NETHERLANDS - Pension funds and insurers must provide their members with more clarity on the costs of their defined contribution arrangements as few are meeting regulatory requirements, according to communications watchdog the Financial Markets Authority.
The AFM conducted a study of new member letters sent by a representative selection of providers and found only 7% met the legal transparency requirements on data priovided.
The regulator said pension providers did not clearly stated the costs of an individual's pension in 56% of the new member letters studies.
The regulator also found that the costs of defined contribution arrangements varied from a zero charge to 35% of the assets saved. For every contributed euro, the AFM said, providers spend 79 cents on average on the actual pension investments, having earmarked 16 cents to cover costs and 5 cents as risk premium.
The watchdog further advised that providers should include a clear statement about charges in their new starter letters, as the cost information was often scattered within the documentation.
It has been mandatory for pension funds to send out all new members a starter letter, which is required to include costs specifications, since 1 January 2008 while insurers were required to do from 1 January 2009.
The communications regulator has hinted that it will in future take "formal measures" if new member letters lack the prescribed information.