Dutch Pensions Federation calls for 'random' admin checks
NETHERLANDS – The Dutch Pensions Federation has called on its members to conduct random checks into the quality of their administration to better establish risks and the possible need for improvements.
The federation's comments follow a recent survey by pensions supervisor De Nederlandsche Bank (DNB) that found a "considerable number" of differences between pension claims within administration systems and "accurate" calculations based on source documents.
The DNB also looked into registered claims at 10 pension funds last year and found that, in more than half of its checks, not all required documents were available.
The Pensions Federation said its members should now carry out random checks of active participants, deferred members and pensioners and recalculate claims or benefits based on source information all the way back to the start of participation in a pension fund.
The survey should include, for example, 12 non-selective random checks, equally divided over the periods until 1990 – from 1990 to 1999 and from 1999 onward.
In addition, 15 selective draws should be carried out over the most recent period, involving adjustments for divorce, death during employment, labour disability, incoming value transfer and exchange of old-age pension for surviving relatives pension, or vice versa, according to the schemes' representative organisation.
Recalculation should be conducted based on source documents. If these documents are unavailable, pension funds must consider how to explain the accuracy of the applied alternatives and calculation to the participants.
But the federation also stressed that the checks would provide merely an "impression" of administrative quality, and that a consistent check ought to be aimed at live events data.
According to Koos Haakma, partner at Mastermind Consulting, the recalculation of pension rights – particularly over long periods, sometimes up to 40 years – often poses big problems.
"Some rights just can't be proved, and past divorces in particular are a complicating factor in reconstructing pension rights," he said.
"In practice, pension funds often need to decide between what is reasonably sound and what is in part unsolvable."
Mastermind Consulting is often involved in "cleaning up" pension administrations, as part of pension funds winding up, mergers and transitions of pension rights, he said.