NETHERLANDS - Reinsured pension schemes with a shortfall caused by credit risk at a reinsurer are not required to submit a recovery plan before 1 April 2010, the pension regulator De Nederlandsche Bank has announced.

DNB said in a letter to the schemes that the same goes for any extension to recovery plans which have already been submitted, as least where there are reinsured liabilities involved.

Moreover, the pension supervisor said it will allow reinsured schemes to keep on making decisions this year on, for example on indexation and value transfers, as though they are not carrying a shortfall on the reinsured element of their liabilities and related to credit risk.

According to DNB, the ministry of social affairs will, in cooperation with the regulator and the pensions sector - including the Dutch Association of Insurers (VvV) and the Labour Foundation (Star) - develop a policy on the risks for reinsured pension funds.

The pension watchdog advised pension funds earlier this year that they can opt for a tailor-made approach through, for example, a temporary exemption on parts of a recovery plan where it is aimed at the reinsured risks of its liabilities.

However, DNB stressed that schemes which have only parts of their risks reinsured are still required to submit a recovery plan on the non-reinsured liabilities.

"The credit risk has risen substantially within a short period, exposing reinsured schemes to a potential funding shortfall," said DNB in April.

A DNB spokesman today said approximately 200 Dutch pension funds have their liabilities fully or in part reinsured.

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