AF Advisors: To gain control of the Wtp chain, a guaranteed TOM is required

May 19, 2026

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

By Ed Vermeulen, Director of Organisational Consultancy, and Dirk-Jan Gerrits, Partner, both at AF Advisors

During the roundtable discussions on SPR implementation organised by AF Advisors, it became clear once again just how important a shared target operating model (TOM) is for pension funds.

A TOM provides an overview of processes, dependencies, responsibilities and deliverables. However, real control is only achieved when these agreements are properly translated into contracts, SLAs, change procedures and escalation agreements with the relevant supply chain partners.

A TOM as the basis for supply chain management

Under the Wtp, processes become more closely interlinked and dependencies within the monthly process increase. It is precisely for this reason that supply chain management becomes more important. Processes must run smoothly the first time round. Correcting errors retrospectively is undesirable, particularly when mistakes have a direct impact on participants’ pension assets.

This applies to both the SPR and the FPR. Although the operational implementation differs, a joint TOM remains essential for insight, overview and effective supply chain management. At the FPR, the implementation of the TA function is a key issue. At the SPR, the emphasis is instead on the processing of protection and excess returns and their distribution among participants and cohorts.

For both the SPR and the FPR, insight into the timing of all steps within the monthly process is essential, even when a step is carried out by just one service provider. After all, the rest of the monthly process depends on it. By working out the entire monthly process jointly with all service providers in a single TOM, clarity is created regarding dependencies, planning and responsibilities. This is particularly important for pension funds and boards, as they ultimately bear final responsibility. Furthermore, a comprehensive overview helps to respond more quickly to disruptions in the process and to determine appropriate solutions.

Risks of a limited scope

In practice, we see that some TOMs are limited to the moments of data exchange in accordance with the SIVI standards. At that point, there is a direct dependency between service providers. The definition of process-disrupting events often follows this pattern, with a standard approach being adapted to client- or fund-specific circumstances. Consequently, activities taking place within the service providers themselves remain out of the picture, and reference is made to bilateral agreements.

This makes it more difficult to view all successive steps in context and to determine the total lead time per month. There is therefore no insight into whether everything fits within short months with few working days. In the event of incidents requiring escalation, it becomes more difficult to determine whether this is still feasible within the available time when the overall overview is lacking. Consequently, effective supply chain management by the fund comes under pressure precisely at times when it is most needed.

Establishment of responsibilities and contracting

The TOM agreements can be laid down contractually in a multi-party agreement or via bilateral agreements with accompanying SLAs. Regardless of the chosen form, the agreements from the TOM must be contractually guaranteed. In doing so, the cooperation between all chain partners must be laid down, and agreements with each chain partner must be legally enforceable and form part of the outsourcing agreement.

In addition, it must be ensured that the procedures in the TOM cannot be amended without the pension fund’s consent. Changes must be agreed upon jointly with all relevant supply chain partners. This is essential for maintaining control over the outsourcing. Based on our experience, we recommend ensuring that the TOM and the agreements with supply chain partners align seamlessly, so that nothing falls between the cracks.

In the case of bilateral agreements, the precise details of the contractual arrangements depend in part on the overarching TOM. Changes must therefore be directly incorporated into the bilateral agreements and the SLAs. This ensures that the contracts remain consistent with the TOM and prevents differences in interpretation.

Governance and leadership within the supply chain

During the round-table discussions, it became clear that a joint TOM is only effective when pension funds themselves take on the leadership role within the supply chain. In practice, service providers primarily optimise their own processes and responsibilities, whilst the functioning of the entire supply chain is less of a priority. This is precisely why active management by the pension fund is necessary. This requires not only clear governance agreements, but also sufficient countervailing power from the board and the board office. This involves, among other things, assessing schedules, understanding dependencies between parties, monitoring operational risks and escalating bottlenecks in the chain in a timely manner.

Pension funds that have already transitioned to the Wtp system indicated that this steering role remains essential even after the transition. Particularly in the event of process-disrupting incidents, clear escalation procedures and timely end-to-end chain testing are necessary to keep risks manageable. An important point to note here is that governance does not automatically improve through additional documentation or extra layers of control. Effective governance arises precisely through targeted insight into critical processes, responsibilities and dependencies within the chain. An integrated TOM forms an important basis for this.

Conclusion

For both SPR and FPR, an integrated TOM remains essential for effective management of the pension chain. Without a shared overview of processes, dependencies and responsibilities, it becomes difficult for pension funds to effectively fulfil their management role.