Vier belangrijke onderdelen van beoordeling overbruggingsplannen 2023

DNB published news about four key elements of assessment bridging plans for 2023.
Five industry pension funds and one professional pension fund submitted a bridging plan for 2023 to DNB by the end of August. Following evaluation in mid-October, DNB approved these six bridging plans. This news update provides feedback on the evaluation and looks ahead to the assessment of bridging plans for 2024.
1. „Invaar“ Funding Ratio
The „invaar“ funding ratio is the funding ratio that a pension fund needs to smoothly transition responsibly, transparently, and in a balanced manner. The pension fund substantiates how the invaar funding ratio is determined in the bridging plan. Before an implementation plan is submitted, there is a statutory minimum invaar funding ratio of 95%. The required justification for the invaar funding ratio, considering preliminary objectives regarding transition and compensation, also applies when a pension fund aligns with this statutory minimum invaar funding ratio.
Some pension funds noted that social partners have not yet finalized agreements and objectives regarding transition and compensation. DNB took into account in the evaluation that the justification for the invaar funding ratio in this phase may not be fully based on the agreements regarding changes to the pension agreement and compensation. In cases where DNB inquired about the fund-specific justification of the invaar funding ratio, the funds made the justification more concrete in relation to the preliminary agreements and objectives. This justification included aspects such as the intended replenishment of reserves, agreements on compensation, and preliminary objectives in the context of decision-making about the transition. In the assessment of the 2024 bridging plans, when funds are further along in the transition process, DNB will pay extra attention to the justification of the invaar funding ratio.
2. Governance
In evaluating the bridging plan, DNB examines the involvement of the accountability body (opportunity for advice) or the stakeholders‘ body (approval of intended decisions) and key function holders in actuarial and risk management.
The six involved funds provided the accountability body with the opportunity to advise on the determination of the bridging plan.
3. Generation Effects
A pension fund substantiates in the bridging plan how it has taken into account generation effects in terms of net benefit. This concerns only the effects arising from the intended policy changes in the transition funding ratio. The size and direction of generation effects depend on various fund-specific factors, such as the level of start and invaar funding ratios, the length of the period until the invaar moment, and the intended adjustment of the policy for cuts and/or allowance during the bridging plan’s duration.
4. Model Assumptions
It is important for pension funds to be aware of the impact of simplifications in modeling on generation effects. In calculating these generation effects in the bridging plan, it is conceivable that simplifications are applied in the modeling. If these have a substantial effect on the calculation outcomes, it may be considered to make more realistic assumptions. If this is not possible, it is important that the pension fund is aware of the potential materiality of the outcomes.
From 1 January to no later than 1 July 2024, pension funds can submit a bridging plan for 2024. The starting point of the 2024 bridging plan is the financial situation as of the end of 2023.
The four aspects mentioned above will also be important components in DNB’s assessment of the 2024 bridging plans. DNB will publish the inquiry and accompanying instructions for the 2024 bridging plan in December, which will be similar to the 2023 inquiry.