Dutch schemes must decide on targets, risk and premiums – Federation

Dutch companies and employees must be allowed to choose the right balance between pensions targets, investment risks and contributions, the Pensions Federation has argued.

Speaking at the federation’s annual congress, chairman Kick van der Pol stressed that the sector wanted to improve the stability of both contributions and liabilities.

But he decried the fact that, in initial proposals for a real pensions contract, pension funds had to invest “prudently” while at the same time providing full indexation.

In the federation’s opinion, this is “impossible”.

In a message ostensibly directed towards Jetta Klijnsma – state secretary for the Ministry of Social Affairs, who is currently elaborating a financial assessment framework (FTK) based on a single hybrid pension contract – Van der Pol compared the government’s previous versions of the FTK with “a shoe shop without the right shoe sizes”.

He also lamented the “contradictory” goals of politicians, who have demanded both an increase in contributions to improve financial buffers and lower premiums, due to the expected reduction of tax-friendly pensions accrual.

In the chairman’s opinion, pensions communication should focus on explaining risks to participants rather than on underlining certainties.

“We must make clear that taking investment risks generates a much better pension than risk-free investment,” he said.

Van der Pol also announced that the Pensions Federation’s three constituent organisations – the Association of Industry-wide Pensions Funds (VB), the Foundation for Company Schemes (OPF) and the Union for Occupational Pensions Funds (UvB) – would merge fully into a single lobbying body on 1 January.

“By offering pension funds the option of becoming a direct member of the federation,” he said, “we expect to increase both their involvement and our influence.”

He added that the federation hoped the change would help regain the trust of participants.

Surveys have shown that pension-fund participants currently have more faith in banks and insurers than in pension funds.