Political uncertainty requires pension industry to think in scenarios
In the wake of election uncertainty, the pension industry needs to look strategically ahead with scenario planning.
The upcoming introduction of the new pension contract is the most significant change in the pension sector in the past 40 years. This means that pension funds will be extremely busy in the coming years to bring this complex transition to a successful conclusion. New collaborations must be looked at, standards agreed, and information to pension members prepared.
This is already a tall order when everyone knows where they stand and there is an end date for the new system to take effect. This was more or less the case until recently. However, the outcome of the Lower House elections brings a lot of uncertainty. Two parties (PVV and BBB) would prefer to roll back the reforms altogether, and another party (NSC) believes that pension members should be given the collective right of consent, leaving the possibility that different systems will continue to coexist. No one currently knows exactly which way this will go. Clarity on this could take another year, and the pension industry cannot prepare for the transition.
The pensions industry will have to engage in scenario planning, which can be used to place developments in time and assess their interaction. Making the chances and risks of specific political choices measurable and monitoring them over time within a single model makes it possible to arrive at better-founded (strategic) decision-making. In this way, the pension sector can become more agile and manageable in the face of significant policy changes.