NETHERLANDS - The Dutch minister for social affairs has announced he intends to revise draft legislation on pension fund governance with the aim of tightening the proposed law.
The revision was needed to "take advantage of thoughtful industry comments on the draft", Henk Kamp told an audience at a pension fund governance seminar last week.
One change under consideration is to broaden the list of governance models on offer, currently restricted to three in the draft legislation.
Kamp outlined the three options currently included in the draft.
"First would be an improved version of the existing model, second would be a model where the board of trustees is comprised exclusively of independent professional trustees and third would be a mixed model combining professionals and stakeholder representatives," he said.
According to Kamp, "a number of organisations" have indicated they would welcome more options than these three. Kamp said he was happy to take the suggestions under advisement.
"We will carefully study the arguments, and we're willing to let ourselves be convinced," he said.
The draft legislation was presented to parliament in June, when the ministry launched a consultation to solicit industry comment. Kamp noted that the online consultation led to around 50 responses from the industry.
Some respondents asked for an explicit view on what constituted good governance, including more specifics regarding the role of trustees and how the role may be affected by the new Pension Agreement, Kamp said.
The role of the board of trustees and a clear division of responsibilities between the board and the social partners was also raised, said Kick van der Pol, chairman of the Pension Federation.
"We need more clarity on who is responsible for what," he added.
A board of trustees should have the right and the authority to demand social partners design a pension arrangement that meets certain standards. Most important, such a plan must be such that it can be explained, as well as implemented, he said.
Further, although a board of trustees "should never go so far as to refuse to implement a pension arrangement", it is nonetheless responsible for ensuring that pension contributions match plan ambitions, Van der Pol said.
The issue of defining the trustee boards' role and status vis-à-vis that of the social partners - the employer and employee representatives who negotiate the pension arrangements - is a controversial one, but the Federation appeared to enjoy support from regulator De Nederlandsche Bank (DNB).
Joanne Kellermann, director of pension supervision at the DNB, also called for boards to be entrusted with further powers.
"We would like trustee boards to be empowered so they have the authority to refuse candidate trustees put forward by the stakeholders, if those candidates don't meet requirements," she said.
Nor was the DNB the only one to think this way.
"Several organisations have argued that trustee boards should be given the right to reject candidates," Kamp confirmed.
The consultation also included requests to regulate exactly which organisational unit within a pension fund had the authority to hire and fire, rather than leaving such tasks to the board and the bylaws of individual pension funds.
Another issue touched upon was that of internal supervision. Currently, many pension funds opt for a visitation committee to come by once every three years, with boards under no obligation to heed recommendations.
The draft legislation aims to change this by giving pension funds a choice between yearly visitations or installing a supervisory board.
The DNB, however, does not view these changes as sufficient, instead calling for mandatory reporting and requiring visitation committees to report directly to the regulator any cases where individual board members are not fulfilling their duties or where a board refuses to take a visitation committee's recommendations seriously.
At present, internal supervision comes with no strings attached - mandatory reporting would change that as it introduces "an opportunity to escalate the process", Kellermann argued.
Kamp promised that his department would study all serious comments, adding: "We certainly intend to use these responses to our benefit, so of course we will revise the draft legislation. The draft can only improve by doing so."
A final draft of the legislation will be submitted to parliament by the end of the year, he added.