Dutch minister rejects calls for DB cost-transparency rules
NETHERLANDS - Dutch social affairs minister Piet Hein Donner has resisted calls to issue additional rules to increase the cost transparency of defined benefit (DB) schemes offered by insurers and pension funds.
In a letter to parliament, Donner said it was still too early to make conclusions in light of the new requirements for cost transparency and communication set out in the Pension Act, not to mention recent initiatives from the sector and ongoing consultations for improvement.
The Financial Markets Authority (AFM) recently found only 7% of examined 'start letters' complied with all legal requirements for transparency and that more than 50% of these letters lacked a clear indication of costs.
Another recent AFM survey described the quality of advice on defined contribution (DC) arrangements given to employers as "sub-standard".
The supervisor also said the fact risk under DC schemes is always with employees - and that that risk can be considerable and difficult to hedge - must be better communicated.
However, a survey by consultant PricewaterhouseCoopers suggested insurers' costs for collective DC arrangements for 100-100,000 participants were on average lower than for pension funds.
Last year, parliament supported a motion by Christian Democrat MP Pieter Omtzigt calling on the government to develop a standard model for DC scheme costs.
However, Omtzigt himself conceded the implementation of the initiative would be difficult due to the variety of pension contracts and costs.