results for its members. Utilizing this expertise requires a robust organizational model, wherein the pension fund explicitly continues to invest.

6. Engaged ownership promotes good governance and corporate social responsibility. Factoring in ESG standards is essential to the investment cycle and leads to an improvement of the risk-return profile;
ESG factors influence the investment risk and return of all asset categories, with good governance (G) being a prerequisite for improving a company's performance on the environmental (E) and social (S) factors. The fund expresses its commitment to social responsibility through its Responsible Investment Policy.

7. Active management can provide added value because not all markets are equally efficient; 
The pension fund believes that it can add additional value through active management (for instance by regularly trading in shares and bonds). By actively managing its investments, the fund seeks to outperform the benchmark. But it isn't that simple to beat the benchmark. When opting for active management, the costs of finding the most competent managers, the additional costs of active management, the extra governance burden and the risk of underperformance are also factored in.

8. Additional costs are acceptable within certain boundaries for generating higher returns, better risk management, or realising important investment objectives.
The fund considers the impact of long-term expenses on potential returns. The fund believes that, in certain cases, it is preferable to accept additional costs to achieve better (net) investment results. This way, the investment risk aligns better with its risk budget.

Our ambition is to provide our participants with a healthy retirement income, whereby we offer them a set of investment options that are aligned with the (financial) needs of individual participants. We then strive to achieve our participants' best possible investment outcome while adhering to their investment preferences.  

What risks are we willing and able to take? 
The principle of our investment policy is guided by how our participants view risk, also known as their risk attitude. This is basically a deliberation between what risks participants are willing to take and the financial capacity to take those risks. The investments and the risk are ultimately for the account of the (individual) participant. SNPS periodically asks its participants for their views on investment risks and takes those views into account when determining a participant's investment options.

How do we determine our investment policy?
Pension contributions alone aren't enough to guarantee a secure pension. That is why we invest pension contributions with care and consideration. This requires a balanced investment policy with sufficient checks and balances to stay on track. The Asset Liability Management Study (ALM) is one of the most important key metrics for our investment strategy. This tool allows us to test our investment policy in various future scenarios and economic conditions. Through the ALM, we can regularly identify principal (investment) risks and determine if we can successfully achieve the pension fund's ambition. If necessary, we make adjustments within our investment policy.

The three building blocks in our investment portfolio
Up until the retirement date, every pension participant can choose from three Life cycle profiles: Neutral, Defensive and Offensive. This gives participants the freedom to decide how much risk they want to take with their investments. 

In turn, each Life cycle profile consists of three different Life cycle portfolios: Return, Interest and Matching. The emphasis of the Interest and Matching portfolios is on protecting the accrued investment capital and mitigating interest rate risk. For the Return portfolio, the focus lies more on delivering returns for the longer term. 

When a participant approaches retirement age, more capital is transferred to the Interest and Matching Life portfolios. In the Life cycle accrued capital is only transferred to the Matching portfolio if a participant chooses to purchase a fixed benefit from an insurer at his or her retirement date.

In the year he or she turns 58, the participant makes a provisional choice of a fixed or variable pension benefit. When the participant opts for variable pension benefits, his or her personal pension capital is gradually converted to the Collective Variable Pension (CVP). 

If the participant makes a provisional choice for a fixed pension benefit at retirement, he or she will continue to participate - with the full capital amount - in a Life cycle profile best suited to a fixed benefit during retirement. At the retirement date, a final choice is made for either a fixed or variable pension benefit.

SNPS has a generic investment mix for CVP participants. It is tailored to the group's profile. Individual options aren’t available. The board establishes the CVP investment mix based on an Asset Liability Study (ALM). The CVP portfolio consists of a Return Life cycle portfolio, overlay funds (used to hedge interest rate risk), government bonds, and Dutch mortgages.
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• The Return Life cycle portfolio consists of developed-market equities, emerging-market equities, infrastructure, and high-yield and emerging-market bonds. 
• The Interest Life cycle portfolio consists of Euro government bonds, non-government Euro bonds and Dutch mortgages. 
• The Matching Life cycle portfolio consists of long-term government bonds.

The SNPS board establishes the strategic investment policy. This is understood to mean:
• The composition of Life cycle profiles (defensive, neutral and offensive).
• The composition of CVP portfolios.
• The composition of the Life cycle portfolios Return, Interest and Matching.

The selection and monitoring of the investments have been outsourced to Achmea Investment Management. The final selection takes place after approval by SNPS.
 
Our statement of investment principles (pdf) contains our full investment policy and the strategic policies of the Life cycles and CVP portfolios.

Who is involved in investments?
We have outsourced our asset management activities to several specialists. In doing so, we make a clear distinction between three key roles and activities in asset management:

1. Fiduciary manager and adviser
2. Asset managers
3. Custodian

1. Fiduciary manager and adviser
The pension fund has outsourced the role of fiduciary manager and adviser to Achmea Investment Management. This company is responsible for operational asset management and advises the pension fund. 

2. Asset managers
The actual management of assets has been outsourced to several parties. A portion of the pension capital is invested by Achmea Investment Management. A substantial part is invested by other parties, including: Robeco (emerging market equities and high yield), SAREV (mortgages) and LGIM (emerging market bonds). In addition, for the infrastructure category, the pension fund invests in investment funds of specialised parties in these asset classes.

3. Custodian
The pension fund has placed its custodian operations with BNY Mellon. The main task of the custodian is to register and store the investments that are held in the name of the pension fund. 

A custodian is a financial institution that holds securities (such as shares and bonds) on behalf of the pension fund. This is done in an administrative form. SNPS invests in several investment funds. Investment funds generally have their own custodian.