On 30 December 2011, the Netherlands Authority for the Financial Markets (AFM) imposed an administrative fine of €200,000 on Generali. This fine was imposed because in 2009 and 2010 Generali issued termination letters that lacked the information prescribed by law.
This means that Generali violated Article 39(1) of the Pensions Act. This act requires pension administrators, upon termination of participation in a pension contract, to provide exiting participants with a statement of accrued pension entitlements and information concerning, inter alia, value transfer, granting of supplements, the consequences of incapacity for work and the cancellation of coverage against mortality risk.
The AFM investigated a large Generali pension contract. The investigation showed that in 2009 and 2010 Generali upon termination only sent a statement of changes to the exiting participants. This statement of changes only contained a statement of the accrued pension entitlements. Providing information concerning the other components (value transfer, granting of supplements, coverage of mortality risk and disability for work) is important upon termination of participation, in order to enable participants to make well-considered choices concerning their financial situation.
Pursuant to the AFM's findings, Generali did later provide the relevant participants in the investigated pension contract with the information prescribed by law. It also offered to compensate the loss that may have been incurred to the relevant participants to the extent it is established that Generali is responsible for said loss.
The basic amount for violation of Article 39 of the Pensions Act is €500,000. When determining the amount of the fine, the AFM took into account in its consideration the seriousness and duration of the violation, culpability and financial capacity of Generali.
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).
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As an independent market conduct authority, we contribute to a sustainable financial system and prosperity in the Netherlands.