The Dutch government came under fire from senior pension industry figures such as Roland van den Brink and Jean Frijns at a seminar organised by the Dutch central bank.
Not only was the role of the new Financial Assessment Framework (FTK) seen as resulting in changes in the Dutch pension sector, but the role of the Dutch government as a trustworthy sponsor and regulator of the pension sector was put under scrutiny.
According to Van den Brink, director of investments at the Metalektro scheme, the new FTK will result in in-depth changes for the actuaries, based on the fact that most supervision aspects will have to be based on market value.
He stated that this will need a total renewed actuarial approach, based on a reassessment of their own sector, changed educational needs and take
into account the increased interference of politicians in the coming years.
He also addressed the changed relationship between actuaries and the pension funds or company, based on different rationales for future risks. He said the FTK would give actuaries a new and practical framework to take the market value approach.
He urged all parties to re-evaluate the current situation. Although the FTK would be positive in some ways it would also lead to a decline of the schemes’ autonomy.
Due to the need for increased transparency and openness, there was a threat that third parties would increasingly meddle on a day-to-day basis. It was an unresolved question whether the FTK would be positive for the overall economy or financial status of schemes.
As an actuary, he also urged the sector to understand that it will be more advantageous to be more focused on overall principles than to drown in new regulations – which could directly lead to lower investment yields.
Jean Frijns, head of ABP Investments, also made some critical comments, saying the government is not currently acting as a long-term sponsor.
He indicated that the Dutch government’s current stance and approach to future challenges is putting all the risks onto the funds themselves, without taking any preventative measures.
Frijns’ remarks were supported by the delegates. In his response, DNB director Dirk Witteveen did not explicitly address Van den Brink and Frijns’ critical remarks.
Witteveen said that the overall pension agreements are based on a business contract formula and a so-called social contract.
He only deliberated on issues such as transparency, the need to inform the public about the real situation of the sector and to raise awareness of the increased risks for the continuation of the current pension system.