Looking at or looking after?
Cees Verhagen looks at 75 years of VZK The earliest evidence of an individual pension scheme in the Neth-erlands dates from 1432. A priest obtained a pension after his term of service, which was paid by his successor. In 1579 an old-age pension scheme for priests was introduced. This is the oldest example of a group pension scheme. During The Twelve Years' Truce (1609-1621) the first state pension scheme was introduced, which applied to a part of the army.
A pension scheme for civil servants was mentioned for the first time in 1836, followed by the establishment of the first company pension fund in 1884. As from 1908 there were legal requirements a pension fund had to meet before an employer could de-duct a part of the premium of the wages. The first industrial pension fund was established in 1918, the General Miners Fund of the Limburg coal mines.
In 1954 the Pensioen-en spaarfondsenwet (Pension and Savings Funds Act 'PSW') became operative in the Netherlands.
From that moment company pension funds and industrial pension funds were compulsorily subject to supervision. The Verzekeringskamer (VZK) is responsible for this supervision. From 1988 the Algemeen Burgerlijk Pensioenfonds (ABP) has also been subject to the VZK supervision.
The PSW states that the assets of a pension fund increased by the future income must be sufficient to meet the liabilities resulting from the articles of association and by-laws. From an in-ternational perspective, this is not self-evident. Only a small number of countries, amongst them the Netherlands, UK and Ireland, have a capital funding system. France has a cost allocation system for supplementary pensions and Germany has a scheme in which the pension provisions are entered onto the balance sheet of the sponsoring company.
The starting point of the PSW is that pension funds will reinsure fully the money earmarked for pensions with a regular insurer. Such a reinsurance may be omitted if the fund works on the basis of an actuarial and technical business memorandum. The act also makes demands on the investment policy of pension funds. It is required that the investment of the available funds shall be made in a sound manner, taking account of the nature of the liabilities. Company pension funds are also subject to rules with regard to investments in the sponsoring company. The aim of these rules is to prevent the fortunes of pension money from being too tied up with the employers through the back door.
The PSW contains a number of protective provisions with regard to employees. For instance, the act lays down that the employer and the employees have equal representation on the management board of a pension fund. In addition, it stipulates that employees shall obtain a minimum regarding to pension rights when they change their job. There are also provisions with regard to the information and consultation of pension scheme members.
The current supervision of pension funds implies that the funds have to submit their financial data to the VZK annually and that the supervisory authority has periodical discussions with the fund and carries out random on-site inspections. At the moment the VZK does not have many opportunities to impose sanctions in order to deal with a pension fund which does not comply with the law. In this field, legislation is being prepared which will enable the VZK to optimise its supervision of pension funds in future. Cees Verhagen is spokeperson for the VZK in Appeldoorn