NETHERLANDS - The Dutch Minister of Social Affairs Aart Jan de Geus will adopt some of the stricter FTK-requirements for the financial supervision of pension funds made by De Nederlandsche Bank.
De Geus confirmed the move in an official letter to the Dutch parliament yesterday, after consulting employers and the trade unions.
The social partners and the minister back the regulator's advice in which it sees a change in the assumptions on investment return for continuity analysis, the assumed maximum yield of 5% on fixed income has been lowered to 4.5%.
The minister and the social partners do not want to adopt the suggestions made on the risk premium on equities.
DNB proposed these should be broken down by mature markets, private equity and emerging markets and the maximum risk premiums were set at 3%, 3.5% and 4% respectively, taking the maximum total yield to 7.5%, 8% and 8.5%.
In the letter to the parliament De Geus outlined that the social partners did not see any reason to comment on other elements of DNB's advice.
The DNB released new recommendations about the parameters for the new Financial Assessment Framework, or Financieel Toezichtskader (FTK), for pension funds on October 3, after De Geus had asked to assess whether the values agreed earlier still held in the current economic climate.
The regulator suggested changes to parameters for investment assumptions, emerging market equities, indirect real estate and commodities.
Last week an Ernst & Young and Holland Van Gijzen survey found that FTK has prompted changes in funds' investment policy: three-quarters of schemes surveyed are going to make changes in their investment policy as a result of the new Pensions Act.