The Dutch government is planning to change the regulation requiring mandatory participation in a pension fund. 

In a letter to the Dutch Parliament, Jetta Klijnsma, state secretary at the Ministry of Social Affairs, said a Bill – soon to be tabled – would allow social partners to choose providers to carry out specific pension arrangements.

Her announcement comes after a recent legal verdict that prohibited mandatory sector schemes from joining the so-called ‘general pension fund’, or APF.

As a consequence of this ruling, the options for industry-wide pension funds wishing to scale-up by ringfencing their assets were reduced.

Klijnsma, however, has now decided that mandatory sector-wide pension funds can establish or join an APF if mandatory participation is linked with a pension plan.

In this case, social partners can set up a mandatory scheme as a separate “ring” with an APF or another provider.

This would also apply to the large industry-wide pension funds.

The state secretary said one of the conditions for the new legislation would be that mandatory participation must remain intact.

She added that social partners must be able to move their pension plans to another provider, and that there must be no incentive to stick with an existing provider.

Hans van Meerten, a professor of international pensions legislation, recently noted that, in several cases, Dutch legislation was at odds with European law, citing the mandatory participation of companies in industry-wide schemes as an example.

To address this potential problem, he suggested linking mandatory participation to a pension plan rather than a provider.