The Dutch Pension Federation has issued its response to De Nederlandsche Bank’s (DNB) consultation on its draft policy statements for the Future Pensions Act.

In its response, the federation highlighted the need for a good balance between DNB properly supervising the transition to the new system and leaving pension fund boards sufficient room to make decisions that are best for their members.

Looking primarily at the impact on implementation and the scope that pension funds have to actually manage, the federation warned that some of the proposals in the draft policy statements could be too granular and may not do justice to the responsibility of pension fund boards.

It stated that the broad interpretation of the possibility to prohibit encashment was at odds with DNB’s intention to assess reviews of the balanced consideration of interests procedurally and marginally.

According to the policy statement, encashment could be prohibited if some of the participants, former members, other beneficiaries and the employer did not feel they can be represented, despite all other requirements being met.

The Pension Federation also urged DNB not to ask for more substantiation than was required by law, warning that the draft version of the policy statement required too many calculations and was too granular.

“This required accountability is not conductive to the needed comprehensive analysis and jeopardises the timely completion of the transition,” it stated.

Later in its response, the federation expressed doubts as to whether the measures of benefit volatility during the retirement period and long-term risk were fit for purpose.

It called for the policy instruments to be considered in conjunction with one another when assessing whether the financial design fits the attitude to risk, and for the adjustment of the risk instrument or other policy instruments to be possible if the strategy no longer meets the chosen risk criteria.

Furthermore, the federation called for an alternative proposal for monitoring interest rate risk protection, noting that it thought the interpretation of the direct and indirect method of allocating protection returns in the policy statement was “unnecessarily restrictive”.

On the proposal for DNB to have the option of extending the six-month review period, the Pension Federation said this should only be possible in exceptional circumstances.

“If DNB unexpectedly needs more time for the review, it may turn out at the last minute that incorporation has to be postponed,” it said.

“This is not workable. The Pension Federation therefore advocates a description of the process at DNB, the introduction of final deadlines and clear criteria for an appeal for extension.”

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