SUPERVISION REPORT

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

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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 the choice options for participants, makes decision-making more complex, and increases the pressure on pension fund boards to explain choices made. These developments increase the importance of correct, clear, and balanced communication towards participants. In this light, the AFM, as the behavioral supervisor, has received new tasks.

To explore how pension funds deal with the guidelines and roadmaps issued by the AFM, and how they comply with the legal 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 important that pension funds not only test whether they formally comply with the rules, but also reflect on the purpose of the rules and regularly reflect on their own policies, processes, and decisions, especially where these touch upon 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 signaling 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 laws and awareness of participant interests

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 give a good interpretation 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 signaling of risks for participants requires clear processes and role distribution

From the conversations with pension funds, it appears that the way a compliance function is designed varies greatly in practice. Some pension funds work with an internal compliance officer, while others have outsourced the function entirely or choose a combination of internal and external compliance. The positioning also differs: in some pension funds, the compliance function is involved in board meetings, while in others it operates more at a distance. Furthermore, pension funds differ in the extent to which the compliance function is actually elaborated. In some cases, it remains mainly a job description on paper. In other pension funds, we saw that, in addition to a clear job description, processes were also established and clear agreements were made regarding who has which role in signaling, assessing, and following up on risks. The execution and functioning of this are also monitored periodically 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 come to light in time and whether these are adequately taken into account in decision-making. The differences in the design and positioning of the compliance function therefore directly affect the way risks are signaled, assessed, and followed up.

Among other things, the following practical examples and observations emerged from the conversations regarding process and role distribution:

Process

• Continuous signaling cycle: In some pension funds, the compliance function plays a (pro)active role in a continuous signaling 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 afterwards during testing. This allows space to ask questions about risks for participants at the beginning of the process and to think about the substantiation of choices and how these will be explained to participants later.
• Written input for decisions: We saw pension funds where compliance standardly provides a written paragraph (for example, about risks and impact for (groups of) participants) for decisions with material impact, including any dissent.
• Monitoring: In some pension funds, the compliance function periodically looks back to see if risk signaling, compliance, and follow-up work in practice as intended, and whether adjustment is needed.
• Own signaling and reporting process: In cases where the compliance function is outsourced, we saw examples where the pension fund does not only rely on the reports of the pension execution organization (PEO), but where the compliance function contributes by agreeing and documenting a fund-specific process, reporting frequency, and escalation line with the PEO.

Role Distribution

• Independent position: In several conversations, it emerged that the compliance function is positioned as an independent and autonomous part within the pension fund. Pension funds stated that this independent position is reflected, among other things, in direct reporting to the board, for example regarding the monitoring of compliance with internal policy and laws and regulations, providing input for decision memos, and unrestricted access to all relevant information within the fund.
• Task delimitation and responsibility: We heard examples where tasks between compliance, the legal function, and risk management are clearly recorded and distributed. Some pension funds stated that they have explicitly recorded who is responsible for signaling, assessing, and following up on risks and what role the compliance function plays in this. This helps to prevent blind spots, even where processes are outsourced.
• Multidisciplinary collaboration: In the conversations, it was also noted that different disciplines (e.g., compliance, actuarial function, legal affairs, risk management) can reinforce each other when they involve each other in time, exchange information, look at the same risks from their own role, and collaborate on (complex) issues.

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B. The strategic value of compliance: in the interest of the participant

A formal compliance function is not legally required for pension funds. However, practice shows that establishing the compliance function as a (supra-legal) 'fourth key function' makes a difference. We heard that in pension funds where the compliance function is well-positioned, operates independently, and has sufficient weight, risks come to light earlier and are involved in decision-making, which contributes to the protection of participant interests.

There is no blueprint for the compliance function: the interpretation 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 a box, and that picks up signals as a critical and independent counterweight, has an eye for the participant interest, and increases awareness thereof, was seen as valuable by funds.

C. Compliance is more than a legal check

Our exploration shows that in some pension funds, the compliance function is primarily focused on monitoring the code of conduct and testing laws and regulations. At the same time, some pension funds stated that their compliance function plays a broader role. This is not only focused on legal testing, but also on the quality and substantiation of intended decisions.

In this broader interpretation, compliance looks at whether the participant interest has been weighed in a balanced manner. In this broader interpretation, compliance is not a paper exercise but a function that provides a counterweight by signaling 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 well-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 contribute, for example, to balanced communication that fits different groups of participants, that choice guidance is designed from the participant's perspective, and that complaints and signals from participants are handled carefully.

Among other things, the following practical examples and observations emerged from the conversations regarding the interpretation of the compliance function:

Interpretation of the Compliance Function

• Critical benchmark: In 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 secured therein. The compliance function assesses whether policy, processes, and decisions fit the intention of the legislation, the standards and rules that 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 unrequested, to risks for participants, and to explicitly put these topics on the board's agenda.

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D. The compliance function strengthens compliance with laws and awareness of participant interests

In the conversations, we heard that visible and accessible compliance officers lower the threshold for asking questions and contribute to a culture where integrity and compliance are self-evident. This applies both to compliance 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 action. 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: In 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 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 way.
• Stimulating an approachable culture: Some pension funds emphasize that the compliance function is consciously visible and approachable within the organization, so that employees can discuss dilemmas and questions in a low-threshold manner.

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