<!-- Swiftype Variables -->

Pension Funds

Consolidation, industry changes reduce Netherlands retirement plans by 62% over past 10 years

The number of retirement plans in the Netherlands has fallen 62.4% over the decade ended June 30, and 74.7% over the 20 years to that date, said De Nederlandsche Bank.

The Dutch financial watchdog said the consolidation trend is set to continue, with a further 45 plans notifying DNB of their decision to liquidate.

A news release by the regulator said the decline is largely related to corporate plans, with their number falling to 192 as of June 30. That compared to 605 corporate plans at the end of 2007.

Industrywide multiemployer plans are also falling, to 59 as of June 30 compared to 10 years ago when there were 96.

DNB said decisions to liquidate or merge assets are driven by "multiple converging trends, including the increasing cost of pension administration, further tightening of statutory requirements, difficulty of finding suitable board members, the fund's financial position or demographic composition, and developments at the employer" such as mergers, company failures or adjustments. "Consolidation may also help to achieve economies of scale," said the release.

DNB said the assets of liquidated plans can either be transferred to another provider or merged with other plans.

The regulator said insurance firms, industry-wide plans and "general pension funds" — collective plans that may cover defined benefit, defined contribution, multiemployers and cross-border plans — have taken over more of the assets over the past three years than premium pension institutions and company plans.

The regulator said sustainable plans are able to meet the obligations toward their participants in the long term. "This is why we expect pension funds to consider their sustainability and develop a vision and strategy for the future. The fact that the future of the sector is as yet unclear emphasizes the importance for pension funds to have a vision and strategy in place, and to be able to anticipate changes to the system. This applies to both smaller and larger pension funds," said the release. Earlier this year, DNB identified a group of 22 plans as "highly vulnerable" from which it has requested a plan for the future. This plan will indicate if and how they intend to address their vulnerabilities or how they intend to resolve their activities in an orderly fashion.