NETHERLANDS - Dutch pension funds are faced with a substantial fall in confidence, concluded a survey by the Netherlands Interdisciplinary Demographic Institute, as the share of participants with confidence in pension funds has dropped from 64% to 44% percent over the last three years.
One has to recognise trust is an important factor for pension funds, according to the researchers, as "it is needed to obtain the necessary support for pension reform", adding "current discussions on pensions seem to suggest that it is all about actuarial mathematics".
The poll was conducted to gather the thoughts of 1036 Dutch pension scheme members but suggests it is not just the smaller pension funds that saw their reputation damaged.
ABP, the largest pension fund in the Netherlands, enjoyed the confidence of 69% of its members in 2006, however that figure has now fallen to 54%. Likewise, confidence in PFZW has dropped heavily too: from 59% to 45%.
That said, these pension funds appear to be performing better than the average pension fund in The Netherlands, as the overall picture suggests confidence among other participants dropped from 58% to 43%.
"Apparently, pension funds cannot escape from the effects of the credit crisis in the case of trust as well", said a spokesman for ABP.
"Although the results show that ABP stands out relatively well within the sector, this is of course a worrisome outcome. We will do our utmost to regain the trust lost by our members," he added.
Part of the problem is a lot of attention has been paid to the financial impact on pension funds and less has been communicated to members on the solutions, noted a spokesman of VB, the representative body for industry-wide pension funds.
He said he understood "this causes uncertainty and damages the confidence in pension funds," and recognised confidence could be lost pension funds as they can only really communicate the effects on pension benefits as soon as the recovery plans are finished.
"Clear communication will have absolute priority", he added.
"What is striking", added Harry van Dalen, one of the survey's researchers, " is that the confidence of people who consider themselves well-informed on financial matters has dropped faster, in absolute sense, than people who do not".
He said the trust of the first group went down with 15 percentage points to 34% whereas the ratio for the latter group fell by 20 percentage points to 50%.
Interestingly, the study showed the view of insurers was even worse as 45% of the respondents claimed to have no confidence at all in these financial institutions. Banks scored a little better as only 35% of respondents said they have no trust at all in these companies.
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