Dutch pensions supervisor De Nederlandsche Bank (DNB) has indicated it won’t object to pension funds deviating from their strategic investment plans “during the current extraordinary market conditions”.
However, it said that such decisions must be thoroughly underpinned, and take risk management into account.
It also highlighted that recovering pension funds will not be allowed to “deliberately and structurally” raise the risk profile of their investments.
The watchdog suggested that, given the changing economic conditions and worsening financial positions, pension funds should assess whether their current strategic investment policy still matches the risk attitude of their participants instead.
DNB made its comments as part of adjustments to its supervision for the financial sector following the COVID-19 outbreak.
It said, however, that it will increase its focus on crisis management, including continuity management and cyber risks.
Increased supervison will also target the impact of market volatility on coverage ratios, the implementation of rebalancing policy and liquidity management, it said.
DNB added that additional supervisory priorities will be established during active engagement with sector organisations and pension providers.
The supervisor has already offered pension funds the option to postpone submitting their monthly and quarterly reports. It said it had temporarily cancelled on-site investigations.
Referring to the government’s emergency support measures for employers, which include a subsidy for pension contributions, DNB emphasised that the measures are meant to finance continuing pensions accrual.
The watchdog added that pension funds must put in a maximum effort to cash in pension premiums from employers.