A Dutch pension scheme’s accountability body has filed a court case to assess the functioning of its management board, the first time any Dutch fund has taken such action.
The management board of the ailing pension fund for dental technicians (Tandtechniek) warned that the court referral could “seriously delay” the scheme’s plan to join giant healthcare scheme PFZW.
Accountability bodies, known as VOs, represent the interests of scheme members. Tandtechniek’s VO has taken the unprecedented action in the corporate court (Ondernemingskamer) of Amsterdam’s Court of Justice, seeking an assessment of whether the board had been responsible for “culpable or apparently improper” management during the past few years.
In addition, the VO has asked the Ondernemingskamer to replace the board with a temporary administrator during the course of the requested assessment.
According to Hans van Meerten, spokesman for the VO, a lack of communication from the board had caused a troubled relationship between the two parties in recent years. The VO felt it had not been consulted sufficiently or sometimes at all on important issues.
This applied for example to the board’s decision to join the €186bn PFZW on 1 January, as agreed in July.
The board of Tandtechniek said it would listen to criticism, but that it regretted the method chosen by the VO to settle the conflict.
It warned that the transfer of pension rights to PFZW and the implementation of its pension plan could be seriously delayed as a result of the legal procedure.
Rob van Leeuwen, the current chairman of Tandtechniek, said he was not worried about the outcome of the court case.
He said that the board’s decision to liquidate and transfer pension rights to PFZW was supported by its independent internal supervisors (RvT).
“And our annual reports have always been approved by both the RvT and the external accountants,” Van Leeuwen added.
Three years ago, the VO accused the previous board of “substandard performance”. This included relying too much on its pensions provider and asset manager Syntrus Achmea, and waiting too long to introduce a strategic interest-rate hedge and a dedicated risk committee.
At the time, it noted that the combination of rights cuts and indexation in arrears had caused participants to lose 30% of their pension rights.
At the end of last July, funding of Tandtechniek stood at 88.8%. As a consequence, the scheme’s participants are likely to face another significant rights cut when Tandtechniek joins PFZW.
In the pension fund’s annual report for 2016, the VO made clear that, in its opinion, the board still lacked accountability and paid insufficient attention to limiting costs and good governance.