NETHERLANDS - The Foundation of Company Funds (OPF) has voiced serious concerns about social affairs' minister Piet Hein Donner's plan to introduce the pensions indexation label next spring.

The indexation label has been created by the government and regulatory authorities to try and explain to members the position of their pension fund, and is set to be launched following delays sparked by the financial crisis.

However, officials at the pensions representative body are concerned that consumers may not understand how it works, what it means or its relevance when many pension funds are not currently paying indexation.

"Pension funds must show their participants a label with at least a minimal indexation for the next 15 years. Yet most schemes are not in a position to grant indexation at all at the moment," said Loek Sibbing, chairman of the OPF, during the body's annual conference yesterday.

"This is impossible to explain and will cause confusion among the schemes' participants," argued the chairman, who described Donner's announcement as "very bad timing".

The pension label - indicating the ‘indexation quality' of pension funds - was initially set to be introduced on 1 January 2009, but was delayed to 1 April.

The deepening credit crisis subsequently forced the Authority Financial Markets (AFM), the watchdog for pension communication, to allow pension funds to inform their participants about the effects of the credit crisis through a letter rather than the indexation label.

According to the OPF chairman, pension funds can now only deviate from the prescribed standard text on the indexation label with approval of the AFM.

"The minister has ruled that the financial position of pension funds has much improved. And although some schemes are already able to compensate for inflation, most pension funds are not that far ahead yet," claimed Sibbing.

The Association of Industry-wide Pension Funds (VB) also has some reservations about introduction of the indexation label in 2010, according to Gert Kloosterboer, spokesman for the body.

"We would like to have had a discussion beforehand with Minister Donner and the AFM on the exact content of the label," said Kloosterboer.

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