Pension insurance companies still do not implement their duty of care in a sufficient manner with respect to contribution agreements with investment freedom. The drawing up of client profiles and the advice provided to participants have to improve in particular. In addition, nearly half of the 31 pension insurance companies do not send out the Uniform Pension Statements (UPO's) within the statutory term. This is evident from the self assessment among pension insurance companies carried out by the Netherlands Authority for the Financial Markets (AFM) this year for the second time, following the initial measurement in 2007. The AFM will shortly approach the pension insurance companies that were discovered to be in default for further investigation, following which formal measures may follow. The UPO must be sent in the third quarter as of 2009.Duty of care: improvement possible and necessary
A total of 31 pension insurance companies filled in the online questionnaire. A duty of care applies to 15 pension insurance companies. The joint average score with respect to the duty of care of these 15 pension insurance companies is 64%. The target is a score of 100%; the average score of 64% therefore shows that there is still room for improvement as regards compliance with the statutory requirements. The drawing up of client profiles and the advice provided to participants have to improve in particular. The AFM may take formal measures, following additional investigation, against pension insurance companies that do not implement their duty of care properly. The duty of care applies if pension insurance companies offer their participants a contribution agreement with (some degree of) freedom of investment for the participant. In such cases, the pension insurance company will be obliged to assist the participant in its choice, inter alia by drawing up client profile, providing advice and monitoring over time.
The 15 insurance companies received a total individual score, on the basis of the answers they provided, for the manner in which they implement their duty of care. These scores are weighted averages, and they can lie between 0% (does not in any way act in compliance with pension legislation) and 100% (acts completely in compliance with pension legislation).
Timely UPO provision
Pension legislation provides that pension administrators are obliged to send the UPO to the participant each year, and that they are required to provide the UPO in a 'timely' manner. 17 of the 31 pension insurance companies did not send any, or not all, 2008 UPO's on time. 6 of these 17 pension insurance companies failed to send more than half of the 2008 UPO's on time. The AFM will shortly approach these pension insurance companies as well for further investigation, following which formal measures may be implemented.
The UPO is one of the most important means of communication regarding the pension. It informs participants annually of the pension entitlements accrued by them, and shows the amount the participant should expect in various situations. The AFM recently elaborated the open term 'timely' by means of a policy rule. While sending UPO's in the fourth quarter was still considered 'timely' in 2008, the pension administration will be obliged in 2009 to send the UPO in the third quarter of the relevant year at the latest. The AFM will investigate whether all pension administrators send the UPO in a timely fashion, and take measures if necessary.
The AFM encourages all participants to carefully read their UPO each year and to consider whether it is necessary to arrange for additional pension. The AFM also calls on participants to demand their UPO's if they have not received one.
Concerning the self assessment
The self assessment is an online questionnaire all pension insurance companies fill in each year. It provides pension insurance companies with insight into the extent to which they comply with the requirements of pension legislation and points out any points for improvement. In addition, the self assessment enables the AFM to structure its supervision in a risk-based manner. Separate self assessments for pension insurance companies and pension funds have been set up this year for the first time. All pension insurance companies have since received individual feedback on their own results.
The AFM promotes fairness and transparency within financial markets. We are the independent supervisory authority for the savings, lending, investment and insurance markets. The AFM promotes the conscientious provision of financial services to consumers and supervises the honest and efficient operation of the capital markets. Our aim is to improve consumers’ and the business sector’s confidence in the financial markets, both in the Netherlands and abroad. In performing this task the AFM contributes to the prosperity and economic reputation of the Netherlands.
The AFM is committed to promoting fair and transparent financial markets.
As an independent market conduct authority, we contribute to a sustainable financial system and prosperity in the Netherlands.