The accountability body (VO) of the €700m pension fund for Dutch dental technicians has blamed the scheme’s low coverage ratio on the “indecisiveness” of former board members. 

In the pension fund’s 2014 annual report, the VO said the previous board’s dithering over the implementation of a strategic interest hedge caused its funding to drop below 94%.

VO chairman Guus Stroot said: “The combined effect of rights cuts and missed indexation means participants have lost 30% of pensions accrual.”

He added that communication between the VO and the former board had been “very difficult”, and claimed that any countervailing power on the board had been “totally absent”.

“The former board blindly followed its asset manager and pensions provider Syntrus Achmea,” he said.

The pension fund’s supervisory council (RvT) agreed that the scheme still lacked a balancing power.

It recommended the pension fund appoint a “fully independent” external adviser and suggested the scheme might need to re-assess its future viability.

Since 2013, the scheme has applied 9% in overall rights cuts.

Stroot said the VO preferred a merger with another pension fund, but he acknowledged that its current low funding made it a relatively unattractive partner.

The former board has been largely replaced, including former chairman Piet Duijndam, who stepped down – partly at the VO’s request, according to Stroot.

The new board, chaired by Ronald Heijn, has launched an extensive recovery plan, focusing on governance, risk management and checks and balances.

Heijn said the scheme would assess its viability annually and stressed that the needs of participants would take precedence over its continuing independence.

He also said a third rights discount was “not yet on the cards”, as the new financial assessment framework (nFTK) allowed pension funds to smooth out cuts over a 10-year period.

Duijndam, the former chairman, dismissed the VO’s criticisms as being “one-sided”.

He pointed out that, 10 years ago, when interest rates were 3%, the board had unanimously decided against applying an interest hedge, “as a further rate decrease was deemed highly unlikely”.

“When rates started to drop,” he said, “we still refrained from hedging, as the cost would have come at the expense of returns. With the wisdom of hindsight, the board would have taken different decisions.”

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