One in three Dutch pension schemes considering liquidation
NETHERLANDS - One in three Dutch company pension funds is seriously considering liquidation and joining an insurer, as they are finding it increasingly difficult to cope with ever tighter and complex regulation, a survey by KPMG has suggested.
The consultancy, which looked at 100 schemes, found that 20% of the pension funds think liquidation within two years is 'very likely', while another 8% believe the chances of dissolving are 'likely'.
According to pension regulator De Nederlandsche Bank (DNB), more than 250 company schemes have placed their pension plans with an insurer over the last 10 years, and KPMG has predicted the credit crisis and subsequent recession will "speed up this development".
For more than 70% of pension funds in KPMG's survey, the increased buffer requirement was the chief reason for considering liquidation.
Requirements for expertise, management costs and scale also played important roles, the consultancy said.
Edward Snieder, KPMG's director of pension funds, said: "As company schemes are governed by employers and employees, there are sometimes very few potential board members available, and the rising demands make it increasingly difficult to make people come forward.
"But also from an organisational and financial point of view, pension funds are often too small, with relatively high management costs and smaller buffers to counter disappointing returns."
He added: "Because for many workers certainty about their pension is of the greatest importance, the question rises whether a relatively expensive pension vehicle with uncertainty about the final results should be replaced by a guaranteed pension plan at an insurer with a much larger volume.
"This could help the peace of mind of not only a pension fund's participants, but also of its board members."