New Dutch FTK faces hurdle of merging past, future pension rights
The introduction of a hybrid pensions contract under the revised financial assessment framework (FTK), offering a mixture of nominal and real benefits, will need to address the problem of merging new pension rights with existing accrual, a pensions lawyer has argued.
However, because the odds of a successful legal claim by pensioners for violation of ownership rights was small, the development of the new FTK should not be further delayed, René Maatman of law firm De Brauw Blackstone Westbroek said.
In a contribution to Me Judice, an independent forum for economic debate, he suggested that the Dutch state shoulder the risk from the inevitable conversion of pension rights – in order to both prevent further damage to pension funds’ reputation and to maintain society’s support for the pensions system.
In Maatman’s opinion, the possibility that merging pension rights would lead to financial liability was very small. “State secretary Jetta Klijnsma does not need to further delay her FTK proposal for this reason,” he said.
The lawyer suggested that the reason of the repeated delay in the presentation of the FTK bill was that Klijnsma has concluded that a hybrid contract would also cause problems in merging the two systems.
“However, the possibility that a court will honour legal claims for violation of ownership rights seems very remote to me,” Maatman said. “The legislator is entitled to adjust the FTK, and the government has good reasons for changing the pensions system.”
The lawyer added that European Court of Justice had previously demonstrated it would not easily accept arguments about violation of ownership rights. The court has, in the past, also accepted appeals that legal changes to future benefits structures were necessary for the financial sustainability of the pensions system.
In his opinion, the current IORP Directive also offered the the Dutch government ample margin for changing the FTK.