Value transfer communication needs improving - AFM
NETHERLANDS - The Dutch Financial Markets Authority (AFM) has warned pension providers need to improve their communications to individuals about pension participants' rights when they move jobs.
An employee is entitled to transfer the value of his pension rights to the new pension provider when moving jobs, however, such a decision can have a big impact on the worker's ultimate pension because of differences between schemes.
Over 400,000 workers change jobs every year in the Netherlands. Yet a survey commissioned by the AFM has found over one-third of the job movers questioned indicated they have not been pro-actively informed by either their old or new pensions provider about the right to move their pension entitlements.
The researchers noted it is plausible that quite a few respondents have not noticed or ignored provided information.
On the other hand, almost two-thirds of the 643 workers surveyed have indicated the pension consequences of their job move have been made clear, with a large majority being (very) satisfied.
In this case, the researchers also put the high satisfaction rate into perspective, by suggesting indifference and unfamiliarity of the subject might be the main cause.
One-third of job movers said they have requested they move their pension entitlements, and three-quarters of this group do so because they can place their pension claims with one provider, the survey suggested.
That said, workers who decide to move their pension rights are unlikely to base their decision on the quality of a scheme, speculated researchers, and attribute this phenomenon to ‘limited intake of pension information as well as low knowledge' among employees.
The survey also found 11% of employees changing jobs refrained from moving their pension rights because of the ‘trusted reputation' of the pension provider to the employer they were leaving.
"By improving a workers' awareness of their own responsibility, as well as further tuning the information on value transfer to workers' needs, their decision can become a more conscious choice," the AFM said.
The regulator suggested the additional information could be incorporated in the compulsory letters an employee receives when starting and leaving a job, as well as in the regular updates on indexation.
The AFM is currently carrying out an analysis of how pension providers deliver information on value transfer available to their participants.