Dick Kamp: The Wtp makes the board accountable for the system

June 16, 2026

_{This column was originally written in Dutch. This is an English translation.}

In my previous column, I wrote that the Wtp entails a new role for the board. What does this shift mean in practical terms for risk management, governance and supervision?

By Dick Kamp, Director of Pensions, Investment and Risk, Milliman Pensions

New priorities and areas of focus

Before the new priorities can be developed, it is important to consider what fundamental changes the Wtp brings to the role of the board itself. Under the FTK, the board was primarily an active steward: it could grant or withhold indexation, implement or defer reductions, and adjust the investment policy during the term. The board had genuine discretionary scope and made use of it.

Under the Wtp, that scope has virtually disappeared. The contract is fixed ex-ante: the distribution mechanisms, the lifecycle investments, the solidarity reserve and the allocation rules are contractually determined and can no longer be adjusted on an ad hoc basis. The board is thus transforming from an active steerer into a system manager and guardian of correct implementation. The central question is no longer ‘what do we do now?’, but ‘does the system work as intended, for all participant groups, and in the long term?’

This is a fundamentally different governance role, which requires a conscious shift in thinking and working practices. Directors accustomed to discretionary management will tend to seek policy leeway that no longer exists.

I envisage the following approach to strategic risk management:

• Strategic risks: Comparability with other funds in the sector, scalability, capacity for innovation, management continuity.
• Periodic review: Strategic risk analyses, scenarios and future outlooks are desirable.
• Stakeholder management: Active involvement of members, social partners and regulators in strategic policy and risk management.
• Data & IT: Data integrity, cybersecurity, system resilience and change management form a core part of risk management.
• Communication risk: Support and understanding among participants are essential for the scheme’s raison d’être.

And for operational management, I envisage the following approach:

• Monitoring, reporting and evaluation: Quarterly and prospective (via scenario analyses) monitoring of investment and biometric risks at individual/cohort level, new KPIs (such as mismatches in investment mixes, deviations in individual pots, system reliability, participant satisfaction), and structural evaluation of effectiveness.
• Control framework: Perhaps more preventive and detective controls, a strong focus on data and IT risks, aimed at operational excellence and fulfilling the mandate of the social partners.
• Training & culture: Investing in digital skills, readiness for change and a learning organisation.

Building on the shift in the board’s role described above, the strategic and operational shifts translate into a number of concrete new priorities for risk management. These priorities lie primarily in the areas of implementation, supply chain dependency and communication: areas that were often regarded as secondary under the FTK but become a direct management responsibility under the Wtp.

This involves a number of new priorities: These priorities require the board to make a continuous investment in competencies in the areas of IT, data, process management and communication. Board members will need to develop into professional overseers of a complex system, in which real-time monitoring, periodic evaluations and a learning organisation form the basis for future-proof risk management.

• Outsourcing relationships and supply chain dependency: The board must pay systematic attention to the quality of outsourcing relationships. Strict SLAs, periodic assessment of service provision and explicit agreements on incident handling are essential, particularly now that system failures or errors in administration can have a direct impact on participants’ pension outcomes.
• Data quality and reconciliation: With the focus on individual capital, error-free data is a prerequisite. The board must ensure that there are systematic checks on data quality, reconciliation processes and error handling, and that discrepancies are quickly detected and corrected.
• Incident management: The board must oversee robust incident management and recovery processes, so that operational errors or data breaches can be identified quickly and remedied appropriately.
• Compliance and legislation: Increased complexity and standardisation heighten the importance of compliance. Monitoring compliance with privacy legislation, data security and other relevant regulations is a fixed item on the board’s agenda.
• Expectation management and communication: Stakeholders are more assertive and critical. Proactive and transparent communication regarding risks, outcomes and limitations is essential to maintain trust and prevent disappointment.

Real-time monitoring has become a necessity, not a luxury. The direct impact of operational errors on individual pension outcomes requires that deviations be identified and rectified in a timely manner. In addition, regulators expect the board to manage risks proactively and prospectively, precisely because of the greater operational complexity and chain dependency. Only with real-time monitoring can the board fulfil its system responsibility and maintain the trust of participants and stakeholders.

Governance and structure

The transformation of the board described above — from active policymaker to system manager — has direct consequences for the required competencies and the organisational structure. Whereas financial and actuarial expertise and policy insight dominated under the FTK, the Wtp context requires a broader and, in part, different mix of competencies. It must be assessed to what extent the existing competencies within the board and, where applicable, the board office align with this changing context. In concrete terms, this means greater focus on IT, data, process management and communication. Not as supporting disciplines, but as core competencies for effective governance under the Wtp. This also means greater focus on scenario analyses regarding the realisation of the ambition per age cohort.

Although not every pension fund operates with a committee structure — smaller funds often assign these tasks directly to the full board — it is generally true that there will be greater focus on implementation, operational excellence and communication, regardless of the chosen form of governance. Where committees exist, their agenda will shift noticeably: less policy-making, more oversight of implementation and quality.

