NETHERLANDS - Pension funds should be obliged to disclose their approach to indexation, a report for the Dutch pension institute Netspar finds.

In a report entitled "Efficiency and continuity in pensions: a closer look at the nFTK", authors Coen Teulings and Casper van Ewijk argue while the current system reveals only minimum pensions in nominal figures, what pensioners need to know is exactly how much their benefits will buy.

Despite the introduction last year of the new Pension Law and the new Financial Review Framework (nFTK) the public is still not fully informed about premiums and pension
liabilities and how they might be affected by the economic cycle.

According to the authors, a good pension contract should be independent of inflation and ought to share the positive or negative effects of a pension fund's financial performance between pensioners and its active members.

Teulings and van Ewijk who work for the CPB (Netherlands Bureau for Economic Policy Analysis) - one of the main advisers to the government - believe pension scheme subscribers still are unaware of the risks attached to a pension scheme.

They argue a new system should be added to the nFTK/Pension Law which makes it obligatory for pension funds to indicate their respective approach to indexation.

It is not compulsory in the Netherlands to adjust the purchasing power of pension against inflation.