“We are critical, but we also feel responsible

The Dutch Central Bank (DNB) is working at full speed. The supervisory authority is currently reviewing the transition plans of around thirty funds. DNB’s focus is primarily on the balance and substantiation of the plans. “You only get one chance to do this, so it has to be right the first time,” says Jochem Dijckmeester, division director of Pension Fund Supervision at DNB.

The pension sector has numerous stakeholders, including social partners, administrators, politicians, and regulators. What is their specific role, how do they view the sector, and how are they seeing and responding to the new system? In the Krachtenveld (Force Field) column, the parties tell their stories.

At present, DNB’s Pension Fund Supervision division, with its 150 employees, is fully focused on the Future of Pensions Act (Wtp). “The Wtp requires flexibility not only within our division, but also across the entire bank. For example, 35 colleagues from other departments, including legal affairs and enforcement, have been temporarily seconded to us. This shows that everyone at DNB understands the importance of the transition.” According to Dijckmeester, this upscaling is necessary because DNB does not want to be a bottleneck. “Funds should not be delayed because we don't have sufficient capacity.”

Nevertheless, many funds have postponed their plans in recent months. What role did the DNB’s requirements play in this?
“There are numerous reasons for delays. It may be related to our supervisory approach, in that we ask questions that require more time to answer properly. Capacity in the sector is scarce, so I really get that. However, in certain cases, it also relates to the internal governance of the pension fund, which still needs to be finalized. Or it may be due to cooperation with the administrative organizations. And sometimes it’s a combination of these reasons. Incidentally, we are seeing a lot of different approaches to how the transition is being organized.”

What has DNB done with the lessons learned during the transition of the early adopter funds?
“We have adjusted our assessment process in certain respects. For example, we now make an explicit distinction between what is essential for the transition, what needs to be discussed and resolved beforehand, and what can be discussed and resolved after the transition. If you look at our supervisory task, in normal times, there is a whole range of supervisory instruments that can be used to work with a particular institution on improvements. With the Wtp, there is really only one: whether or not to impose a ban. That is a heavy measure, and you have to consider very carefully whether and when to use it.”

The sector is critical of DNB in some respects. For example, the transition template was amended during the process. This means that some funds that had already completed their transition notifications using the old template now have to transfer them to the new template. How can DNB better support the sector in addressing issues like this?
“If you were to do the transition again, the funds would approach things differently. But of course, we would too. Sometimes you have to tweak things, and that was the case with the transition template. Other matters needed to be asked about, and we are very aware of the impact of a change. Despite that impact, the decision was made to make an adjustment. It is not possible to prevent friction entirely, but understanding each other’s position can help mitigate damage to the relationship. We all have our own responsibility in this transition.”

How can you tell that the sector has learned from the 2025 funds?

“We are receiving fewer questions about the plans that are now coming in. This is thanks to the early adopters, who have shared a great deal of knowledge. But we have also shared our experiences through webinars, transition news, and appearances at conferences and other events. It is positive that this is leading to improvements. There was considerable friction between the frontrunner funds and their administrators on the one hand and regulators, such as DNB, on the other. However, in retrospect, we now realize that the critical eye of the regulators has elevated the plan to a higher level. I taught at Windesheim University of Applied Sciences for a while and supervised thesis projects. I have always noticed that when students spend a long time working on their thesis in the library, they tend to think that everything they write down makes perfect sense. But when I read it with my ‘fresh eyes’, it wasn’t well thought out and therefore difficult to follow. I see a parallel with the transition. You work on the transition dossier for so long within the fund that you sometimes fail to see that certain justifications are missing or that some issues are open to interpretation. You have to be very careful about how you write things down and how someone who wasn’t involved will interpret them.”

Is the fact that discussions about dossiers are now running more smoothly also due to DNB taking a different view of the standards?
“It should be clarified that DNB is not adjusting any standards. We assess compliance with the law. This is in the interests of participants and the sector as a whole. Our independent quality assurance protects public confidence in the transition. That is very important. So, adjustments to our approach are not aimed at becoming less strict, but rather at working together with the sector; do we understand each other well enough? It should not be the case that a transition dossier comes in and our assessment is one big black box, and that only after several weeks of radio silence do we say: no, this is not satisfactory. We take a critical look, but we also feel responsible. We have the capacity, we ask questions in good time, we are predictable, and we explain what is and is not acceptable and what steps funds can still take.”

Are there any concrete examples of improvements in the sector thanks to, for example, additional guidance from DNB?
“We have drawn up a step-by-step plan to support a balanced distribution of assets, and we have noticed that this is being implemented. At the same time, we also notice that funds and administrators find this a complicated issue. We see that funds generally provide good substantiation for individual measures. However, these measures add up. The assessment of why the whole is balanced can often be improved. It is also very important to provide good substantiation for the overall bottom-line assessment.”

DNB places great emphasis on balance. Why?
“Participants will ask questions about whether they feel fairly represented. You need to demonstrate this clearly. It is the core of the transition. Are the calculations correct? Redistributing wealth is a one-time endeavor, so it must be done correctly the first time. We identify vulnerabilities in the figures that are sometimes presented to us.”

What does that depend on?
“Sometimes it is about the substantiation: why is a choice balanced at this point? But before that, there is the question: are the figures we are looking at plausible? Are the assumptions correct? Before you start discussing this with each other, you need to make sure you have the right picture. Balance also touches on risk appetite. When we see that the reasoning behind the risk appetite is shaky and, at the same time, we see a strong focus on pension expectations as a benchmark, we ask questions about this.”

DNB previously called for attention to be given to redistribution from older to younger participants. How important is this?
“We take a critical view in cases where there are very big differences in net benefit, i.e., the extent to which participants benefit equally from the switch to the new pension scheme. This brings you to the stage where you have to ask yourself whether, as a board, you need to make adjustments and look at your instruments or, for example, shift assets. This does not mean that a fund has to do this, but it must have been considered as a realistic policy option. If this has not been weighed up in the entire decision-making process, it is more likely to lead to critical questions than if a reasoned explanation is given as to why it was not used. After all, you also have to substantiate what you have not done.”