The Dutch cabinet wants to make it mandatory for larger company pension funds to have permanent internal supervision, rather than an annual check by a ‘visitation’ committee.
The supervision proposal was aimed at approximately 30 company schemes, each with assets of more than €1bn.
Industry-wide pension funds have had permanent internal supervision – either through a supervisory board (RvT) or through a one-tier board – since 2014.
Clarifying the €1bn lower limit, the cabinet said it wanted to keep the administrative burden down for smaller company pension funds, which have a less complex decision-making process.
It added that fully reinsured schemes would also be allowed to keep their visitation committee, rather than employ a permanent committee.
The measure is meant to come into force as of 1 July 2017.
Commenting on the proposals, supervisor De Nederlandsche Bank (DNB) made clear that it would have preferred that all visitation committees would disappear, “as small pension funds in particular are struggling with an increasingly complex environment”.
DNB said it disagreed with the cabinet’s suggestion that complexity and risks are less for small schemes.
The association for internal supervisors (VITP) made clear that it felt it hadn’t been taken seriously by the government.
Nelly Altenburg, chair of the lobbying organisation, said it had recently called on Jetta Klijnsma, state secretary for Social Affairs, to keep the visitation, and even extend the deployment of the committees to the large sector pension funds.
“We had expected an evaluation, but now it is being scrapped without any respect to content,” she added.
In the opinion of the VITP, a visitation would be in many cases an excellent way of supervision, and would include the advantage of a “view from outside”.
It also said the cabinet had overestimated the costs of supervision and underestimated the costs of a supervisory board.
According to the VITP, the annual costs of an RvT are between €30,000 and €40,000, instead of the government’s estimate of €27,000.
The Pensions Federation, for its turn, said it would have preferred an evaluation of the proposals as well.
“But as the Dutch Senate wanted to abolish all visitation committees, the current cabinet’s proposals are a compromise,” said a spokesman.
When asked for a comment, the Ministry of Social Affairs confirmed that it would carry out an evaluation this year.
Recently, the company schemes ING CDC (€500m) and NN CDC (€200m) announced that they would replace their visitation committee with an RvT.