NETHERLANDS – Jetta Klijnsma, state secretary for the Dutch Ministry of Social Affairs, has announced that the new cross-border pensions vehicle API is to replace the 'multi-scheme'.
In a joint consultation document with the Treasury, Klijnsma said the API would be able to provide more than one defined benefit (DB) arrangement with mandatory ring-fenced assets.
She said the API was in fact an elaborated version of the 'multi-scheme' and had been modelled partly on the experience gained from the PPI defined contribution cross-border vehicle.
According to the proposal within the consultation, both company pension funds and non-mandatory industry-wide schemes can act as an API.
However, Klijnsma said mandatory industry-wide schemes and occupational pension funds should be barred from operating as APIs, as they must charge an average premium and always act a single financial unit, following the "solidarity principle".
In contrast, the API offers benefits of scale for several pension plans, without compulsory risk sharing, she said.
According to the Dutch Cabinet, employers that have been exempt from participating in a mandatory industry-wide scheme should also be allowed to place their pension plan with a company scheme run as an API.
The same would apply for employers with their pension plans currently carried out by an insurer.
Because third parties, including insurers, would also be allowed to establish an API, the principle of level playing field between insurers and pension funds would remain intact, Klijnsma said.
In the Cabinet's proposal, the API can choose between a board with equal representation and an independent board.
With the first option, however, the board must include stakeholders of each pension plan.
Because not every company has to be represented, the scale of the board can be limited, and the possibilities to elect the most capable board members would be increased, according to the state secretary.
In case of an independent board, a stakeholder council should be required for each grouping of ring-fenced pension assets, she stressed.
The Cabinet further suggested placing internal supervision at an API with the independent supervisory board or the non-executive members of a one-tier board, rather than with a visitation committee.
Klijnsma strongly urged participants in the consultation to indicate which added value the API could offer to the Dutch pensions system, and which alternatives were available in case of any shortcomings in the current proposals.
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