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Red tape killing Dutch company schemes - KPMG

NETHERLANDS - Thirty percent of Dutch companies with their own pension schemes are seriously considering abandoning them due to ‘red tape’, says KPMG.

The consulting firm found that almost two-thirds of firms are thinking of appointing an insurer – while the rest are considering linking-up with industry-wide funds.

Researcher Geert van Til has investigated 100 of the 700 companies with an independent pension fund.

Most of the businesses actually want to keep control of the quality of the old-age pension, but the pressure of costs and risks is becoming too much, van Til said.

“They need to spend a disproportionate amount of time applying rules, such as those for corporate governance and the new IFRS.” More red tape, like the rules of the regulator DNB, the new financial assessment framework FTK and the difficult investment market, has made the mood gloomier.

According to van Til, 40% of firms consider the costs of their schemes too high. And to 30% the costs are unacceptable.

Forty percent of the businesses surveyed claim the implementation and asset management of their schemes is too expensive.

Almost 90% of the companies of the inquiry had adjusted their pension funds during the past three years, or indicated they will do so soon, in order to keep the finances under control. Nearly half of the businesses have changed from final to average salary.

“Although companies are paying a lot of attention to the new FTK, several more issues need to be addressed,” van Til said.

“Schemes, finance agreements and investment policy need to be revised in connection with the new reporting rules and the new pensions legislation.

“The index objectives and the reservation policy need to be established. Hardly half of the funds has set out any concrete index ambition for the long term”.

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