Pension regulator DNB is planning to give Dutch pension funds the opportunity to get approval for their defined contribution (DC) transition plan in three separate stages. This so-called partial assessment should make for a smoother and speedier move to the new pension system, which will gradually come into force between 2025 and 2028.
The partial assessment involves pension funds submitting specific parts of their DC transition plan to DNB once the decision-making process has been completed.
The three topics covered by the partial assessment procedure are: i) the determination of risk appetite; ii) the design of the new DC pension arrangement; and iii) the assurance of admin data quality prior to the transition.
The main rationale behind the introduction of the partial assessment procedure is that it can make the transition a more smooth and speedier affair, according to Cindy van Oorschot, director of pension supervision at DNB.
“Funds will receive preliminary approval from us on the issue at an early stage. It will also give funds time to make adjustments on the basis of our findings, should this be necessary,” she said.
In principle, the overall assessment of a pension fund’s transition plan will be based on the outcomes of the partial assessments already made.
According to Van Oorschot, DNB can reconsider a partial assessment “in case of changes in applicable laws and regulations or new jurisprudence” or if it turns out afterwards that incorrect or incomplete information was provided by the pension fund.
DNB will actively approach pension funds once they are ready to undergo a partial assessment. In addition, funds can also volunteer to be part of a partial assessment procedure.
Several pension funds confirmed their interest in divvying up their pension transition process to IPE. One of these is Pensioenfonds Openbare Bibliotheken, the pension scheme for librarians which is scheduled to be one of the first pension funds to make the move to the new system on 1 January 2025.
“I think we would certainly like to use this opportunity, depending on the schedule and conditions that DNB attaches to it,” said president Margreet Teunissen.
The Dutch Pension Federation also expects there to be “appetite” among pension funds to make use of the partial assessment procedure. In this way, for example, they can reduce the risk of having to take steps back and redo calculations in the entry process, according to a spokesperson.
“A partial assessment by DNB also prevents funds from finding themselves in protracted periods of uncertainty. It can also help spread the workload, both for the funds in question and for DNB,” the spokesperson added.