In the new pension system, defined benefit agreements will no longer be the starting point. Existing defined benefit agreements in pension funds will initially be converted (‘collective transfer, or in Dutch: invaren), into defined contribution agreements, unless this has a disproportionate impact on certain groups of stakeholders.
In the new pension system risks lie more clearly with the participant. Moreover, participants need to make more choices that affect their pension benefits, such as the choice of a lifecycle in the case of a flexible premium scheme, or the ‘lump sum’. The provision of information and guidance of choices by pension administrators will therefore have to be optimal.
Duty of care by design
The duty of care of pension providers will increase with the transition to the new system. They will have to rethink and redesign their business operations regarding the provision of information and choice guidance, but also complaint handling, data quality, investment policy and employee training. By designing their policies, systems and processes in this way, pension providers can meet their higher duty of care. We call this ‘duty of care by design’.
Four principles
By working with four different principles within the duty of care by design, the pension fund can comply with its efforts obligation regarding duty of care:
- Put participants' interests first; transparent, timely and clear communication, user-friendly communication tools, communication tailored to the participant and a participant-friendly organisation will put the participant first
- Give direction to duty of care; By developing core values around duty of care and by making duty of care part of the mission, vision and strategy, the internal and external stakeholders will understand what the pension fund wants to achieve in the area of duty of care and how, and the objectives around duty of care can be achieved
- Integrate duty of care into pension schemes and services; Duty of care by design ensures that duty of care becomes a core component of products and services. Duty of care is an integral part of the product or service
- Duty of care is a cycle: Duty of care by design takes into account the changing requirements regarding the provision of information, communication, the set-up of the organisation and the participant's wishes. Duty of care in the service provision must be constantly monitored, duty of care jurisprudence must be kept up to date and legislation and regulations related to duty of care must be implemented in a timely fashion.
What can PwC do for you?
PwC has knowledge and experience in implementing all aspects of the duty of care within the pension sector but also other financial sectors. At PwC, we work in multidisciplinary teams that have thorough pension expertise, legal knowledge (in the field of pension) and expertise in the field of communication, user interface, technology and governance. The composition of the team members themselves is characterised by diversity and inclusion. The problem-solving capacity is optimal due to the different perspectives and experiences of the team members, and so they are able to achieve the best result for you. If you would like to know more about what PwC can do for you, please do not hesitate to contact us.
