Dutch pension funds risk losing younger generations' trust – AFM

NETHERLANDS - Dutch pension funds could lose the trust of younger generations unless they do more to educate participants of the risks to their future pensions, the AFM has warned.

Speaking at a symposium organised by Pensioen Bestuur & Management, Ronald Gerritse, chairman at the communications watchdog, argued for the introduction of an extensive digital facility showing “all relevant financial information for old age”.

This ‘pensions dashboard’, he said, should be built on the current pension register, which provides information about accrued rights for the state pension AOW and pensions in the second pillar.

Gerritse said the register should also indicate accrued pension rights in the third pillar.

He also argued that the periodically issued uniform pension statement (UPO) should be included in the digital platform, but extended with information about the effects of ‘good and bad weather’ scenarios.

“Currently,” he said, “the UPO seems to provide more facts than it actually does.”

Gerritse said pension funds’ participants must also be offered help in assessing the provided financial information.

The AFM chairman recommended addressing the objections of younger generations by introducing third-pillar arrangements for part of the salary, and providing access to second-pillar schemes to self-employed workers without staff (zzp’ers).

He also called for increased simplicity and efficiency within the pensions sector, including the reduction of transitional rules and exceptions.

“Currently, there are many pensions providers carrying out many similar arrangements,” he said.

Most symposium attendees agreed that participants’ risk appetite should play a role in a pension fund’s investment policy - provided they were aware of the possible effects of their decisions.

A sizeable majority also agreed that a pension fund’s board should combine internal and external experts.

Benne van Popta - chairman of the Association of Industry-wide Pension Funds and the €42bn metal scheme PMT - underlined the importance of the social partners providing sufficient expertise for the boards.