The Dutch Federation of Pension Funds (Pensioenfederatie) has called for clarity about the implementation of the laws and regulations surrounding the Future Pensions Act (Wtp).

The federation has sent an extensive letter to the Ministry of Social Affairs and Employment (SZW) after it asked the federation to identify and share experiences of frontrunners transferring to the new Dutch system.

The letter focused on five key issues that the federation has identified for the transition. This includes clarity on legislation and regulation, the large volume of questions from the regulator De Nederlandsche Bank (DNB), experiences with lead times and the capacity required, transition communication and 10 valuable lessons from the ongoing transition.

Currently, three funds have transitioned to the new pension system, and the federation said that during the development of their implementation plans, the need for clarification or further elaboration of laws and regulations became apparent.

“Some provisions were interpreted differently by the industry and supervisors. Forerunners had to discover in practice what requirements supervisors were setting in the interpretation of certain open standards, such as the determination of the risk attitude and the substantiation of the balance of the transition,” the letter stated.

It has therefore called for clarity about the interpretation of laws and regulations but acknowledged the consultations between the pension sector, DNB and SZW on several areas of ambiguity.

Specifically, areas of clarity needed concern the spreading of shocks and equal adjustment of benefits in the solidarity-based contribution scheme, application of the standard rule when saving capital from contribution agreements for funds with hybrid schemes (both benefit and contribution agreements), possibilities for adjusting the strategic investment policy after transition, the use of the solidarity and risk-sharing reserves and the requirements for the cost provision.

It also noted that the first three funds faced many additional questions from DNB and had to carry out many additional quantitative analyses after submitting their
implementation plans in order to substantiate the balance of the transition and
coordinate with social partners and fund bodies.

In relation to time and capacity, the federation said DNB’s contact was “unpredictable” for frontrunners and made things difficult to plan.

“Sometimes it took a long time for DNB to decide on something and/or there were technical constraints on the DNB side that required additional lead time. For the first three frontrunners, the process demanded a lot from the availability and flexibility of administrators and staff,” the letter stated.

“In this, it is important to maintain good contact with DNB both at the expert level and at the decision-making level as a fund. This allows for faster switching and an earlier insight into which aspects have priority for DNB.”

Commenting, Dutch Federation of Pension Funds chair, Ger Jaarsma, said: "In the new system, we retain the strong elements of our current system, such as mandatory joint pension accrual, risk sharing and lifelong pensions. At the same time, we are making improvements to make the system better suited to the changing labour market."

Jaarsma added that such changes can create uncertainty and resistance among some stakeholders.

"This is why open and transparent communication is key, as is the involvement of all stakeholders and sufficient flexibility. It is an intensive process, but in the end everything has to be right."

In addition, perhaps in reference to the recent proposal from NSC on the Wtp, the federation called for “peace and quiet” for the pensions sector to successfully undertake the transition.

As part of this, it called for “consistent and stable policy from government and regulators” so that “no new complexities are added to the legislation that
disrupt the transition”. This, it said, will allow pension funds, administrators and other stakeholders to “work with full focus” on the transition.

Jaarsma added: "Consistent and stable policies from government and regulators are essential. This also applies to political policies. It is crucial that no new complexities are added to legislation that could disrupt the transition. Only then can pension funds, administrators and other stakeholders fully focus on a careful and proper transition to the revamped system for millions of working and retired people."

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