TRANSITIENIEUWS – Gesprekken tussen DNB en pensioenfondsen bieden inzichten in beheersing governancerisico’s tijdens transitie

DNB published a news article sharing information from a DNB seminar held for smaller pension funds, considering the outcome useful for other pension funds as well.
More specifically, DNB conducted discussions to assess the governance risks during the transition to the new pension system. The focus was on identifying risks related to the roles and responsibilities of fund organs and key functions, as well as ensuring a balanced consideration of interests in the transition. The insights gained from these discussions, regard particularly roles, tasks, and timelines.
– Clarification of Roles, Tasks, and Timelines: Many pension funds involve key functions and fund organs (internal supervision, accountability board and stakeholder forum) in preparing for the transition. While these entities acknowledge that risks and concerns can be considered in decision-making, there is a need to clearly define when key functions and fund organs should provide opinions, advice, or approvals. Developing specific roles, tasks, and timelines provides clarity on their responsibilities and the time available for decision-making.
– Development of Equilibrium Frameworks: Regulatory guidelines emphasize the need for robust decision-making during the transition, involving the establishment of objectives, quantitative measures, and priority rules for a balanced transition. Some pension funds have created assessment frameworks in advance to evaluate choices and agreements made during the transition in terms of balance. This framework may include criteria reflecting the extent to which the fund’s transition objectives are achieved.
– Role of Key Functions in the Transition: The risk management key function sometimes focuses on the process, requiring substantive evaluations, not just a procedural check. „A thorough interpretation of the risk management function as envisaged in the implementation of IORP II is not limited to a marginal review of whether all process steps are followed, but also requires substantive assessments of them“. Key functions, such as risk management and actuarial roles, play an active part in preparing for the transition. However, there is a need for clarity on how these functions combine their active roles with providing independent countervailing power during actual decision-making. DNB observes an increased collaboration among the three key functions as the transition approaches.
– Documentation of Decision-Making Rationale: Pension funds make numerous decisions during the transition to the new pension system. DNB notes an increasing focus among funds on documenting the rationale behind their decisions. Well-documented decision-making provides a crucial basis for accountability. DNB can assess whether the fund complies with relevant legal rules based on this documentation. This documentation is also important for the fund’s governance, organs, and participants, allowing them to demonstrate why a decision was made and how various aspects and interests were considered.