The Dutch finance ministry also created a new watchdog recently. As of 2002, the Authority Financial Markets (AFM) - the successor of the regulator for stock transactions SDE - is checking the behaviour of the players in savings, lending, investment and insurance, including the pension funds.
The AFM’s supervision on pension funds so far has been aimed at preventing conflicts of interest at stock transactions, private transactions of staff and board and how price-sensitive information is being dealt with. It has also been checking that these rules are applied within the administration and the internal control of institutions. Since September 2004, the AFM keeps an eye on share dealings of pension schemes as well.
The relatively limited involvement in the pensions industry will change however considerably, as soon as the new pension bill comes into force. In the present concept of the bill, the AFM has been destined to become the supervisor on transparency and communication.
The position of most of the players within the industry is to wait and see how the new watchdog will manifest itself. Hardly any clear-cut opinions are yet to be heard.
According to Roland van den Brink, chairman of the Actuarial Society, and CIO/investment director of the industry-wide pension fund for Metal and Electrotechnical Engineering Industry (PME), it’s still too early day for a proper assessment of the effects of the split in regulatory tasks. “Apart from the AFM’s existing task of checking behavioural issues, nobody within the industry has had any experiences yet with its new supervisory role on communication,” he says.
The Dutch Association of Industry-wide Pension Funds VB, still doesn’t like the phenomenon of two regulators. “The split in supervisory tasks is an unholy choice, because we fear that both regulators will interfere on the indexation promises of the pension funds to their members”, stresses director Peter Borgdorff. “We don’t want to have discussions on the issue with both regulators.”
“The total supervision should have been left at DNB,” says the director of VB, which represents three-quarters of the assets within the Dutch pensions industry. “That’s why our political lobby is fully aimed at keeping the AFM out of the pensions sector “
The AFM has already cast its shadow ahead. “Pensions are nearly the most important financial product. Our demands to transparency and the level of information have gone up steeply during the recent years,” reiterated AFM’s chairman Arthur Docters van Leeuwen last autumn, during speeches made to representatives of the pensions industry.
“We will monitor if the information given by pension funds and insurers is correct and timely, and both understandable and available for all their clients: active members, pensioners, deferred and surviving relatives.”
Docters van Leeuwen indicated that the AFM’s judgement will depend on the views of DNB, with which it has a covenant for co-operation. “There is quite a leap forward to be made on communication,” he told his audiences. “The average Dutchman is really struggling in understanding his annual statement”. According to Docters van Leeuwen, the new uniform statement is a step in the right direction, “but to me it is only a part of the issue”.
“We are investing enormously in education and in the transition of standards by consultation, and we offer self-assessment,” Docters van Leeuwen - the former head of the former Dutch national security service BVD - announced. “If there isn’t any malicious intent, we’ll warn first. But we won’t tolerate irregularities, and we will act decisively against malefactors.”
(See page 22)

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