SNPS. Smarten up your future
Annual Report 2020 – Shell Nederland Pensioenfonds 
Your pension, your future
Love your future. Shell Pension.

November 2020

SNPS board member Bas Koch on crisis management during the pandemic

“Sometimes doing nothing is the hardest”

Rarely has the world been so disrupted as in the first few months of the coronavirus outbreak. The word crisis seemed to be reinvented. The financial markets plummeted to an all-time low, part of the economy came to a standstill. Bad news for investors. What has the SNPS board done to cope with these developments? Bas Koch (39), Manager Cyber Security Consultancy Services for Joint Ventures at Shell, tells his story.

Were you prepared for such a crisis? Were there any scenarios available?

“There would have been very few companies with scenarios for such a pandemic with a huge impact. In any case, we did not have them ready on the shelf. However, we did prepare other scenarios in recent years, such as major financial shocks in the world. These proved enormously useful during the coronavirus outbreak.”

Why were they useful?

“The scenarios were worked out down to the smallest detail. For example: What if all IT systems break down? What effects do the economic shocks have? But also: What is the role of the crisis management team? Who does what with which responsibility? How are the internal and external lines of communication? Because we had outlined all of this, we could move very quickly.”

The stock markets crashed, part of the economy came to a standstill, a barrel of crude oil was worth nothing at one point. What did it mean for SNPS investments?

“Our long-term investment policy is largely passive in index funds. This means that our investment portfolio is very robust and potential risks are taken into account in detail. For example by ensuring spread and diversification, but also by being extremely vigilant in terms of interest rate developments. In other words, crisis or no crisis, we are keeping a close eye on the markets anyway. And if there are any shocks, as a long term investor you’re not immediately going to step on the emergency brake.”  

And yet, this crisis had a major macroeconomic impact. Aircraft were grounded, there was an oversupply of oil and gas. So what do you do with your investment strategy?

“We analysed the financial performance on a weekly basis with our crisis management team. We asked ourselves the question: Do we need to change our strategy in any way? All kinds of issues and options were considered. In the end, we decided to stick to our course and not intervene.”

“We had made the
right analyses”

And how did that work out, this non-intervention?

“It worked out well, because after a few months the stock markets started to recover and kept rising. We had made the right analyses.”

Were there any hurdles that you had to take?

“Yes, the right time to communicate. Because you want to inform and reassure the participants. But in such a crisis situation, timing is everything. You want to give as complete a picture as possible and be clear, even though you don’t know the outcome yet. It wasn’t until after a few weeks, when we were able to look a little further ahead, that the right moment came. From that moment on, we started giving information. We focused in particular on the question our support team was often asked: What are the consequences for my pension?”

And what were the consequences of this crisis for the pensions of SNPS participants?

“We are a young fund, with many young participants. These participants therefore have a long-term horizon for recovery. For participants who are pensioners or near-pensioners it is naturally different. Participants can adjust their risk profile and, through the CVP, also benefit from risk diversification and the possibility to continue investing.

How big is the damage?

“All participants were affected in the first phase of the crisis. If you look at the pension accrual in 2020, you can clearly see a cut-off in the first quarter. In the second quarter, investment returns started to recover. The financial markets bounced back despite the fragile economic situation. This has largely closed the gap. The coverage ratio of CVP at the end of 2020 was slightly above 100%. We could not have imagined this after the crisis broke out earlier in the year.”

What did you learn from the past year?

“We implemented the more profound return analyses from the beginning of the crisis, in which numerous questions were asked about the impact of developments on the pension, in the quarterly analyses for the board. This crisis has made us even more vigilant, creative and effective.”

In hindsight, are there parts in handling the crisis that you would have liked to have handled differently?

“Not really, at least no big things. The IT systems were running like clockwork. One point of improvement we are looking at is the size of the crisis team. It consisted of a considerable group of people, allowing us to look at the developments through a broad lens. That worked out really well. But in hindsight, the very large group resulted in the discussions and decisions taking longer. In the future, we will limit the crisis management team to just the requisite roles and involve the other experts on an on-call basis.”

Do you think the right decisions have been made?

“Certainly. We were well informed and were able to ask the experts a lot of questions. But I cannot deny that at times it was very difficult not to intervene. Sometimes doing nothing is the hardest.”

About Bas Koch 

Bas Koch is a non-executive director at SNPS and co-responsible for the internal supervision of the executive directors. His focus areas within the Board are ESG, Asset Management and ICT. Bas Koch’s day-to-day job is helping to mitigate cybersecurity risks at Shell joint ventures that are not protected by Shell Cyber Defence. He lives in Rotterdam and studied economics at Erasmus University Rotterdam. Bas has always been interested in IT. From the age of 14, he assembled and disassembled computers and sold them. Bas lives with his partner, has a son and is expecting to become a father for the second time very soon. Before Shell, he worked as a consultant for Deloitte.