Due to the stagnating German (car) industry, the Brexit and the trade war between the US and China, things didn't at all look rosy for investors at the beginning of 2019. Until the central banks decided to lower interest rates. This gave investors more clarification, confidence grew and equities gained value. So the tide turned and in the end 2019 proved to be an excellent investment year.
At SNPS, each participant has a personal pension pot. Capital gets accrualed, which is then used to purchase retirement once the retirement age has been reached. This individual pension capital grows as a result of the monthly contributions from both the employee and the employer, plus the return on investments. Due to the good investment results over 2019, the pension capital for all the chosen risk profiles (neutral, offensive and defensive) has grown, but the impact of the corona crisis in the first quarter of 2020 has already offset these effects. As SNPS is a long-term investor, peaks and troughs in the market are taken into account.
With a prudent and well balanced investment policy, SNPS tries to create as much value as possible for its participants. In order to minimise the risks inherent in investing, an Asset Liability Management (ALM) study was conducted in 2019. This study provides the SNPS board with insight into possible risks and returns of investments in several economic scenarios. The results of this study have been compared with the existing investment policy.
The results show that SNPS is on a steady course. Both in a scenario in which economic conditions are adverse for a long time and in a scenario in which the economy is recovering, there is a realistic chance that participants will build up their expected pension. Only on a detailed level did some suggestions for improvement come to light. Those have been taken on board by the pension fund. For example, the 'investment beliefs' have been refined and one investment category has been exchanged for another. This has resulted in an even more sound investment policy. The economic situation can change rapidly (especially in these unprecedented times). The board, supported by the Shell Pension Fund, monitors the financial markets closely and will process any necessary amendments.