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Dutch government weighs support for changes to mandatory participation

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Jetta Klijnsma, state secretary at the Dutch Ministry of Social Affairs, is to measure the level of support for replacing the current mandatory participation in a pension fund with a system that gives participants the ability to choose their pensions provider.

In a letter to Parliament, Klijnsma said she would look into the matter in co-operation with companies, workers and the pensions sector.

She said objections raised by the unions, after the Dutch government suggested it might decouple the concept of compulsory participation from pension funds, had sparked the inquiry.

The government previously suggested participants would be given the option of compulsory pensions saving with a pensions provider of their choice.

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As a result, industry-wide pension funds would be able to transform themselves into, or join, the new general pension fund (APF) vehicle, something that is currently prohibited.

Unions, however, objected to the proposal, saying they feared “considerable consequences for the market for pensions provision, the relationship between the social partners and the pension fund, as well as the existing governance structure”.

In their opinion, mandatory participation should be in any discussion about a new and sustainable pensions system.

Klijnsma said the government would launch legal proposals if she managed to hit upon a broadly supported solution.

In her letter to Parliament, the state secretary, citing DNB figures, also confirmed that 45 pension funds were liquidated last year, leaving a remaining total of 320 schemes, including 57 mandatory industry-wide pension funds.

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