Communication with participants of pension funds transitioning to Wtp ‘could be better’

Communication with participants of pension funds transitioning to the Future Pensions Act (Wtp) "could be better in some cases," according to the Dutch Authority for the Financial Markets (AFM) head of insurances and pensions, Anne de Groot.

She stressed that the information provided to participants must be "correct, clear, on time and well-balanced," and administrators must avoid creating "unrealistic expectations" for participants.

The new system, which officially came into effect on 1 July 2023, allows funds to adjust investments based on age, helping to increase pension benefits.

Around 11 million participants are expected to transition to Wtp by January 2026, while 235,000 participants have already made the switch.

However, Groot said she thought that the industry might feel the AFM was "setting the bar too high."

"I certainly don't deny that this is a complicated process and requires a lot in terms of process design and administration for pension administrations," she acknowledged.

However, she warned that "communication with participants is an essential and impactful process as pension information is often the only tangible thing participants see when it comes to their pension."

"It is, therefore, important for everyone in the pension industry to start considering participant communications as an essential core process," she urged.

"Take enough time for the design and make sure to implement a careful process with checks and balances. Properly test in advance among groups of participants what is really needed. It involves personal communication, not a generic process."

The comments come after several Dutch pension funds voiced concerns about amendments to the Wtp, proposed by the political parties New Social Contract (NSC) and the Farmer-Citizen Movement (BBB).

In a "critical response," funds including PFZW, ABP, Bouw, PME, and PMT warned that the amendments could undermine the pension system and lead to €18bn in additional costs.

Subsequently, the House of Representatives rejected the amendment, which would have allowed participants to choose whether their current pensions could be transferred to the new pension schemes.

Despite the eventual rejection of the amendment, the impact of these concerns is still being seen, having prompted broader concerns over widespread delays in the shift to the new system, with two Dutch pension funds announcing they were postponing their planned transition last month.

The law currently states that all pension providers must have transitioned by 1 January 2027.

Groot, though, said she was "confident this will work out well."

"We can see that people learn from each other, and that is really nice. We also learn from the conversations we have with the industry. We are becoming smarter, more efficient and better as well, and work more risk-based," she added.



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