Dutch funds agree to map out pensions costs to participants
NETHERLANDS - Dutch pension funds have agreed to start mapping out all costs related to pensions and asset management and report the results to their participants in a "world's first".
The Pension Federation, which held its first annual conference today, said proper insight into all cost components would allow pension fund boards to conduct bespoke communication with participants and better account for their decisions.
Gerard Riemen, director at the pensions lobbying group, described the announcement as "ambitious" considering the fact that reporting will now be uniform sector-wide and that all transaction costs - often buried in overall asset management costs - will now be transparent.
According to the federation, Dutch pension schemes have also agreed also clarify asset management transaction costs separately.
"Pension funds need to tackle the issue by adjusting contracts with their asset managers, which are facing an entirely new phenomenon," Riemen said.
Acknowledging that the implementation of its recommendations will require "significant effort", the Pension Federation has opted for a "step-by-step" introduction of the measures.
It has asked that all members comply with these measures with respect to content and phasing - or explain themselves when failing to do so.
The Dutch pensions industry has been scrutinising the cost of pension provision since 2006.
A number of surveys on the topic have shown that the scale of a pension fund is often the main factor in determining cost per participant.
Other factors - such as a pension fund's preferred level of service, or increased asset management fees following above-average returns - have also played a significant role in pension funds costs.