NETHERLANDS - Social Affairs minister Piet Hein Donner is willing to change the Pension Act to enable cooperation between different small company pension funds within an umbrella scheme.
The minister - in a white paper for parliament - said he supports the necessary extension of the area of competence of cooperating pension funds as well as abandoning the legal requirement of one financial entity of a scheme.
In addition, Donner favours a new option of ring-fenced assets for individual pension funds cooperating within one scheme, he stated, while stressing that the financial assessment framework FTK will be applicable for the separate parts.
However, the minister has also asked the Labour Foundation (Star) for advice about the feasibility of the phased introduction of the API, of which an umbrella fund for company schemes is the second step.
The first phase of the introduction of the API is the present development of a premium pension institution (PPI), focusing on defined contribution arrangements. The third and last phase is setting up a - more complicated - API for defined benefit schemes.
That said, the minister announced new rules for the make-up of an umbrella fund's participants' council, to allow its members for involvement in their own pension scheme.
According to Donner, the white paper follows the need of company pension funds for asset pooling and sharing of knowledge.
During the past ten years, the number of company funds has dropped by 36% to approximately 600 in an ongoing trend, mainly caused by increased government requirements and costs.
The Social Affairs' minister stressed that he isn't considering a change of the area of competence of mandatory industry-wide schemes, nor a new demarcation of products of any pension fund.
Frans Prins, the director of the Foundation for Company Pension Funds (OPF) declined to comment on Donner's views today, while referring to an official response that will be given during the OPF's congress tomorrow (November 13).
The Dutch Association of Insurers (VvV) is opposing a change of the Pension Act to accommodate small company pension funds, spokesman Paul Koopman said.
"After the introduction of commercial activities by pension funds, new umbrella schemes will further affect the level playing field between pension schemes and insurers," Koopman explained.
"Company pension funds should rather focus on cost reduction through standardising of schemes, pooling of investments as well as increased cooperation on administration and governing policies," he added.