The Dutch Pension Federation has stated that it wants to have a legal review on the Netherlands Authority for the Financial Markets’ (AFM) conclusion that pension funds’ communications on pension increases were insufficient.

In anticipation of the transition to the new pension system, new rules to make indexing possible at a lower funding ratio of 105 per cent were introduced for pension funds.

Many pension funds took advantage of this to lessen the impact of the increased prices on their members.

The rules stated that pension funds must make the effects of the increase on different generations transparent to all members.

The Pension Federation said it considered it important for members to receive information about the effects of the pension increase on each generation.

If pensions are increased, the capital decreases, which has an effect on future rises and on the fund’s capital for future generations.

The Pension Federation said that that vast majority of pension funds had made this effect clearly visible.

However, the AFM believed that this had not happened sufficiently for several pension funds, because it had not been explicitly stated that the decision has negative as well as positive effects.

The Pension Federation said it was “surprised” by this conclusion and that it wanted to have a legal review as to whether the AFM’s interpretation was in line with what is described in the rules about providing insight into the effects of pension increases.

“The Pension Federation is also surprised about the process, in which there was no adversarial hearing and in which there is no possibility of objection,” the federation stated.

“This leads to a lack of clarity among some pension fund managers about the nature of the AFM's objections.

“The Pension Federation considers it important that there is a clear statement that a pension fund must adhere to in its communication.”

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