Board decision-making is shifting from ad hoc policy decisions to fixed, structured cycles. Consider quarterly reviews of lifecycle investments per cohort, annual evaluations of reserves, provisions and distribution mechanisms, periodic assessment of the implementing organisation based on pre-determined KPIs and SLAs, and an annual self-evaluation of the board focused on implementation and learning capacity. The board thus acts as a professional overseer of the system, rather than as a policymaker with considerable discretion.

Next steps

Based on the above, the following practical next steps can be identified. The steps are organised thematically: the first four steps are analytical and diagnostic in nature and form the basis for the remaining steps. Steps five to nine are implementation-oriented and can be carried out partly in parallel. Step ten — the updating of the Own Risk Assessment (in Dutch: ERB) — concludes the process and assumes that the preceding steps have been completed. Implementation requires close cooperation with the administrative office and the implementing organisation. Anyone comparing this list with the agenda of an average pension fund under the FTK will recognise a number of familiar elements. A control framework, a monitoring dashboard, a focus on training and culture — these are not unfamiliar concepts. Yet the list as a whole is fundamentally different from what funds are used to. Under the FTK, the emphasis was on financial management: funding ratios, recovery plans, indexation policy and investment policy dominated the administrative agenda. The follow-up steps associated with these were primarily of a financial-actuarial nature.

• Gap analysis: Current versus required skills and systems.
• New risk taxonomy: Reassessing risks in line with the new contract.
• Process mapping: Fully mapping out implementation processes.
• Control framework: Establishing adequate controls for each process.
• Monitoring dashboard: Developing new KPIs and metrics.
• Governance review: Reassessing competencies, committees and decision-making.
• Communication strategy: Risk management as an integral part of communication.
• IT/data roadmap: Ensuring the necessary systems and data quality.
• Training & culture: Encouraging the continuous development of directors and staff.
• ERB update: Within a reasonable timeframe following implementation (indicatively 6–12 months), draw up a new Own Risk Assessment that fully reflects the changed context and practical experience gained.

What distinguishes this list from the agenda under the FTK is the shift towards implementation, systems and processes as the core of governance work. Steps such as process mapping, an IT/data roadmap and a new risk taxonomy were secondary for many funds under the FTK or were largely left to the implementing organisation. Under the Wtp, they become a direct governance responsibility. The same applies to the communication strategy: whereas under the FTK communication often followed policy decisions, here it is positioned as an independent risk management tool.

In short, the list is no longer a financial recovery plan in a different guise, but an operational transformation programme, and that requires a board willing to embrace that new role.

Summary

The transition to the Wtp represents a fundamental shift from collective, discretionary management to individual, contract-driven implementation. Because the board can no longer make adjustments via policy decisions — indexation, reductions, investment adjustments — but must allow the system to operate as contractually stipulated, the focus shifts to the quality of data and information as the primary management tool. It is not the scope for policy, but the reliability of information on individual pension capital, cohort results and implementation processes that determines whether the board can fulfil its responsibilities. Risk management is therefore inevitably becoming more data-driven.

This shift is also reflected in the nature of monitoring. Under the FTK, periodic reporting on the funding ratio was often sufficient as management information. Under the Wtp, returns must be allocated to individual capital in a timely and accurate manner, lifecycle investments must be monitored per cohort, and deviations in implementation processes must be identified quickly before they affect participants’ pension outcomes. This makes more frequent and more forward-looking monitoring not a choice, but a necessity arising from the structure of the new contract itself.

The specific update to the risk management framework comprises — as detailed in the practical next steps — a recalibration of the risk taxonomy in line with the new contract, a renewed control framework focused on operational processes and data quality, new KRIs and a monitoring dashboard at cohort and individual level, a robust outsourcing policy with strict SLA agreements, structural legal and compliance expertise, and an updated ERB that fully reflects the new risk context. Together, these elements form a framework that fits the role of the board as a system manager rather than a policy-maker.

The next step is up to you

The analysis in this article makes it clear that the transition to the Wtp is not merely a technical or legal task, but first and foremost an administrative one. The new system requires directors who are prepared to redefine their role: from policy-maker to system manager, from financial steward to guardian of implementation, data quality and chain integrity.

This shift requires concrete action — and that starts with honesty about the current situation. As a board, ask yourselves the following questions: A good first step is to carry out the gap analysis as described in the practical next steps: assess where the fund currently stands and what is needed to operate in a future-proof manner under the Wtp. That discussion — open, critical and focused on the long term — is precisely the administrative dialogue that the new system requires.

• Do we possess the competencies required by the Wtp context, particularly in the areas of IT, data and process management?
• Do we have sufficient insight into the quality of our implementing organisation and the risks in the chain?
• Is our risk management framework already geared towards the new reality, or are we still operating primarily on the basis of FTK reflexes?
• When will we draw up our updated ERB? And who will take the lead in this?

The participants in your fund are counting on it.

This is the fifty-first column in a series on risk management. The aim of the series is to encourage readers to view risk management as an integral part of running a pension fund.

More columns by Dick Kamp