KAS BANK, the Dutch custodian, has launched pension custody in the Netherlands to support the Premium Pension Institution (PPI) cross-border defined contribution pensions vehicle.
A PPI operates defined contribution schemes for employers both in the Netherlands and across the European Union. To prevent assets from being comingled, the PPI is required by law to separate all assets under administration. To this end, each PPI must appoint an independent pension custodian, in order to meet the requirement for fully independent supervision, transparency and risk management.
KAS BANK now combines custody and administration in its new pension custody service. This will also enable the PPI to remain in full control, an essential consideration for any PPI in these turbulent times, KAS says.As a pension custodian KAS ensures the separation of the PPI pension assets, mitigates the risk that the assets of one retirement plan are allowed to offset the liabilities of another (contamination risk), and act as an independent supervisor of the PPIs management.
KAS BANK believes that the introduction of PPIs is a very positive development for the Dutch pensions industry, and a constructive response to the opening of European borders to pension providers from other member states, the firm said in a statement. Through PPIs, participants will be able to provide for their retirements at lower cost, whilst effectively mitigating the associated risks.