BlackRock: Prepared to perfection, executed as planned

Apr 24, 2025

On January 1 of this year, Beroepspensioenfonds Loodsen (BPL) made the switch to the new pension system. It was one of the first three pension funds to make the transition so far. Rajesh Grobbe, Director of the BPL Administrative Office, and Willem van Dommelen, Fiduciary Advisor at BlackRock, share their initial experiences under the new system and look back on how BlackRock's target operating model played a key role in the transition process.

How did you prepare for the transition?

Rajesh Grobbe: 'Good preparation is the key to a successful transition. We started looking at what was needed to make the switch well in advance. This gave us plenty of time to prepare the process thoroughly, using extensive tests and simulations. Another success factor was the good cooperation with our partners. In addition to BlackRock, these are Northern Trust as custodian, Blue Sky Group as pension administrator, and Sprenkels as consultant. It was important to ensure that everyone was on the same page, as we all have different backgrounds, of course.'

 

Good preparation is the key to a successful transition .

 

Willem van Dommelen: 'That last point is indeed crucial. We have extensive experience in implementing portfolio transitions, which has proved very valuable here. Each party in the chain has its own expertise and speaks its own language. It is essential to discover where the connections lie, where cooperation is needed, and where there may be gaps. For the Wtp, we designed a target operating model. This model is the same for every client at the start, but is fully customized during the preparations to reflect the specific characteristics and preferences of the pension fund. We therefore proposed using our target operating model as a starting point. This provided a concrete framework for ensuring that all discussions in the run-up to the transition ran smoothly. It allowed those involved to look at the planning, timelines, and dependencies step by step. Thanks to good interaction within the model, we were able to identify all bottlenecks at an early stage.'

Why did BPL decide to make the transition at the beginning of January 2025?

Grobbe: 'We started this process in 2022 and mapped out what was feasible in terms of planning. On the one hand, we looked at the governance and decision-making process of the board and the surrounding bodies, and on the other hand, we looked at what the implementers could handle. The most important starting point was the transition targets we received from the Dutch Pilot Corporation, which is equivalent to a professional pension association. At the time, the coverage ratio was well above these targets and has only developed favorably since then. Moreover, the calculations showed that participants would benefit on the basis of various model calculations, so there was no reason to postpone the transition.'

Were any adjustments to the portfolio necessary?

Van Dommelen: 'More than a year in advance, we made an initial sketch of what the future portfolio might look like under the new scheme. Our guiding principle was that a portfolio that is optimal under the FTK should also remain so under the new system to a large extent. We repeated the analyses several times during the year. This was done to incorporate new insights and to analyze the impact of changes in, for example, the funding ratio and the participant base. This gave us a clear picture of how robust the intended portfolio was. It also helped us to clearly identify the changes required as a result of the transition and to base the rebalancing strategy on this. The biggest change was in the interest rate hedging. Apart from that, only minor adjustments proved necessary.

Rajesh's credo is: 'run first, then refine'. We applied this principle here too: we are making the transition with a robust portfolio and will then look at what adjustments are needed in the new environment. Because the portfolio was already solid, we didn't have to make many adjustments in terms of transactions.'

Grobbe: 'The way BlackRock approached this really impressed me. In 2023, we had already started to map out how the transition would affect the portfolio, which at the time consisted of 25 funds. The expected trading transactions and their impact also looked very different at the time because there were more pension funds. We asked BlackRock to simulate what the transition would look like in terms of trading volumes at the beginning of 2024. It was very helpful to get a feel for this and to see that BlackRock has really in-depth market insights. What's more, the number of funds decreased over the course of last year, so we were able to work towards the transition with a great deal of confidence.'

Van Dommelen: 'To reduce the risks even further, we advised reducing the funding risk in the run-up to the transition date. This gave us even more certainty that BPL's funding ratio would be sufficient to proceed.

When executing the transactions, it is important to carefully weigh the costs and risks at that moment. If there is insufficient liquidity or if the transaction costs are excessively high, we discuss with the client how best to deal with this. We have very short lines of communication with BPL. This makes the collaboration very smooth and pleasant.'

What did the transition look like in practice?

Van Dommelen: 'The most important adjustment was to modify the interest rate hedge. This was done very quickly. The same applied to the adjustment of the rest of the portfolio. It was, of course, an advantage that Loodsen was one of the first to make the transition, so that there were few – or perhaps even no – other parties wanting to carry out similar transactions at the same time. We had prepared the transition down to the last detail and the implementation went according to plan.'

Grobbe: 'We received notification from BlackRock at around 11 a.m. on January 2 that the adjustment to the interest rate hedge had been implemented at low cost. That was a very nice way to start the new year.'

Now that the transition has been successfully completed, is the work done, or are there still important points to consider?

Van Dommelen: 'We are constantly optimizing portfolios and looking for improvements. In a sense, it's now business as usual. At the same time, the new environment also brings new insights that will help us implement future improvements. It's a continuous learning process, both for us and for the market as a whole. That process has only just begun, by the way.'

 

It is a continuous learning process, both for us and for the market as a whole. That process has only just begun, by the way .

 

Grobbe: 'We still have a weekly check with all parties involved in the process. Although these meetings are short, I find them extremely useful. They help us to keep track of current issues, quickly identify any bottlenecks, and make immediate adjustments where necessary.'

Which part of the transition do you look back on with the most satisfaction?

Grobbe: 'As chair of the steering and working groups, it was an experience you don't get from a book. It was an incredibly educational time. No one can take that knowledge and insight away from me. Ultimately, of course, we do it for our participants. In that respect, I am quite proud of the way in which we managed to keep that group well informed through good communication in the run-up to the transition. After the first adjusted pension payments were made, the service desk received exactly one call from a participant with a question about this. He wanted to check whether it was really true that his pension had increased so much in the new year.'

 

The most important adjustment was the change in the interest rate hedge .

 

Van Dommelen: 'In English, we have the lovely saying ‘the proof of the pudding is in the eating’, which means that you only know whether something is really good when you actually do it. I therefore look back with pride on the moment when the changes to the portfolio and interest rate hedging were implemented smoothly and successfully on January 2. That's what it's all about, really. And I am very happy with all the experience we have gained during our journey together. Between our first presentation of the target operating model and the actual transition, there were many discussions, new insights, and experiences. It is extremely valuable to now have experience of the entire preparation process, the transition and now also the post-transition phase, in which a pension fund operates under the new regulations. This will certainly benefit us and our other clients.'

 

Rajesh Grobbe Rajesh Grobbe has been Director of the Executive Office of the Loodsen Occupational Pension Fund since 2019. He also fulfills various roles within the pension sector, including as a member of a Supervisory Board, a member of an audit committee, and a key risk management position. Grobbe is also part of the diversity, equality, and inclusion task force. Grobbe has a degree in business administration and finance and is also a Certified Controller.

 

Willem van Dommelen Willem van Dommelen is a Fiduciary Advisor with the EMEA Pension Solutions team within BlackRock's Multi-Asset Strategies & Solutions. Before joining BlackRock in 2023, he worked at NN Investment Partners, where his responsibilities included developing and managing systematic investment solutions (including LDI) and leading an alternative investment team. Van Dommelen studied Finance & Accounting at Tilburg University.

 

Attachments

• FI-2 - 2025 - IOM BlackRock.pdf