Dutch regulator scolds pension funds for administrative shortcomings
NETHERLANDS - The Dutch pensions regulator (DNB) has called on pension funds to take a long, hard look at their administrative processes after it found that a number of registered claims deviated from current pension rights.
After making a "thorough" calculation based on available documentation, the DNB said it found a "considerable number" of differences between actual claims and alterations and the registered data.
Directed by its internal accountants service, each scheme in the DNB's survey had to reconstruct fully the pension rights or benefits of 30 randomly chosen participants, as well as recalculate at least 500 alterations, such as the effect of divorce and incoming value transfer.
In more than half of the cases, the necessary source documentation was incomplete, the watchdog said.
Although in most cases the deviation was limited - and almost equally benefiting and hurting participants - the DNB stressed that the accurate administration and registration of pension claims was a matter of "hygiene" for each pensions provider.
It said it had asked the surveyed pension funds to file an action plan for corrections as soon as possible, adding that it would consider how the resultant good practice for administrative quality control could be propagated to the entire sector.
The watchdog stressed the importance of proper administration for the introduction of a new pensions contract that took long-term adjustment mechanisms of life expectancy and fluctuations in returns into account.
It also stressed that pension funds must retain all relevant source documents until seven years after a participant has left, and that these documents must be instantly available free of charge.
The watchdog suggested that schemes could limit their administration risk, as well as costs, through "self-limitation" and simplifying pension arrangements.
Earlier, the DNB found similar results during a screening of the largest pension insurers for the accuracy of their administration.