The Dutch pensions and insurance regulator PVK has invited the country’s pension funds to comment on a new White Paper concerning pension fund solvency requirements.
The move comes after the regulator wrote a controversial letter on coverage levels to schemes last September. It warned those schemes whose coverage levels had fallen below 100% that they had a year to rectify the situation.
Gaston Siegelaer, project manager for the Financial Assessment Framework White Paper at the Pensioen & Verzekeringskamer, the Pensions and Insurance Supervisory Authority, says the PVK is looking for feedback from pension funds by May 9. “We are very interested as to what pension funds and other industry experts think about the ideas that we have set out.”
The paper harks back to the issues that were raised in the PVK letter last year. And it also proposes a number of new rules for pension fund solvency that will be integrated into a financial framework for pension funds and insurers that is expected to come into effect in 2006.
Says Siegelaer: “The letter from September last year referred to an actual situation for pension funds in the current market situation. On the other hand, issues were also mentioned in the letter that might allow pension funds to anticipate the solvency rules in the new financial framework.”
He notes that there are a number of steps still to be taken before the White Paper makes it into regulation. “Firstly we will evaluate all the comments and feedback on the White Paper and take account of all the good ideas.
“Then we will write out a complete financial assessment framework, not only for solvency tests but also for so-called continuity tests. That will be in the summer of this year. Then we will have a formal consultation with the representatives of pension funds, insurance companies, actuaries and accountants and investment analysts.
“We should have reached some decision on this by the end of this year. Then in 2004 we will put forward the concept and rules, to be followed by another formal consultation. Only then will there be rules that will be enforceable by the supervisor.”
Peter Borgdorff at the Dutch Association of Industry-wide Pension Funds, or VB, says they have informed their members about the White Paper and are now working with the union of professional pension funds on a reply.
“It appears as if the White Paper will give us the possibility to have a financial testing framework for each individual pension fund and we believe it is very important that the PVK has chosen this particular direction. Our first impressions are positive.”