NETHERLANDS – The Dutch Senate has approved, by a very slim margin, the government's proposals for new legislation concerning pension fund governance.
Jetta Klijnsma, state secretary at the Social Affairs Ministry, was forced to make several concessions, most notably granting the new supervisory board (RvT) the right to hire and fire board members.
She also had to agree that all pension funds would establish a permanent RvT after three years.
For the time being, the body for internal supervision is only mandatory for industry-wide schemes.
Company pension funds are allowed to deploy a visitation committee, which will carry out internal supervision every year.
Responding to almost Senate-wide scepticism about the need for five board models, Klijnsma said she would closely monitor the use of the different options – particularly the one-tier board model, which is relatively new in the Netherlands.
The state secretary also stuck with the 25% cap on pensioner representation on pension funds' boards, arguing that, at schemes with an ageing population, the number of pensioners should not exceed the number of active participants.
However, she stressed that pension funds must also encourage board diversity with respect to age and gender.
In her opinion, employers should also have board representation, as they "remain liable to pension risks", and "some are prepared to plug funding gaps".
Addressing the concerns of almost all political parties about the position of younger workers, Klijnsma promised to draw up proposals aimed at increasing "enthusiasm" for pensions among the younger generations.
The new PFG Act on governance will supersede the initiative legislation Koşer Kaja Blok, which guaranteed a proportional representation of pensioners on pension funds' boards as of 1 July.
The PFG Act is to come into force on 1 July 2014.
Pension funds must submit their plans for a new board model to supervisor De Nederlandsche Bank within the first six months of next year.