Compliance at Pension Funds: In the Interest of the Participant

SUPERVISION REPORT Compliance at Pension Funds: In the Interest of the Participant MARCH | 2026

© AFM 2026 | Compliance at Pension Funds: In the Interest of the Participant 2 Compliance at Pension Funds: In the Interest of the Participant Never before have pension funds faced so many changes simultaneously. The transition to the new pension system increases choice options for participants, makes decision-making more complex, and increases pressure on pension fund boards to properly explain the choices made. These developments increase the importance of correct, clear, and balanced communication towards participants. In this light, the AFM, as the conduct supervisor, has been given new tasks. To explore how pension funds deal with the guidances and guidelines issued by the AFM, and how they comply with the statutory standards on which the AFM supervises, which are embedded in their operations, the AFM spoke with various pension funds about the design, position, and working methods of their compliance function. It is precisely now that it is important for pension funds not only to test whether they formally comply with the rules, but also to reflect on the purpose of the rules and regularly reflect on their own policies, processes, and decisions, especially where these relate to the interest of the participant. A strong compliance function can help with this. In this publication, we share practical insights and examples that emerged from these conversations. We do this based on the following observations: a. Timely identification of risks for participants requires clear processes and role distribution b. The strategic value of compliance: in the interest of the participant c. Compliance is more than a legal check d. The compliance function strengthens compliance with the law and awareness of participant interest The design of the compliance function takes place within the framework set by DNB, as elaborated in its good-practice document, which includes examples that DNB considers to provide a good implementation of its expectations regarding the design of the compliance function. Pension funds interested in how the compliance function can contribute to protecting participant interests and wish to get started can benefit from the observations in this exploration. A. Timely identification of risks for participants requires clear processes and role distribution Conversations with pension funds reveal that the way a compliance function is designed varies significantly in practice. Some pension funds work with an internal compliance officer, while others have outsourced the function entirely or opt for a combination of internal and external compliance. The positioning also differs: at some pension funds, the compliance function is involved in board meetings, while at others it operates more remotely. Furthermore, pension funds vary in the extent to which the compliance function is actually operationalized. In some cases, it remains largely a job description on paper. In other pension funds, we observed that, alongside a clear job description, processes were established and clear agreements were made regarding who has which role in identifying, assessing, and following up on risks. The execution and functioning of these are also periodically monitored and improved where necessary. In these situations, we heard positive feedback on how the compliance function can fulfill its role as a critical and independent counterweight. The compliance function is more visibly involved in relevant decision-making and can more effectively test whether risks for participants are identified in time and whether they are adequately taken into account in decision-making. The differences in the design and positioning of the compliance function therefore directly impact how risks are identified, assessed, and followed up. The conversations yielded the following practical examples and observations regarding process and role distribution: Process • Continuous identification cycle: at some pension funds, the compliance function plays a (pro)active role in a continuous identification cycle, for example via a SIRA, legislative calendar, or compliance annual plan. • Early involvement: there are pension funds where the compliance function is involved at an early stage in the intended decision-making, rather than only retrospectively during testing. This creates space to ask questions about risks for participants at the beginning of the process and to reflect on the substantiation of choices and how they will later be explained to participants. • Written input for decisions: we observed pension funds where compliance routinely provides a written paragraph (for example, regarding risks and impact on (groups of) participants) for decisions with material impact, including any dissenting opinions. • Monitoring: at some pension funds, the compliance function periodically reviews whether risk identification, compliance, and follow-up work in practice as intended, and whether adjustments are needed. • Own identification and reporting process: when outsourcing the compliance function, we saw examples where the pension fund does not solely rely on the reports of the pension scheme administrator (PUO), but where the compliance function contributes by establishing and documenting a fund-specific process, reporting frequency, and escalation line with the PUO. Role distribution • Independent position: in several conversations, it emerged that the compliance function is positioned as a self-contained and independent component within the pension fund. Pension funds indicated that this independent position is reflected, among other things, in direct reporting to the board, for example regarding the monitoring of compliance with internal policies and legislation, providing input for decision memos, and unimpeded access to all relevant information within the fund. • Task delineation and responsibility: we heard examples where tasks between compliance, the legal function, and risk management are clearly documented and distributed. Some pension funds stated that they have explicitly documented who is responsible for identifying, assessing, and following up on risks, and what role the compliance function plays in this. This helps prevent blind spots, even where processes are outsourced. • Multidisciplinary collaboration: the conversations also noted that different disciplines (e.g., compliance, actuarial function, legal affairs, risk management) can strengthen each other when they involve each other in a timely manner, exchange information, look at the same risks from their respective roles, and collaborate on (complex) issues.

