The AFM imposes an administrative fine on the Bikudak pension fund for failing to provide clear and understandable information


On 27 December 2011, the Netherlands Authority for the Financial Markets (AFM) imposed an administrative fine of €4,687 on Stichting Bedrijfstakpensioenfonds voor de Bitumineuze en Kunststof Dakbedekkingbedrijven (Bikudak). This fine was imposed because Bikudak failed to provide participants with understandable and clear information concerning the accrued pension entitlements in the Uniform Pension Overview concerning the year 2008 (UPO 2009). The AFM examined five 2009 UPO's.

The Bikudak pension regulations contained the regulation that pension entitlements only arose if the pension premium had been paid by the employer. In the 2009 UPO, Bikudak combined information concerning an employer's payment arrears in a single factor with information concerning the length of the employee's employment (full time, part time, unpaid leave). Combining both of these types of information into a single factor meant that in various cases the UPO was not understandable or clear.

According to Bikudak's pension regulations, an employee can submit a request for crediting pension entitlements to Bikudak, if no premium had been paid through no fault of the employee. For this purpose, an employee had to demonstrate the existence of the employment and the amount of his entitlements arising from this employment 'to the satisfaction' of the Bikudak board. As this option was not pointed out in the 2009 UPO or the explanation to it, the 2009 UPO was not clear or understandable in this respect either. The option of submitting a request was of great interest to employees in order to ensure that their pension entitlements were not affected.

This means that Bikudak violated Article 38(1) in conjunction with Article 48(1) of the Pensions Act. This act obliges pension administrators to provide a UPO each year, and to use clear and understandable language in it.

The explanation to the Pensions Act indicates that a pension fund is not allowed to make a right to pension dependent on the question of whether the premium has been paid. As Bikudak made the right to pension in the case of unpaid pension premiums dependent on an employee's request for crediting, it was extremely important that Bikudak, within the context of the accrued pension entitlements, also provided clear and understandable information concerning unpaid pension premiums and concerning option of a request for crediting.

Bikudak cancelled the rule that, in the event of unpaid pension premiums, the employee has to submit a request for crediting, with retroactive effect to 1 January 2007. Crediting entitlements now takes place as soon as the premium due becomes definitively uncollectable.

The basic amount of a fine for the violation observed is €500,000. The AFM has mitigated this amount on the basis of the size of the company and the seriousness of the violation. Moreover, the AFM has mitigated the amount of the fine in order to limit the damage for participants.

Interested parties can submit the AFM's decision to the competent court for review.

If you have any questions or comments you can contact the Financial Markets Information Line on: 0800-5400 540 (free of charge).

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.

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