Frits Bolkestein, the former European internal markets commissioner, has called on the Dutch government to act promptly to implement the occupational pension fund directive.
He said the government should address the issue largely to keep pension funds in the country – or even to attract new ones.
“If the Dutch government follows an ‘ostrich policy’, the future will be severely bleak,” Bolkestein told a seminar organised by financial group Fortis. “The Hague should without any delay implement the full EU pension directive.”
The pension directive - Institutions for Occupational Retirement Provision - was passed in 2003 during Bolkestein’s tenure.
He told the seminar that the Dutch government should try to put into place a regulatory and legal framework to support future European-wide pension fund operations.
He indicated that if the current legal and tax system is not changed, most pan-European pension funds will opt for a base in either Luxembourg or Ireland in the future.
He said this was because pan-European schemes would be set up, as is normal in a free market system, in the place where the financial legislation is the most appropriate.
If this were the case, Bolkestein said, many Dutch pension sector participants could opt to move their offices to Luxembourg.
This would not only mean a change in the current pension sector in the Netherlands but a loss of expertise
and jobs.
There were two options to counter the threat of an ageing society – raising the retirement age, and lower pensions. In addition, the change from defined benefit to defined contribution could become a necessity to lower overall liabilities.
He indicated the EU is increasingly interested in setting up the internal market for pension funds.
This will result in an increased pressure on Dutch players to become more competitive.
Due to the Danner case at the
European Court of Justice (ECJ),
tax exemptions of pension contributions should be implemented
EU-wide, which would support the free movement of labour throughout the EU.
Until now, he said, some countries have not been totally supportive of the idea, but only the Dutch have refused to implement it.
He expected that this will be solved in either a congenial way or via the ECJ.