15/04/2011
By Ilonka Oudenampsen
Following the news earlier this week that many pension funds are not aware of their full asset management costs, the Dutch Government has demanded greater cost transparency, threatening legislation if this doesn’t happen quickly enough.
On Tuesday, the Financial Markets Authority (FMA) announced the results of their exploratory survey into the costs of pension funds’ investment policies. It revealed that the actual costs pension funds make for their asset management is on average two to three times higher than is disclosed in their annual reports. According to the FMA, this adds up to €1.5 to €3 billion of unreported management costs a year.
In a letter to daily paper NRC Handelsblad, a majority of politicians said that these amounts are bigger than the annual indexation and pension discounts of pensioners combined. These have not been paid out since the crisis due to low funding levels. The Government believes that the funds should annually report on how much their investments cost, as the Netherlands has a pension pot of over €800 billion.
The politicians want the funds to provide clarification in the pension overview which every member receives each year. Many employees are obliged to enrol into a pension scheme and therefore have the right to know what happens with their money, they said.
At the end of March, experts told the Government in a hearing that the costs are not made by the pension funds themselves, but by the investment funds and asset managers to which they have delegated tasks.
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