NETHERLANDS - The new premium pension institution (PPI), which is being created by the Dutch government as part of a new international vehicle to tap IORP guidelines, is being extended to cover all contribution-based scheme and may be applicable to some overseas defined benefit (DB) arrangements.

Hans van Meerten, a lawyer covering financial markets and stability and closely involved in the Dutch ministry of finance's plan, confirmed to IPE this morning the proposals have been altered following pressure from the industry.

The PPI is expected to be introduced in 2009, according to Meerten, and will now not only cover so-called 'pure contribution schemes' - DC arrangement whereby the investment and longevity risks lie solely with the employee.

"Depending on the country from where the arrangements originate, these can also be DB schemes. What matters is that these arrangements have the characteristics ensuring the risk is not with the institution itself. As long as that is the case, the PPI can execute all these arrangements," said van Meerten.

The PPI had previously drawn criticism from the pensions industry because it would cover only these schemes, instead of covering other pension arrangements - where risks are distributed differently - and which are more common in the Netherlands and abroad.

"The PPI can execute normal premium arrangements, so all Dutch but also all foreign premium arrangements can be covered. Foreign pension schemes do not have to qualify as premium arrangements," said Van Meerten.

According to Meerten, when drafting the new PPI the stakeholders looked at arrangements in Germany, Belgium and Italy, where payment guarantees are given to the employees, and behind which there, in some cases, is also a pension insurer.

It is understood the PPI - previously branded an API-lite as it was intended to be the first phase of a new general pension vehicle (API) - has now been altered after the industry which had argued the vehicle would be too limited.

In May this year, Frans Prins, director of the foundation for company pension funds (OPF) argued the earlier proposed set-up would "not [be] of much use to us, since it does not address the issue of the required scaling up of domestic schemes, nor does it provide solutions for cross-border schemes." (See earlier IPE article: 'Pension body questions 'API lite')

Akkie Lansberg, director of the Dutch Holland Financial Centre (HFC), told IPE in an interview this morning: "The API-lite will be much less 'light' than previously aimed for."

According to Lansberg, the various parties involved in the PPI are in the final stages of drafting the new vehicle and are "ready to go in the first quarter of next year".

The API is due to be rolled out at the end of 2009.

If you have any comments you would like to add to this or any other story, contact Carolyn Bandel on +44 (0)20 7261 4622 or email carolyn.bandel@ipe.com

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