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IPE special report May 2018

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Pension fund for Dutch watchdog seeks merger with other schemes

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The AFM – the pensions communications watchdog in the Netherlands – has said it wants its €100m scheme either to merge with other pension funds in the Dutch financial sector or join an initiative to establish a low-cost APF vehicle.

The AFM, which has a staff of approximately 600, said it was “undesirable” for smaller pension funds to remain independent, and that they should merge with other schemes to gain the benefits of scale.

The regulator’s scheme was established in August 2013, following the liquidation of the Mercurius scheme, which had served several companies in the financial sector.

The AFM had tried in vain to make Mercurius part of a new voluntary industry-wide pension fund for the financial sector, and, after this initiative failed, it decided to launch its own temporary fund.

At the time, it concluded that joining an insurer would have been too expensive, adding that this would also have prevented it from linking up with a larger pension fund at a later date.

In the Dutch financial sector, the pension fund of merchant bank and asset manager Van Lanschot is in the process of establishing an APF, in which assets can be ring-fenced.

However, it declined to provide details about its potential partners.

Expenses at the AFM and DNB schemes have recently come under scrutiny, as many of the institutions they supervise decry the ever-increasing cost of regulation.

The AFM’s merger announcement comes soon after the publication of a survey by local insurance magazine AM and news website Follow the Money, which claimed that the watchdog underestimated the cost of winding up Mercurius and starting its own pension fund.

The AFM recently confirmed that its total costs for the scheme had come to €1.5m rather than the estimated €1m.

It also said its pensions administration costs were €426 per participant – three times the national average for Dutch pension funds.

By comparison, the cost per participant at the €1.3bn pension fund for fellow watchdog DNB is €284.

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