NETHERLANDS – The Dutch central bank has warned there will be time pressure on pension funds if the new Pension Law is not passed by Parliament before the summer.

DNB division director Klaas Knot told a conference in Amsterdam that pension funds will need to assess their investment strategy and pension premiums again in 2008 if the law is not passed before the parliament’s summer recess.

He stated funds would not have enough time to implement any new legal requirements before January 2007, when the new law is due to be implemented.

At present, the new Financial Assessment Framework (FTK) is set to come into force at the same time although several points are still unclear. A new legal framework needs still to be approved by the Dutch parliament.

Knot stated that “as in November still several important legal changes need to be made and put into action, pension funds will not have the possibility of taking the latter into account for their 2007 premiums and indexation”.

He added that as the implementation of the new FTK takes a lot of time, funds will not have the time to implement new changes on time.”

Knot indicated that there is a real danger that pension funds will have to change 2007 pension premiums again a year later.

This was not a positive development, as pension funds will have to take a long-term view to counter possible premium volatility.

He also expects that a delay in parliament would result in a need to change investments strategies and communication to members.

At present, main point of discussion in the parliament is the issue of recovery in case of under-coverage. The parliament needs to give its approval for the proposed time schedule of recovery, as the DNB a recovery period of 1 year.