NETHERLANDS - The way the Dutch pension supervisor De Nederlandsche Bank (DNB) has implemented the financial assessment framework FTK has been "lousy", according to economist Sweder van Wijnbergen.

Van Wijnbergen made his remark during a hearing of the parliamentary select committee for social affairs about the financial position of pension funds, adding that the DNB's approach was exhibiting "problems of competence".

During the hearing, the DNB said it saw no reason to adjust FTK steering rules for pension funds' coverage ratios, which change continually due to the volatility of long-term interest rates, the criterion for discounting liabilities.

Joanne Kellerman, pensions director at the DNB, said: "The FTK already offers sufficient policy leeway on this, and they don't have to act by following the situation on a daily basis."

Kellerman responded to a remark made by Dick Sluimers, chief executive at the €250bn asset manager and pensions provider APG, who compared pension funds to "a giant tanker that must be steered like a speedboat".

She further stressed that 'hard' pension rights needed to be discounted against a risk-free interest rate and that this did not have to be the volatile swap curve.

However, she noted that the DNB's own investment experts had stated that the swap market had not been disrupted, contrary to macroeconomist Roel Beetsma's suggestion.

Kellerman also argued there was no evidence that demand from Dutch pension funds had lead to low swap rates.

She said that, despite inevitable benefits cuts at a small number of schemes, it was too early to establish whether a large group of schemes must apply a discount on 1 April 2012.

She added that the situation could still change, as recovery plans needed to be evaluated twice next year, and that there would be new pension contracts, as well as an updated FTK.
 

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