NETHERLANDS - Social Affairs' minister Piet Hein Donner has decided to go ahead with the present design of the indexation label, despite broad criticism from the pension funds about its clarity.

"It is possible to introduce the label as of 1 July, and make it mandatory in the communication to pension funds' participants as of 1 January 2009," Donner said in a letter to parliament, while adding there will be an evaluation of its effectiveness in 2011.

The indexation label - an initiative from parliament - is intended to provide consumers clarity about future pensions' indexation, but pensions officials have noted early testing found it has not achieved its objectives and it was thought the industry would be given an opportunity to propose an alternative design.

The three pension fund associations - VB, OPF and UvB - will consider a joint response, Leny van der Heiden, acting director of VB told IPE.

"We are not happy with Donner's decision," stressed Van der Heiden,

Earlier this week, VB's employees' chairman Willem Noordman announced VB has hired a specialist bureau to design a better alternative for the indexation label.

The present label design contains a boat floating in high or low waters, depending on the status of a pension scheme's funding. However, a survey of users has revealed the set up is too difficult to understand for a large number of schemes' participants.

"The label should not be introduced as it is," commented Frans Prins, director of OPF, last month.

"The present draft does not provide clarity on the difference between the scheme as a whole and indexation. Based on the label, a quarter of the surveyed participants would make a wrong decision," he explained.

Pension negotiator Chris Driessen of the large union FNV and liberal party VVD's MP Stef Blok indicated he would rather the government went ahead with a less than perfect indexation label, and improve it afterwards.

Hennie Zoontjes, spokesman of the Dutch Association of Insurers (VvV), made clear his organisation will cooperate in implementing the current design.

In his latest letter, Donner acknowledged the indexation label is complicated because of the requirements set by parliament. "However, a simplified design will come at the expense of the informative value," he stated.

Based on the survey, the minister concluded the clarity of the current label increases if it is being communicated within a context. "And the plan is to integrate the label with the uniform pension statement," he said.

If you have any comments you would like to add to this or any other story, contact Julie Henderson on + 44 (0)20 7261 4602 or email julie.henderson@ipe.com

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