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Complexity of pensions leads to errors in UPO's and uncertainty for consumers

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The Netherlands Authority for the Financial Markets (AFM) calls on trade unions and the employers' organisations to simplify existing and new pension schemes, and to avoid transitional and exception schemes as much as possible. Simplification will allow pension funds to provide understandable information to current and former participants and those entitled to pension. Simplification will also lead to a reduction in costs and will make it easier to administer pensions.

This appeal follows the publication of the AFM report of its investigation into the accuracy of the information provided in the 2008 UPO. This investigation shows that the complexity of pension schemes leads to errors in the Uniform Pension Overview (UPO) and uncertainty among consumers. It is confusing for them, for example, if various exception or transitional schemes are not clearly stated in the UPO, or if different reference dates are used for calculations.

The AFM assessed, inter alia, whether the amount to be reached in old-age pension has been calculated correctly by the pension funds in the UPO 2008. For this purpose, the AFM assumed the amounts of the 2007 UPO, and calculated these on for the 2008 UPO on the basis of the relevant pension scheme. The AFM observed that the calculations of the pension funds showed minor deviations from the AFM's calculations (with the exception of a single observation at a particular pension fund, which involved a significant deviation).

The AFM investigation nevertheless shows that at 29% of the investigated pension funds the 2008 UPO contained errors. Deviations resulting from unclear or outdated texts of the pension regulations were observed at 13% of the investigated pension funds. The nature of the errors varies, and concerns, for example, incorrect processing of supplements. The AFM urges pension administrators to regularly check the accuracy of UPO details, and to investigate whether these are in accordance with the pension regulations.

The complexity of pension schemes leads to problems among specific groups. For example, a quarter of the participants who are unable to work did not receive the 2008 UPO, or received it too late. The complex administration and separate status of this group within a pension scheme require that pension administrators devote special attention to communication with this group of participants.

The UPO is based on the model prescribed by law. None of the funds investigated followed the model, with its related explanation, without error. A relatively large number of deviations from the UPO model were observed at 42% of the funds. This concerns a failure to include, or to include in full, the compulsory standard information and transitional schemes. The pension umbrella organisations and the Dutch Association of Insurers have since started a project to simplify the UPO model and to increase its clarity. It is expected that the new UPO model will be introduced in 2012.

The AFM selected 31 pension funds for its investigation, whereby a conscious choice was made to investigate large, medium-sized and small funds as well. Together, these funds administer the pensions of approximately 3.6 million active participants, which is 63% of the total number of active participants. This concerns company pension funds, sectoral pension funds and occupational pension funds. During its investigation, the AFM collaborated with De Nederlandsche Bank (DNB), as imperfections in the UPO can sometimes be traced back to problems in administration. The AFM reported the findings of its investigation to DNB with respect to institutions where it discovered these problems.


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.

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