The Dutch Senate has voted to approve the Netherlands’ new financial assessment framework (FTK) for pension funds.

A roll call vote indicated that 40 of the 71 senators present were in favour.

The vote came after Jetta Klijnsma, state secretary for pensions, made concessions in response to the Senate’s concerns regarding the low discount rate pension schemes are obliged to use.

EIOPA, the European pensions and insurance supervisor, is scheduled to present an ultimate forward rate (UFR) for insurers in February, and many Dutch parties had indicated they would rather wait for this before introducing a new UFR for pension schemes.

Klijnsma discussed their concerns with the Dutch regulator (DNB), which is responsible for determining the interest rate curve – including the UFR.

The DNB said it would take the Senate’s wishes into account in its decision, according to Klijnsma.

She did, however, stress that the final decision regarding the UFR would be the DNB’s alone to make.

She also pointed out that it was up to the regulator to decide how the UFR for Dutch pension funds should relate to the UFR for European insurance companies.

Various parties in the Senate had requested that the DNB seek the advice of a broad range of national and international experts on the issue.

In response to widely shared concerns in the industry that pension funds could be trapped in low-risk strategies without much chance of recovery, schemes with solvency rates above the legally required minimum but below the minimum buffer requirement will be given a one-off chance to adjust their strategies and increase risk levels.

From the outset of the debate, however, Klijnsma rejected requests to soften the strict rules governing indexation.

“There is no way pension funds will grant indexation with an average solvency rate of 105% and a real funding level of 80%,” she said.

According to Klijnsma, the real funding rate of 80% would translate to a shortfall of €200bn.

The new financial rules will be reviewed after three years, as the Senate requested.