The Dutch government should set its sights on developing the new defined benefit vehicle APF and provide a legal base for the collective defined contribution (CDC) model, according to Kick van der Pol, chairman of the Pensions Federation.
Speaking at the Federation’s annual congress, Van der Pol said CDC plans needed to be enshrined in law before the pensions industry could work out new combinations of DC and collectivity.
He also called on the government to allow the APF to accommodate mandatory industry-wide pension funds, and asked for leeway for different configurations of contracts and cooperation within the APF.
An APF offers pension funds from various sectors the option to work together closely, while their assets are ring-fenced.
It is considered an alternative for pension funds keen on consolidation but wanting to avoid placing pension rights with an insurer.
Van der Pol also reiterated the Federation’s criticism of the large financial buffers required for pension funds under the new financial assessment framework (FTK), which is currently waiting for approval by the Senate.
He questioned whether young workers would ever benefit from these financial reserves.
“The pensions system will be seriously put to the test if we charge contributions for an inflation-proof pension over 10 years, while we don’t grant sufficient indexation and keep prioritising the accrual of buffers,” he said.
Meanwhile, Frank Elderson, the new supervisory director for pension funds at the Dutch regulator (DNB), assured delegates that the supervision of pension funds would remain a “local matter”.
He was responding to questions from Van der Pol, who had referred to bank supervision, which is to move to the ECB in Frankfurt.
Elderson said his priorities would be the introduction of the new FTK, consolidation within the pensions sector and making a “balanced assessment” of interests for establishing contributions.
He reiterated his predecessor Joanne Kellermann’s plea that pension funds provide more clarity about participants’ individual pensions rights, in order to instil confidence in the system.
Also during the congress, Coen Teulings, former head of the Bureau for Economic Policy Analysis (CPB), argued that the pensions sector itself must take the initiative on innovating the system, and subsequently introduce changes “soft-handedly”.
In a keynote speech, Teulings, now a professor of economics at Cambridge University, said these plans should be kept away from politics – politics being “the best guarantee of getting them stranded”.
Although he described the freedom of choice for workers to select a pension fund as “expensive and complicated”, he said the introduction of the principle would be inevitable.
However, to prevent complicated questions and to keep costs down, he suggested the application of “maximum standardisation”.
In his opinion, pension funds must tackle the issue of redistribution of assets through the current average contribution, as well as retain the principle of solidarity, in order to increase support for the pensions system.
He also echoed Elderson’s call for more clarity on individual pension rights.