DNB warns pension funds against becoming obsolete
Pension funds must consider what they could offer their participants in the future and how they can keep their support in order to remain relevant, according to supervisor De Nederlandsche Bank.
Otherwise they may meet the same fate as phone manufacturer Nokia, which was too slow to respond to a changing environment, said John Landman, head of supervision of pension funds’ policy, during a conference organised by consultancy firm EY in Wassenaar, near The Hague.
“Pension funds can’t take it for granted that people will keep on participating by default,” he said.
However, he stressed that he was not advocating abolishing the current mandatory pension fund participation for employees.
“I strongly believe in a collective approach and in the need of participants to accrue a pension in such a way,” Landman said. ”But tying people by default is something of the past. Nowadays, they base their choices on expectations and profiles.”
Landman said he expected that lowering the salary cap subject to tax-facilitated pensions accrual would trigger a discussion about what pension funds and insurers are and aren’t allowed to do.
The Dutch pensions sector is expecting a new government in the country to come up with proposals to lower this cap, which currently only applies up to a salary of €103,000.
He also predicted there would be a debate about the additional pensions of self-employed workers, who are currently exempt from mandatory pensions accrual.
Landman said these pressures meant pension funds needed to better communicate their collective character, including through “branding”.
In his opinion, pension funds as well as the social partners who run them, “must detach themselves from established interests and be willing to re-invent themselves”.