Dutch pension monopoly clashes with EU law – will participants endure yet more protectionism?

The European Commission’s conclusion that the Netherlands’ requirement forcing industry-wide pension funds to operate as Dutch foundations (stichtingen) breaches EU rules on freedom of establishment should mark a turning point. Instead, however, it risks becoming yet another chapter in a familiar story: protectionism wrapped in the language of prudence.

For more than five years, I have pressed this case in Brussels – first with the Commission, then the European Ombudsman. Persistence finally paid off in late May 2026 when minister Hans Vijlbrief told parliament that Brussels had found the Dutch rules incompatible with EU law. The long delay is itself revealing. Prof Ton van den Brink of Utrecht University has called the stichting requirement “pretty clearly in breach of EU law”.

If the violation was so obvious, what does it say about the legal advice successive governments received – and about the political will to challenge a system that has shielded a domestic monopoly for decades?

The government now says it will open the market to foreign Institutions for Occupational Retirement Provision (IORPs), but only if they operate without a profit motive – the same restriction that applies to Dutch foundations. This response is too slow and probably still too narrow. Full legislative change will likely take three years. The non-profit condition itself may not survive scrutiny under EU law. We await the final draft.

The real stakes concern the roughly 40 mandatory industry-wide pension funds that cover more than 80% of Dutch participants and manage the bulk of the country’s €1.6trn in pension assets. Corporate and professional funds already had limited freedom to choose foreign providers (subject to a two-thirds participant vote introduced in 2019), a threshold that is itself questionable under EU law. For the giant sectoral schemes – ABP, PFZW, PMT, PME, BpfBOUW and others – the formal barrier is finally falling. Whether anything meaningful changes is another question.

Social partners – unions and employer organisations – design the pension schemes and typically appoint the majority of board members. They also decide which entity executes the scheme. Shifting execution abroad would mean surrendering that control. This creates an obvious conflict of interest: the same organisations that negotiate the pension deal also control the vehicle that delivers it. Such arrangements are almost certainly incompatible with EU law.

The largest union, FNV, has already signalled it sees no need for change, citing concerns about Dutch social and labour law. Employer groups VNO-NCW and MKB-Nederland expect little movement and stress that the obligation to participate remains untouched. Their stance is understandable from a power perspective; it is harder to defend from the perspective of the 10m participants whose money is at stake.

Poor performance

International evidence does not flatter the status quo. A Finnish study of 24 large pension funds over fifteen years ranked both ABP and PFZW among the three worst performers. Some Dutch IORPs, like the PPI, and foreign IORPs already operating in Belgium and Luxembourg can offer more efficient administration, lower costs and better risk management while complying with IORP II standards. The execution of a pension scheme is a service in the sense of the EU treaty. In any other part of the financial sector, that service would face periodic competitive tendering rather than automatic renewal with the incumbent foundation.

Sceptics cite two practical hurdles: the two-thirds participant approval requirement and the transfer of prudential supervision to a foreign authority. Both concerns are false. The two-thirds majority rule will disappear in the revised IORP Directive; I also filed a complaint in Brussels on that issue, by the way, because it is also not in line with EU law. More importantly, if Dutch policymakers genuinely doubt certain foreign supervisors, they should publish clear, objective criteria instead of relying on vague mistrust as a permanent barrier.

“The grand promises that accompanied the Dutch Future Pensions Act – greater insight, influence and purchasing power for savers – have already faded”

The deeper problem is cultural. Decades of protection have bred complacency. A closed domestic market allowed underperformance to continue without serious consequences for those who control the funds. The Commission’s intervention has removed the legal excuse for that protection. What remains is a test of whether social partners will put participants’ interests ahead of institutional power.

The grand promises that accompanied the Dutch Future Pensions Act – greater insight, influence and purchasing power for savers – have already faded. Most funds still lack robust policies to protect future retirees against inflation. Participants remain trapped in opaque structures that give them no enforceable rights from their pension overview and in which conflicts of interest are structurally embedded. Rather than confront these domestic shortcomings, Dutch pension organisations and the government have opposed key elements of the Commission’s supplementary pensions package.

This is a mistake. The upcoming revisions to the IORP Directive and the PEPP Regulation offer the Netherlands a chance to strengthen its second pillar without surrendering sovereignty.

Independence and comparability

Three proposed IORP rules deserve particular attention. First, boards would be required to make independent decisions when conflicts of interest arise with service providers. This would finally render constructions such as ABP owning APG and PFZW owning PGGM untenable. Second, funds would have to measure performance against independent benchmarks set by the supervisor, ending the convenient practice of self-selected yardsticks that have concealed years of underperformance. Third, an EU-standardised pension overview would give participants enforceable rights instead of the current non-binding document that leaves no-one accountable when mistakes occur. These are not bureaucratic impositions.

They are basic standards of good governance and transparency. The Dutch objection that they are “unworkable” rings hollow when the alternative is continued opacity and weak accountability.

Equally important is the proposed European duty of care. Dutch pension funds already have such an obligation under national law, yet the paritarian model has repeatedly allowed employer interests to prevail over those of participants. A principle-based European norm would provide a necessary backstop in a system of mandatory participation.

The Netherlands should also stop resisting the workplace Pan-European Pension Product (PEPP). Growing numbers of people want simple, portable, app-based savings. In China, for example, where I teach, this will be a reality soon. Europe also needs a non-fragmented and well-functioning pension system for all workers, including the self-employed. It is the backbone of an economy.

Some Dutch experts warn that European rules will politicise investments or erode national control. The real risk lies in the opposite direction: clinging to an outdated model that no longer delivers what it promises. The Court of Justice of the EU has already recognised that pension rights enjoy protection under the fundamental right to property. Codifying this jurisprudence in the new IORP rules would give Dutch participants a stronger legal footing, not a weaker one.

The Commission has done its part by removing the legal shield around the monopoly. The remaining question is whether those who control the system will now act in the interests of the people whose retirement security depends on it. Ten million Dutch participants deserve better than another decade of protectionism dressed up as prudence.

Hans van Meerten, international pension expert and lawyer, teaching at several universities worldwide, author of EU Pensions Law with Philip Bennett