© AFM 2026 | Compliance at Pension Funds: In the Interest of the Participant 3 B. The strategic value of compliance: in the interest of the participant A formal compliance function is not legally required for pension funds. Nevertheless, practice shows that establishing the compliance function as a (supra-legal) 'fourth key function' makes a difference. We heard that at pension funds where the compliance function is well-positioned, operates independently, and carries sufficient weight, risks are identified earlier and involved in decision-making, which contributes to the protection of participant interests. There is no blueprint for the compliance function: its implementation is form-free and pension funds adapt the function to the size, structure, and context of the pension fund. Our exploration shows that the compliance function can be valuable when it is more than a formal control function. A compliance function that goes beyond ticking boxes, picks up signals as a critical and independent counterweight, keeps an eye on participant interests, and increases awareness thereof, was viewed as valuable by funds. C. Compliance is more than a legal check Our exploration shows that at some pension funds, the compliance function is primarily focused on monitoring the code of conduct and testing compliance with laws and regulations. At the same time, some pension funds noted that their compliance function plays a broader role. This role is not limited to legal testing, but also covers the quality and substantiation of intended decisions. In this broader implementation, the compliance function, for example, examines whether participant interests are weighed in a balanced manner. In this broader implementation, compliance is not a paper exercise but a function that provides a counterweight by identifying risks in time and bringing them to the attention of the board. In this way, compliance helps prevent decisions from being made without the consequences for participants being properly substantiated or explained. The compliance function thereby strengthens the position of the participant in decisions taken by the pension fund and contributes to trust in the pension fund. In the exploration, we saw that the compliance function can, for example, contribute to balanced communication that aligns with different groups of participants, that choice guidance is designed from the participant's perspective, and that complaints and signals from participants are carefully handled and processed. The conversations yielded the following practical examples and observations regarding the implementation of the compliance function: Implementation of the compliance function • Critical benchmark: at some pension funds, compliance is not only seen as monitoring integrity and legal obligations, but also as a critical test of how decisions are made and how the interests of different groups of participants are safeguarded therein. The compliance function assesses whether policies, processes, and decisions align with the intent of the legislation, the standards and rules the pension fund has set for itself, and societal expectations. • Setting the agenda: we saw examples where the compliance function is given the space to draw attention, both requested and unsolicited, to risks for participants, and to explicitly place these topics on the board's agenda.

© AFM 2026 | Compliance at Pension Funds: In the Interest of the Participant 4 D. The compliance function strengthens compliance with the law and awareness of participant interest In the conversations, we heard that visible and accessible compliance officers lower the barrier for asking questions and contribute to a culture where integrity and compliance are second nature. This applies both to complying with internal rules, such as the code of conduct, and to understanding and complying with external obligations towards participants. In this way, compliance becomes part of daily operations. Not only as a control mechanism, but as a shared responsibility. Based on the conversations, the following practical examples emerged. These show how awareness of participant interests can be strengthened and what role the compliance function can play in this: Compliance initiatives for awareness • Making dilemmas discussable: at several pension funds, the compliance function periodically organizes dilemma or knowledge sessions where relevant case studies are shared to increase awareness. This can help to more consciously reflect on the effects of choices for certain participant groups. • Low-threshold tools: we saw examples where the compliance function uses e-learnings, questionnaires, or short knowledge tests to increase knowledge of laws and regulations and internal standards in an accessible manner. • Stimulating an approachable culture: some pension funds emphasize that the compliance function is consciously visible and accessible within the organization, so that employees can discuss dilemmas and questions in a low-threshold manner.