Published on 03 July 2007
Continuity Analysis
On January 1st of 2007 the new Dutch pension law took effect. As a result, the financial assessment framework (FTK) was activated as well. The FTK discusses, apart from the solvency test, the continuity analysis (CA).
Many aspects of the continuity analysis should be familiar by now: the analysis is meant to gain insight in the (financial) development of the fund and the driving power of the policy instruments. The forecast period is 15 years and limitations are set for the utilised (economic) starting points.
Nevertheless, several misunderstandings about the continuity analysis exist, two of which we will discuss here.
Continuity analysis not required for all funds before Jan. 1st, 2008
Based on information given on a number of websites and in seminars the idea has formed that every fund is required to conduct a continuity analysis before January 1st, 2008. This is not true. The Dutch National Bank (DNB) will generally request the larger funds as well as funds which are (or have been) in a recovery phase to carry out a CA before that date. The other funds are not obligated to do so.
The pension law states that the CA should, at a minimum, be conducted once in every three years. From the perspective of DNB this means that the entire sector should have carried out a CA by the end of 2009 at the latest. In case you still have questions regarding the deadline for your specific fund, we can contact DNB on your behalf. Apart from a possible request by the regulator, a pension fund obviously may decide autonomously to conduct a CA.
Continuity analysis does not require certification by the actuary
A second misunderstanding concerns the certification. The continuity analysis belongs to the responsibility of board, and therefore does not require certification by the actuary.
Continuity analysis and ORTEC
Naturally, ORTEC does more than just clear misunderstandings. We like to aid you in carrying out a continuity analysis. Using our state-of-the-art models you have grown accustomed to, our consultants can perform a CA that does not only satisfy all requirements of the regulator, but also shows your fund the best possible way to approach the uncertain future.
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