THE NETHERLANDS - The Dutch pensions sector has welcomed Social Affairs' minister Aart Jan de Geus' promise, that he is willing to examine the issue of the double supervision of pension funds.

Based on the new Pensions Act, which took effect as of 1 January this year, the Authority Financial Markets (AFM) has been tasked with supervising behaviour, which will focus on transparency and communication. This is in addition to the operations of the watchdog De Nederlandsche Bank, which checks solvency and financial strength of schemes.

Parliament had asked the government for an evaluation two years after the Pensions Act has come into force. This is instead of the envisaged period of five years for a general evaluation of the act.

The review on the supervision will be carried out by the Inspectorate Work and Income, De Geus announced.

"Although we have accepted the decision of parliament to go along with the double supervision, we are still not happy with two regulators," commented Peter Borgdorff, director of the Dutch Association of Industry-wide Pension Funds VB, which represents three-quarters of the assets within the pensions industry.

"We still fear that, for example, both regulators will interfere on the indexation promises of the pension funds to their members. We don't want to have discussions on the issue with both regulators".

At the moment, VB is working with the AFM to help fine-tuning its supervision, Borgdorff indicated.

Frans Prins, director of the Foundation of Dutch Company Funds OPF, is also pleased with De Geus' promise. "The evaluation on the supervision will be three years earlier than the planned general evaluation of the Pensions Act, and that is our gain," he said.

"Although our first experiences with the AFM are positive, in order to prevent problems on tuning and extra costs, we still think that DNB should be the only supervisor," Prins  said, agreeing with Borgdorff.

"De Geus decision is very sensible," commented spokesman Hans ten Brinke of the €209bn civil service pension fund ABP. "We are still afraid that the double supervision will cause extra costs and ongoing uncertainty on the exact tasks of DNB and AFM." According to Ten Brinke, it is still unclear how the AFM's supervision will be carried out.

"We haven't supported double supervision either. But it had become a fact with the Pensions Act, and we will act accordingly," Hans van der Windt, pensions director of the €20.5bn industry-wide pension fund for Metal and Electrotechnical Engineering Industry PME, responded. "It is good that there will be an evaluation after two years."

"Although limited so far, our experiences with the AFM are positive. The AFM is seriously familiarising itself with the pensions sector, and is taking its specific characteristics into account."

The AFM's initial supervision on pension funds had mainly been aimed at preventing conflicts of interest at stock transactions, private transactions of staff and board and how price-sensitive information is being dealt with. The AFM has also been checking that these rules are applied within the administration and the internal control of institutions.

According to AFM's chairman, Arthur Docters  van Leeuwen, his organisation's judgement will depend on the views of  DNB, with which it has a covenant for cooperation.