NETHERLANDS – Dutch pension funds are struggling to make up their minds on a new pensions contract, industry experts have warned, as the current proposals for a revised financial assessment framework (FTK) still lack many details.
State secretary Jetta Klijnsma’s suggestion, made at the IRR congress in Amsterdam on Wednesday, that she may introduce a third option, combining elements of nominal and real arrangements, only increased their uncertainty.
Jacco Heemskerk, managing director of the Dutch pension fund of Royal Bank of Scotland, said: “The possibility of an additional variant complicates a choice between the current two options.”
Even the healthcare scheme PFZW – which has, in principle, opted for a real contract – called for more clarity on a number of issues, particularly the discount rate.
Karin Bitter, head of pensions policy at PFZW, said the issue of merging existing and new pension rights, following a pilot in cooperation with the Ministry of Social Affairs, had not been concluded satisfactorily.
She said it was also unclear whether rights could be merged without causing large shocks in benefits.
But Peter Hoopman of the Dutch regulator (DNB) nevertheless urged pension funds to make their decisions quickly, as Emile Soetendal, project leader of pensions policy at Social Affairs, promised the ministry would provide clarity on the third contract option soon.
Pension funds must update their pension contracts by 1 January 2015.
Hoopman, who oversees the contract transition in a joint project with communications supervisor AFM, said the implementation process would take 6-12 months.
He also argued that pension funds could already take “basic decisions”, such as those based on actuarial developments, as well as make arrangements with their providers.
He said schemes that stuck with their nominal contracts “must take action” because they would have to deal with new buffer requirements, as well as a different method for accounting on cost-covering contributions.
He stressed that pension funds’ boards would be responsible for “proper adjustments”, and said they should take the initiative by consulting social partners on the issues involved.
Annelies Verhoeven of the AFM also recommended schemes gauge “risk-preparedness” among their participants, drawing up a communication plan focusing on purchasing power and risks.