NETHERLANDS - The new Dutch pensions legislation won’t be ratified by January 1 2006, the Dutch minister for Social Affairs Aart Jan de Geus has indicated in a letter to the parliament (Updates with comment).
The move was broadly welcomed by the pension industry.
De Geus expects the bill won't be able to be submitted to parliament any earlier than the second half of 2005 – which won’t give Parliament time to discuss it. “I realise that the possibilities of implementation before January 1 are very limited,” the minister writes.
According to the minister, the delay doesn’t need to be a problem. “The implementation is not by definition tied to the start of any year, and therefore postponement of the implementation till January 2007 is not necessarily” a problem.
“Moreover the regulator DNB is already taking into account what has been discussed about the financial assessment framework FTK”, the minister added.
The move will probably cause dismay among asset managers who were lining up so-called liability-driven products for pension funds as they try to meet the demands of the new FTK.
In March the DNB delayed the FTK for insurers but not pension funds. The pension industry was understood to be lobbying for a delay to the FTK.
The bank had decided to postpone the implementation of the new rules – also known as the Financieel Toetsings Kader – for insurers because of urgent requests for more time from them.
The Dutch Association of Industry-wide Pension funds, or VB, was not yet able to give an official response to today's news. Jeroen Steenvoorden, director of the Foundation of Company Pension Funds, or OPF, welcomed the delay. “The bill shouldn’t be rushed through. Most important is that parliament will have sufficient time to discuss the complicated legislation”, he stressed.
“Implementation of the financial assessment framework, as part of the pensions bill, won’t be ideal, if the start is beyond January 1. It won’t coincide with the tax year," Steenvoorden commented. “But the FTK might be introduced via rules of the watchdog DNB."
Hans ten Brinke, spokesman of civil service scheme ABP, also pointed at the year cycle of the collective labour agreements, or CAO’s. “At the moment we are still in negotiations about the CAO’s for 2006. After this we’ll need time for translating the results into rules," he said.
“A delay is good news for the pensions industry," said Alfred Kool of health care scheme PGGM. “We have always pleaded in favour of more time. Not only for implementing the new rules within the organisation, but also for communicating with our members”. PGGM is one of only five, of the approximately 800, Dutch pension funds which have already voluntarily started accounting under the FTK rules.