The foundation beneath the benchmark

The AFM puts implementation costs firmly on the agenda

An important starting point is the AFM investigation Kosten pensioenfondsen verdienen meer aandacht (Pension fund costs deserve more attention) of April 2011. The AFM found, among other things, that implementation costs could differ widely between pension funds and that pension funds did not always report all costs. This made it difficult for pension fund boards and other stakeholders to form a sound opinion on the costs.

Minister Kamp responded to the AFM investigation on 20 April 2011. In his letter to the House of Representatives he emphasised the importance of transparency, comparability and accountability. In doing so he formulated a principle that still matters today: higher costs are not necessarily negative. They may be the result of deliberate policy choices and may, for example, be related to the way the assets are invested and to the return pursued.

Benchmarking was explicitly addressed as well. A comparison can contribute to accountability, but differences between pension funds must subsequently be explained.

The sector develops the Recommendations on Implementation Costs

Partly in response to the public and political debate, in 2011 the Pensioenfederatie developed the Recommendations on Implementation Costs. With this, the pension sector opted for self-regulation. One aim was to have pension funds report on their implementation costs in a more uniform way and to improve mutual comparability.

The Recommendations concern the various cost categories, including:

• pension administration;
• asset management;
• transaction costs.

An important premise is that costs should not be regarded as a stand-alone figure. For a sound assessment they must be placed in perspective. For pension administration one may look at scale, the complexity of the scheme and the chosen service level. For asset management, asset allocation, active or passive management, the chosen asset classes, risk and return all play a part.

This laid the foundation early on for what IBI calls sound benchmarking: not only comparing how much a pension fund spends, but also examining what causes differences and what stands against them.

Self-regulation does not mean it is optional

Minister Kamp informed the House of Representatives about the introduction of the Recommendations on Implementation Costs. He made clear that the Recommendations could not be seen separately from the reporting to the supervisory authority. The minister put it sharply:

“Any non-committal character of the Recommendations with regard to costs is removed by the reporting obligation to the supervisory authority.”

This passage matters for the standing of the Recommendations. They were developed as sectoral self-regulation, but that does not mean they are without meaning or entirely optional. Part of cost transparency was later anchored in law as well.

Cost transparency is anchored in law

As of 1 January 2015, article 45a of the Pensions Act contains an explicit statutory obligation to provide information on implementation costs in the annual board report: administrative implementation costs, asset management costs and transaction costs.

Costs must be explained in context

In its 2014 investigation into asset management and transaction costs, the AFM stated explicitly that asset management costs should not be considered in isolation, but in the context of return and risk.

In Vermogensbeheer- en transactiekosten pensioenfondsen in beeld (2015) it concluded that a simple comparison of total costs provides insufficient information. Which policy choices lie behind the cost level, and what stands against the costs incurred?

Tightened Recommendations and comply or explain

In 2016 the Pensioenfederatie published a revised version of the Recommendations on Implementation Costs. The principle of comply or explain is explicitly included in it. If a pension fund does not apply a bold-typed recommendation, it must explain why it deviates — unless that element by now follows directly from legislation or regulation.

A distinction must therefore be made between:

• statutory reporting obligations, which a pension fund must meet; and
• sectoral self-regulation, to which comply or explain applies.

The revised Recommendations also emphasise the importance of comparability and of placing implementation costs in perspective.

Costs must be viewed in relation to risk and return

The government, too, continued to stress that implementation costs should not be assessed in isolation. A 2019 letter to parliament speaks of the importance of:

“making a sound trade-off between costs, risk and return.”

After all, the pension fund board determines the investment policy and in doing so makes choices that directly affect the cost level: active or passive management, the chosen asset classes and the way asset management is organised. A higher cost level can therefore not be assessed without knowledge of those choices.

The annual member mailing keeps context on the agenda

The Pensioenfederatie periodically brings the Recommendations and points of attention on reporting implementation costs to the attention of pension funds through its member mailing. Since 2019 this end-of-year communication has again asked for attention to placing implementation costs in context, naming concrete explanatory characteristics for pension administration and asset management.

This annual attention underlines that cost accountability is not a one-off assessment, but part of a pension fund's reporting and governance cycle.

The AFM examines compliance

Ten years after the introduction of the Recommendations, the AFM again examined how pension funds reported on their implementation costs. It looked explicitly beyond the mere presence of cost figures. According to the AFM, one in five annual reports lacked certain statutorily required cost information. Even where the figures were included, the explanatory notes were often limited.

An important part of the AFM investigation carries the telling title:

“Higher costs can have good reasons”

The AFM pointed out that a pension fund may, for instance, deliberately opt for a higher service level. In asset management, too, higher costs may be related to more complex investments, risk diversification or the pursuit of a higher return. This means that a ranking of pension funds based solely on high or low costs provides insufficient information to assess a pension fund's performance.

At the same time the AFM found that fewer than a quarter of the pension funds examined related pension administration costs to, for example, service level or the complexity of the scheme. For asset management, fewer than a third of the funds made clear how costs related to the investment mix.

Parliament responds critically to the AFM investigation

The AFM's findings led to parliamentary questions. The message in the answers is clear: correct cost figures are necessary, but figures alone are not enough for substantive cost accountability. The information must ultimately enable stakeholders to form an opinion on the cost level.

On compliance after ten years

“by no means all pension funds appear to follow their own recommendations in full”

On the AFM's findings

“These findings of the AFM amount to this: many pension funds still have work to do.”

On the purpose of cost transparency

“The statutory standards for cost transparency contain information requirements as a means to an end”

On the opinion that must be made possible

“the relationship between return, risk and costs. Or the relationship between costs and benefits.”

The Wtp strengthens governance accountability

Under the Future Pensions Act (Wtp) the relationship between costs and the pension outcome for members becomes even more relevant. During the parliamentary debate it was again emphasised that absolute costs must be assessed in a broader context. For asset management this concerns the relationship between costs – investment policy – risk – return; for pension administration, costs – complexity – quality – service level. This approach follows directly from the earlier line taken by the Recommendations and the AFM.

During the debate on the Wtp the amended Van Beukering-Huijbregts/Ceder amendment was also adopted, laying down in law that the opinion of the accountability body or the board of stakeholders must in any event also cover the implementation costs incurred.

Monitor and evaluate every year

The Code Pensioenfondsen 2024 follows the same line. Standard 6 requires not only monitoring of the cost level, but an annual evaluation of quality and costs. It does not prescribe a particular benchmark for that purpose. A sound benchmark is, however, a logical instrument to give this annual evaluation an objective frame of reference.

Parliament speaks explicitly of a sound comparison

In the Van Brenk motion the House of Representatives finds that members have insufficient insight into how the costs of their pension provider compare with those of other providers. The House considers:

“that there are no practical or statistical reasons that make a sound comparison of cost levels using uniform key figures in the pension sector impossible”

At the same time the motion acknowledges that pension providers must be able to explain their cost level, because there may be legitimate reasons for deviations. That is precisely the difference between a simple cost ranking and sound benchmarking. The motion was adopted unanimously on 24 March 2026.

Look not only at costs, but also at what the member gets in return

In its response to the motion, in May 2026 the government again confirmed that the debate should not be about the level of costs alone. Cost differences may be related to, among other things:

• the size of the pension fund;
• the characteristics of the member population;
• choices around administration and communication;
• the risk appetite;
• the investment policy.

This again confirms that an isolated cost figure is insufficient for a substantive assessment. The board must evaluate the costs and assess whether improvements are possible. The accountability body and the board of stakeholders then have a role in assessing the board's accountability and the choices that influence the cost level.