The Netherlands Authority for the Financial Markets' (AFM) and De Nederlandsche Bank’s (DNB) cost frameworks are to be increased for 2021-2024 due to the transition to the new pension system.

In a letter to the House of Representative and the Senate, Dutch Minister of Finance, Sigrid Kaag, outlined the increase in the cost framework for both organisations.

Pensioen Federatie noted that the increase was mainly due to an expansion of the supervisory tasks required for the transition to the new pension system.

For the AFM, this related to the research into the risk preference of pension holders, the selection guidance of participants, the provision of information during the transition period and communication plans.

Meanwhile, the DNB will need to provide extra supervision for the assessment of entry details and the supervision of implementation plans.

Furthermore, the rise in the cost framework also reflects the management of risk in large-scale adjustments to administration systems and guarantees for data quality.

Pensioen Federatie said that it understood that the transition required additional supervision and therefore additional costs, noting that the pension sector also has an interest in a successful transition to the new system.

However, the federation said it was surprised that Kaag had decided to introduce an amendment to the cost framework without exploring partial government contribution, as the size of the increase is expected to be around €20m for 2023/24 and more than €20m for 2025/26.

“By allowing all increases to be reflected in the cost frameworks, this means that the implementation costs for the pension funds will increase considerably in the coming years due to the sharp rise in supervisory costs,” it stated.

“These costs are ultimately reflected in the participant's pension.”

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