Dutch MPs grill Social Affairs secretary over pension governance reform
NETHERLANDS – Participants and pensioners of Dutch pension funds with an equally represented board should not be granted additional rights of advice and approval, as they would gain the ability to block a board's decisions against their best interests, according to Jetta Klijnsma, state secretary for Social Affairs.
Responding to questions from Parliament about her proposed reform of governance legislation, she said she was sympathetic to a right of approval for the participants and pensioners council where there was a board of external independent members.
However, she said the council should not be granted full rights of advice and appeal, "as this would lead to a double right of say because both workers and pensioners would already be represented on a pension fund's board".
She added: "A double right of say would prevent the streamlining of tasks, unnecessarily complicate the decision-making process and increase the costs of pensions provision."
The state secretary said the only exception she would consider was granting the participants and pensioners council a right of advice about fundamental decisions, such as the continuation of a pension fund.
In Klijnsma's proposals, the standard board of industry-wide pension funds would consist of equal representation for employers, workers and pensioners.
A supervisory board would supervise and assist the scheme's board and report to the stakeholders if the board would not function properly.
A participants and pensioners council would be given accountability tasks as well as limited rights of advice.
In addition, both the supervisory board and the council would get the right to instigate an enquiry at a corporate court.
In her response, Klijnsma stressed that the pensions regulator would contribute to the checks and balances through its role as external supervisor, "with an arsenal of instruments at its disposal".
Moreover, the participants and pensioners council could take matters to court, and members of the scheme's board and supervisory board would personally be held liable, she said.
Klijnsma said she advised against granting internal supervision the right of advice, "as this is already a task of the supervisory board".
She further insisted that a pension fund's board could only consult external experts if at least 25% of its members agreed, in order to keep costs down.
Klijnsma said she had no objection to the employer also being represented on the participants and pensioners council, as long as the employer's participation was voluntary.
In a further clarification, she said that, in her proposals, members of the council could also be elected at both company pension funds and industry-wide schemes.
Currently, the election option is only available at company schemes.
She advised against giving a company's employees council the right of approval for the contract for pension provision, "as this is legally a matter between the employers and the pensions provider".
Parliament will continue its debate on Klijnsma's pension fund governance proposals today.