The €409bn Dutch civil service scheme ABP is to appeal against the verdict of an Amsterdam court in summary proceedings brought by trade unions about a switch from final to average salary arrangements for military staff.
On its website, the pension fund explained that, by forbidding ABP to communicate in terms of final and average salary, the court had in effect blocked the scheme from providing the Ministry of Defence (MoD) personnel with information to which they were entitled.
It said it would not be able to inform the MoD staff in the legally prescribed “correct, clear and balanced” way about their pension or answer questions.
Responding to the court’s conclusion that ABP had only to blame itself for implementation problems, the pension fund argued that the court had underestimated the complexity of the plan and the IT challenges it posed.
It warned there was a risk of paying incorrect pensions and insufficient clarity about future benefits if the pension fund had to continue the final salary plan for military personnel.
Recently, the unions said they would lodge an appeal against the employer – the Dutch State – demanding that military staff continue accruing pensions under final salary arrangements “as the social partners had not yet reached an agreement about another pension plan”.
The unions’ decision was triggered by the verdict in summary proceedings of a court in The Hague, which judged that average salary agreements should apply as the social partners, including the unions, had agreed to this.
Regulator to focus on communication from schemes facing cuts
Dutch communication supervisor Autoriteit Financiële Markten (AFM) is to focus on whether pension funds that have to apply rights cuts in 2020 correctly inform their members.
In its supervisory agenda for 2019, AFM said it wanted to protect vulnerable consumers against financial problems.
Members must have the financial means at retirement they expected as a result of solid information, effective guidance around options, and suitable matching products, the regulator said.
Pension funds must legally inform their participants in a correct, clear, timely and balanced way.
AFM said it would also check whether pension funds correctly applied new rules regarding improved defined contribution plans, which allows for a drawdown pension.
The regulator added that it would look for inconsistencies in the pension claims communicated to members by the pension providers.
The large metal schemes PMT (€72bn) and PME (€47bn) could be subject to the AFM’s supervisory priorities, as they are facing rights cuts in 2020 if their funding is short of the minimum required level of 104.3% at the end of this year. At November-end, the funding levels of PMT and PME were 102.5% and 101.6%, respectively.
AFM also indicated that it would dedicate resources to providing clarity about the effects of Brexit for Dutch financial companies involved in trading equity, bonds and derivatives.