NETHERLANDS – The VB Dutch Association for Industry-wide Pension Funds has called for all Dutch pension funds and insurance companies managing pension assets to be made to compare their performance against a Z-score type benchmark.

Speaking at a Rome conference today, Frans Prins, director of the VB, said that such a homogenous test would ensure that employers, which may quit the compulsory industry-wide schemes next year should they underperform the Z-score, would be able to compare exactly the performance of other pension arrangements.
“To be able to compare all of the funds we think it is necessary to make the Z-score compulsory for all funds and insurance companies.
“ Now that the employers know the Z-score of the compulsory industry-wide pension fund, they will perhaps want to leave.
“ They do not know the Z-score of the pension fund or insurance company they are considering joining,” commented Prins.

Prins also added that he felt the level of premiums and the quality of the industry-wide schemes could be retaining factors in whether employers do actually take their leave should the possibility arise.
“ The premiums payable to insurers for a pension scheme are generally higher compared to the premiums for a pension fund. Therefore a poor Z-score will not be of overriding importance.”

And he adds that the implementation of the exemption scheme by industry-wide pension funds goes to show that ‘compulsion’ and ‘market effect’ do not have to be opposing processes in pension funds.
“ With the exemption schemes, the legislator has worked out a new balance between these two factors. Compulsory action is being applied but not at the expense of everything else.”

“ At present a compulsory participation in a pension arrangement is no longer considered by everybody as a proper instrument for realising broad-based solidarity between the generations, healthy and less healthy people and between the sexes.
Adds: “Mind you, only last year the system of compulsory schemes was confirmed by the Dutch legislator.