NETHERLANDS - VB, the representative body for Dutch industry-wide pension funds, said it will step up its efforts to explain the true value of collective pension arrangements after a survey revealed consumers think costs are much higher than in reality.
A study commissioned by VB suggested Dutch workers have little clue of the actual cost of pensions and the 30% of the workers questioned said they thought they understood the costs but in fact estimated charges as being much higher than they actually were.
According to the survey conducted by Motivaction of almost 600 people of over the age of 25, workers often expected the costs to contribute largely to the bonuses and salaries and people managing their plans.
Gerard Riemen, director of VB, said: “People often tar the whole financial sector with the same brush following the tumult around single premium insurances with excessive commissions.
“But the facts show that industry-wide pension funds only charge 3.5% costs on contributions, whereas many workers estimate it to be tenfold,” he continued.
The VB director referred to a survey commissioned by pensions regulator De Nederlandsche Bank in 2006, which suggested that individual pension arrangements with insurers lose 25.7% of their assets through charges.
Riemen attributed the true low cost of collective agreement pension funds to the benefits of scale as well as the lack of a profit motive.
“Pension fund governors do not do bonuses and they are very watchful of the remuneration policy of their providers,” he argued.
Bram van Els, spokesman for the VB, added: “The financial crisis has seriously dented consumers’ confidence in the financial sector, including the industry-wide pension funds. People do not seem to make a distinction between pension funds and insurers.”
Earlier this year, a study conducted PricewaterhouseCoopers and commissioned by the Dutch Association of Insurers VvV suggested participants in insurance-based pension plans incur average yearly costs of €61 where they are members of collective contracts with between 10,000 and100,000 participants.
Pension funds, on the other hand, charge €98 on average, according to this research.
VB represents 80 industry-wide pension funds, with 4.7 million active participants, 1.2 million pensioners and 6.8 million deferred members, which is approximately 75% of all participants in collective pension schemes.
The members had combined assets of €500bn at the end of 2007.
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