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Dutch roundup: APF Bill, Social Affairs Ministry, annuity legislation

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The Dutch Parliament has approved the government’s Bill for the introduction of the APF pensions vehicle, designed to serve as an alternative for pension funds considering liquidation.

The APF offers pension funds with various arrangements the ability to operate under a single, independent board, whilst keeping their assets ring-fenced.

During the debate on the Bill, Parliament approved an amendment that will allow pension funds to place their basic plans and additional voluntary schemes into separate rings, for reasons of “fiscal hygiene”.

MPs also supported an amendment that would allow the merger of participating schemes’ individual stakeholders groups into a single collective body.

The APF is a third type of pension fund and is meant to replace the API – the defined benefit vehicle for cross-border schemes that never really took off.

However, mandatory industry-wide pension funds are not yet allowed to exploit the APF option.

Jetta Klijnsma, state secretary for the Social Affairs Ministry, said she was still looking into the risks of market interference, “which would come at the expense of pension funds’ participants”. 

The APF proposals have been approved by all stakeholders, including regulators and the Dutch Pensions Federation.

In other news, Klijnsma announced that she will soon be launching a scheme that enables participants in a defined contribution pension fund to buy annuities in two stages, starting with a two-year period at the date of retirement. 

The temporary measure is meant to address the one-off mandatory purchase of full annuities at retirement, which often leads to poor pensions when interest rates are low. 

However, Klijnsma warned that the decision was not “risk-free” and reminded MPs demanding a quick solution that a previous five-year measure that ended in 2014 produced lower pensions for the 100-odd retirees who used it.

The temporary measure is to precede formal proposals earmarked for December.

Helma Lodders, MP for the liberal party VVD, recently announced that she also plans to present an initiative to tackle the problem.

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