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IPE special report May 2018

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Dutch industry-wide survive ECJ ruling

The future of Holland’s industry-wide pension schemes has been rescued from doubt following a landmark judgement by the European Court of Justice (ECJ).
In a September 21 ruling on the cases of Albany International, Brentjens Handelsonderneming and Drijvende Bokken, the ECJ decided that compulsory membership of industry-wide pension schemes, covering almost 3.6m Dutch employees - more than 70% of the working population, was not contrary to European law.
The decision now removes any doubt over the “European feasibility” of the Dutch system, according to Frans Prins of the VB Dutch association of industry-wide pension funds.
“ Compulsory membership is a stepping stone that can serve as a point of departure for qualitatively sound and, because of the inherent solidarity, relatively advantageous pension schemes for everybody.
“ Without such compulsory membership, many people would find themselves out in the cold.”
Albany International, which set up a complimentary pensions regime for its employees in 1981 via an insurance company contract, argued that as a result it should be entitled to a dispensation from obligatory industry scheme membership.
However, the court ruled that the non-profit making industry-wide pension funds could be considered as ‘undertakings’ in charge of managing services of general interest under EC treaty - due to their aim of achieving a cost covering premium based on scheme solidarity.
This meant their activities were able to be examined regarding compliance with article 81 of European competition rules.
In the view of the court compulsory membership could therefore be justified because such social objectives of generational cohesion and prevention of risk selection might not be guaranteed without the existing system.
Alfred Kool, spokesman for PGGM the Dutch industry-wide scheme for health, mental welfare and social workers, comments: “ We are very positive about the decision of the European court, although we were confident they would rule wisely in this case.
“In Holland over the last decades we have built up a very good pensions system under which few are without decent occupational provision.
“What works should be kept, and the compulsory component is an essential part of this.”
Hugh Wheelan

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