Dutch financial regulator AFM has been forced into consultations with the pensions industry over how pension costs are divulged to scheme members in the new defined contribution (DC) system being introduced across the Netherlands under the WTP (Future Pensions Act) reform, after objections to the plan it laid out.
AFM, the Dutch Authority for the Financial Markets, said in a recent write-up of a 4 June event it hosted for the pensions industry that there had been “heated discussions”, and that “some were bothered by the discussion between the AFM and the Federation of the Dutch Pension Funds (Pensioenfederatie) during the breakout session on cost transparency.”
Citing sources among attendees of the regulator’s pension event – where media were excluded – IPE’s sister publication PensioenPro today reported that Pensioenfederatie had not been happy with the AFM’s plans for the cost information that pension funds will be required to display on the Uniform Pension Overview (UPO) for a WTP-compliant scheme in 2027.
Asked to comment on the disagreement, a spokesman for the AFM told IPE: “The conversation that happened during the event on 4 June brought to our attention that further talks with the sector on the UPO were necessary.”
“These talks are now being held and organised directly with the sector, not through the media/newspapers. Dialogue is our first priority in this process,” he said.
Meanwhile, a spokesman for Pensioenfederatie said the lobby group could only say in response to IPE’s questions that cost transparency was indeed an important theme.
“We are currently in talks with our members, the Ministry of Social Affairs and Employment and the AFM on the subject,” he said.
The regulator’s plan is for scheme participants to be able to see, at an individual level, the costs their pension fund incurs regarding their capital — for administration, investment management, and other miscellaneous expenses, PensioenPro reported, adding that industry sources felt AFM’s interpretation of a broad regulatory standard had been presented at the event as a fait accompli.
However, there were several objections to this plan from the industry, including the practical objection that Dutch pension fund administration systems were not designed to allocate costs on an individual basis.
PensioenPro’s sources argued that an individual breakdown offered, at best, a false sense of security, as it would rely on estimates and allocations across cohorts.
A more fundamental objection was also voiced that in the plans laid out, the regulator was taking a stance of viewing participants as individual consumers, which was at odds with the sector’s view regarding the solidarity-based DC scheme under the reform, it reported.
