As the coronavirus (Covid-19) outbreak continues to spread, there has been increased focus from the Dutch Central Bank ('DCB') on the contingency plans of pension funds and pension insurers.
Continuity plans and preparations are enough to accommodate short isolated events. Standard continuity plans could prove inadequate in the event of an ongoing pandemic. DCB expects pension funds and pension insurers to recognize this risk, analyse its impact and take additional measures where necessary.
On March 6, 2020 DCB reported that pension funds and pension insurers should consider how the outbreak may impact their ability to comply with regulatory conduct. Pension funds and pension insurers should act as follows:
- Monitor proactively the developments surrounding a pandemic, preferably by a multidisciplinary team.
- Map and analyse the consequences of the pandemic for the pension fund / pension insurer (explicit impact analysis) and include how the administrative decision-making process is being safeguarded.
- Assess existing business continuity plans for adequacy, for example the "crisis plan" drawn up by pension funds.
- Explicitly include the pandemic scenario in the test strategy of the continuity plan.
- Anticipate changing behaviour and preferences of plan participants and staff.
- Ensure that external service providers and critical suppliers have taken adequate measures and are sufficiently prepared for a pandemic.
Since most pension funds extensively make use of external service providers, pension funds must have a clear view of what measures have been taken by external parties like the asset manager, the fiduciary manager and the administrator.
Coverage risks of death and disability
If death and disability risks are insured under a pension scheme – namely surviving dependents' pension, a premium waiver in the event of disability and/or disability pension – the insured benefits become due in most cases if participants die or become incapacitated for work.
The Dutch Association of Insurers has confirmed that it expects that the mere fact that a participant has become incapacitated for work or deceased as a result of the coronavirus, does not mean that the benefits will not be paid out. Exclusions in policy conditions and general terms and conditions, regarding stays in areas for which a negative travel advice was in place, are not intended, according to the Dutch Association of Insurers, for a situation such as the situation currently at hand.