Dutch supervisor De Nederlandsche Bank (DNB) has offered pension funds assistance in filling in key positions to comply with the EU-wide pensions directive IORP II.
At the annual congress of the Institute for Pensions Education (IVP) last week, Gisella van Vollenhoven, DNB’s director for pension fund supervision, said the regulator had noticed that it was difficult to comply with the conditions set for the key functions of audit, actuarial matters and risk management.
She said the watchdog was ready to provide advice, explaining that the support would depend on pension funds’ structure, governing bodies and scale.
The introduction of key functions forms part of the pensions directive, which must be implemented across EU member states through local legislation before 13 January 2019. The Dutch Senate was expected to pass the legislation this week.
Van Vollenhoven said she could imagine that large pension funds would place the important positions within their own administrative functions, whereas it would be likely that board members would take on these tasks at smaller schemes.
The personal assignment of these functions would also pose a challenge, because in most cases DNB had to approve appointments, the supervisory director said.
Pensions lawyer Frank Doornik described DNB’s offer as “very positive”, adding that the regulator should repeat this for other subjects.
However, he noted that the key functions could trigger questions about the collective responsibility and accountability of a pension fund’s board.
“What does it mean for the division of roles if a trustee for internal auditing is to report to the board and the internal supervision about things that have gone wrong?” he asked. “Would the board still be a collective one in this case?”
In Doornik’s opinion, pension funds must be much more careful when recording their decisions and how they have been made.
“This would not only apply to the decision itself, but to all considerations and all individual comments on the subject,” he said.