Overlap of indexation label supervision "should be avoided" - ABP

(Amended 08/06)

NETHERLANDS - Dutch pension giant ABP says an overlap could arise in the supervision by DNB and AFM of the indexation label.

ABP thinks it is important the regulators work together to ensure no overlaps occur when the Financial Markets Authority (AFM) takes over next year as the superviser charged with deciding how pension funds and insurers communicate their indexation policies to members and clients, via the so-called indexation label.

AFM supervises financial intuitions' behaviour, while the Dutch Central Bank (DNB) takes care of the remaining pension supervision.

Olaf Sleijpen, head of financial and risk policy at the €212bn fund, told IPE: "There is one concrete point where an overlap could arise, and this has to do with the introduction of the indexation label next year."

The indexation label - a translation of various financial calculations which communicates a pension fund's indexation quality - should naturally have a quantitative and a communicative component.

ABP urges the regulators to make solid agreements about these two components over the coming months.

Sleijpen added: "We would have preferred that the supervision on pension funds would have been completely in the hands of the [Dutch Central Bank] DNB, but for efficiency reasons it was chosen not to do this."

ABP stresses it does not oppose the regulatory regime in the Netherlands, as it thinks good supervision is vital to a good pension landscape.

"We do think that in the implementation of the supervision we need to heed that there isn't too much supervision on supervision: the responsibility of observing the rules should be as much as possible with the institutions themselves," added Sleijpen.

AFM tried to reassure the pension sector last month having two watchdogs on pensions should not cause any overlaps in supervision, arguing the covenant it has with DNB is watertight.

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