Dutch pension funds might in principle ask the European Commission to be treated as first-pillar schemes if they want to be exempt from new pensions legislation, according to Francesco Briganti, director of the European Association of Paritarian Institutions (AEIP).
Responding to questions from the audience at the recent World Pension Summit, Briganti said the Commission would, in principle, accept such a request, and that such a permission should not pose issues for Brussels.
In fact, “the mandatory collective labour agreements (CAOs) and pensions for an entire sector have been decided by a government act”, he said.
Briganti, who gave a presentation on the classification of pension pillars, pointed out that European rules for the first pillar were limited, and that funding requirements were absent.
The first-pillar rules chiefly aim to guarantee the mobility of workers by coordinating the existing national social security systems.
In Briganti’s opinion, Dutch pension funds’ “capital-funded character” would not exclude them from being considered as first-pillar schemes, as Danish, Swedish and many Eastern European pension funds also have capital-funded first pillars.
He also argued that the fact Dutch schemes provide pensions that are agreed by social partners was no reason to not classify them as first pillar at the European levels, for the aforementioned reason that those agreements, which are the basis of the pension schemes, are then extended by a government intervention.
The AEIP director said first-pillar pensions, being a strict national competence, were not subject to European legislation such as the IORP or insurance Directives, nor to the supervision of EIOPA.
However, he said the absence of European supervision of funded first-pillar schemes, in particular in Central and Eastern Europe, still represented a concern for the European authorities.
Briganti raised the question that, if the Dutch pension funds were to move more than €1trn to the first pillar as well, this might raise the European supervisory authorities’ concerns even further.
Furthermore, he warned that first-pillar pensions were a “state matter”.
As such, the government would have much more influence in potentially setting rules on contribution and benefits.
“It would put pressure on the role of the social partners,” he added, referring to Hungary and Poland, where the governments have even emptied capital-funded pension funds.
Briganti pointed out that Dutch pension funds – and possibly their providers as well – if excluded from the scope of the IORP Directive, would no longer be allowed to operate in the European pensions market if Dutch schemes were classified as first pillar.
“That would be a missed opportunity for the Netherlands with its a large and strongly developed pensions system,” he said.
In the opinion of Hans van Meerten, pensions expert at law firm Clifford Chance, a transition to the first pillar would be undesirable.
“It would mean the loss of the fundamental European right that workers and employers are the owners of the pension assets,” he said.
“Moreover, the European Court has already established in the 1990s that Dutch pension funds are private institutions.”