The Dutch pensions sector has responded positively to proposals for new legislation for communication, focusing on tailor-made information.
The proposals were tabled by Jetta Klijnsma, state secretary for Social Affairs, following a consultation with the industry.
The Pensions Federation said it was “broadly positive” on the proposals, particularly Klijnsma’s decision to adopt the so-called Pension123 – a digital welcome letter for new participants explaining a pension plan visually and using simple language.
The industry organisation said it would ultimately judge the legislation on costs, the objectiveness of its criteria and the space it offered digital communications.
The Financial Markets Authority (AFM), the watchdog for communications, said the proposals addressed crucial criteria, such as providing clarity about how much pension benefits a participants could expect, whether this was sufficient and, if not, what could be done in terms of additional arrangements.
The AFM said it was particularly pleased with the proposal that a pensions provider must put basic information about its pension plan permanently on its website.
The supervisor also championed the proposal that the national pensions register provide three financial scenarios – including an optimistic and a pessimistic one – to provide insight into expected purchasing power and risks surrounding a participant’s future pensions income.
However, Council of State (RvS), in its legal advice, was critical about the accounting rules for these scenarios, which are yet to be established through lower legislation.
“It is unclear,” it said, “how these accounting rules could improve participants’ insight.”
In its opinion, providing a true picture of a future pension remained problematic, given considerable uncertainties surrounding long-term returns, indexation and inflation.
Towers Watson underlined the importance of a balance between a tailor-made approach and “honest” communications on the one hand and “complicated” issues on the other.
Celeste de Quelerij, communications strategist at the consultancy, said: “Full transparency on the risks without sufficient knowledge of the issue could further erode confidence among participants.”
She said Klijnsma’s proposals lacked a philosophy about the starting point of the communication process – increasing interest in pensions.
“The accent is still on transmitting information, which poses the risk that well-meant lists of duties are being composed without actually encouraging involvement,” she said.
The new legislation is to introduce new open standards of “correct and comprehensible”, as well as open norms for addressing the needs and knowledge of participants, offering insight into a pension plan’s options and the effects of important life events.
Under the proposals, the information shown on the uniform pensions statement, or UPO, must be limited to accrued pension rights, whereas the national pensions register must provide clarity on combined future pension rights, including purchasing power, risks and options for additional pensions saving.
The communications bill further offers providers the option for digital information provision, although participants must be able to receive the information on paper if they wish.