Most Dutch pension fund trustees do not expect to get approval to make the transition to defined contribution (DC) if it is contingent on a fund-level ballot as proposed by member of parliament (MP) Agnes Joseph. They consider lack of interest, the complexity of the question, the spread of disinformation and a lack of representativeness as key objections, according to a poll by pension consultancy Sprenkels.

Forty pension fund board members and directors from a large variety of pension funds responded to the poll held during a recent seminar on the DC transition. Only 30% of respondents expect to get the green light on the fund-level ballot, as proposed earlier this month by NSC and BBB.

The rest believe a vote will not produce a ‘yes’. For the majority of that group (80%), this is because they do not expect to reach the 30% turnout threshold.

The remainder estimate that this threshold can be reached, but foresee a negative vote by a majority of participants.

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Pension funds are resisting a proposal for mandatory fund-level ballots on the DC transition

Counterarguments

A perceived lack of interest among participants – resulting in a low turnout – is a common argument against holding the ballots, especially with the large sector schemes which only receive a response rate of between 5% and 10% on member surveys they organise.

Another argument against holding a vote is the complexity of the choice presented, which supposedly is too big to overcome for participants. Both arguments were also frequently mentioned by respondents in the Sprenkels poll.

Other new counter-arguments are ‘bias’ and ‘disinformation’. Bias implies that trustees fear that opponents of the DC transition will in particular be motivated to vote. As a result, the vote result may not be representative of what all participants really want.

Disinformation refers to the fear that participants may be confronted with information on social media, for example, that is critical of the DC transition, but not necessarily complete or accurate. It may involve ‘scaremongering’ that leads to ‘distrust’, according to the survey.

The four risks – disinterest, complexity, (lack of) representativeness and disinformation – were mentioned by respondents in roughly equal proportions.

Small and large

According to Martijn Euverman of Sprenkels, smaller funds may be in a better place to get consent from members for the DC transition than larger ones.

“Take the three frontrunners that already made the transition as an example. The pension fund for shipping pilots is so small that they know every participant personally, so to speak. But PWRI has 200,000 members. These are people with a distance to the labour market, there are inactive members with small pensions among them. It would have been more difficult there to motivate them to vote,” he added.

Euverman himself finds the feasibility of the 30% threshold difficult to assess. “Every fund is different,” he said.

Delay

What’s certain is that introducing a referendum would lead to severe delays, according to Euverman.

“Funds have now prepared everything for the transition. They have compiled files totalling a thousand pages or more. If you hold a referendum, you would actually have to draw up another plan like that, for a scenario in which you don’t make the transition,” he added.

Making the transition by 2026, as many pension funds are planning, would then become very difficult, Euverman believes. For now, he does not see funds making any preparations for a referendum scenario.

He said: “There is great resistance. And, of course, it remains to be seen whether it will pass parliament.”

This article was first published on Pensioen Pro, IPE’s Dutch sister publication. It was translated and adapted for IPE by Tjibbe Hoekstra