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17 September 2007 Supervision Supervision label Factsheet

Pension funds must comply with various statutory requirements on being set up and when administering pension schemes. The requirements of pension funds are twofold. On the one hand they focus on promoting the solidity of pension funds (prudential requirements) and on the other hand they focus on pension funds’ control or joint control structures and the relations between the employees, employer and the pension provider (material requirements). These requirements are intended to protect members, deferred beneficiaries and pension beneficiaries.

Prudential requirements

The Pension Act (for company pension funds and industry-wide pension funds), the Obligatory Occupational Pension Schemes Act (for occupational pension funds) and the secondary legislation based on these Acts impose prudential requirements on pension funds in the following areas (this is not an exhaustive list):

  • the trustworthiness of the persons who determine policy
  • the expertise of the persons who determine policy
  • sound operations
  • controlled operations
  • outsourcing
  • the content of the Actuarial and Technical Business Report (ATBR)
  • (minimum) regulatory own funds
  • technical provisions
  • funding of conditional supplements.

Material requirements

The Pension Act (for company pension funds and industry-wide pension funds), the Obligatory Occupational Pension Schemes Act (for occupational pension funds) and the secondary legislation based on these Acts impose material requirements on pension funds in the following areas (this is not an exhaustive list):

  • the content of the administration agreement (between the employer and pension provider/fund)
  • the content of the pension scheme rules (between the pension provider/fund and the members)
  • the content of the pension fund’s charter
  • the composition of the pension fund’s board of directors
  • the existence and composition of a Council of Members and an accountability body
  • value transfer
  • equal treatment (for example of men and women).

Further elaboration of requirements

The prudential and material requirements are worked out in more detail in the secondary legislation and relate to all sorts of operational, technical and financial aspects of pension funds. The provisions in the secondary legislation take account of the various risks involved.

sector

  • Pension funds