The Netherlands has doubts about various proposals from the European Commission for the revision of the IORP Directive. These include additional mandates for pension regulator European Insurance and Occupational Pensions Authority (EIOPA).
The underperformance test, another Commission proposal, whereby funds are required to report to participants if overall returns are lagging behind, must “leave room for already existing nationally developed experiences with the provision of information,” according to the Dutch government.
The idea for a European standard for pension dashboards, to be designed by EIOPA, is also a cause for concern. With this proposal, the Commission goes further than necessary, according to the Dutch.
“The proposed requirements for the provision of information leave little room for existing national safeguards and implementation practices,” it said.
Such national leeway is necessary, according to the government, because the provision of information to participants is “highly dependent on the national cultural context.”
Custodian
Another new rule from the IORP reform proposal, under which funds with defined contribution (DC) arrangements are required to appoint one so-called depositary, or custodian, per scheme, raises questions.
A custodian monitors the investments for members and also exercises a degree of supervision. Custodians are mandatory for ordinary investment funds, in accordance with the European UCITS directive.
For pension funds, countries can now decide for themselves whether they prescribe this. But participants in DC pension funds should have similar protection as those in investment funds, according to the Commission.
This measure will require an amendment to Dutch law and lead to additional costs for funds, the government expects. The extent of these costs cannot yet be determined as existing custodians may be able to perform these tasks.
“Where necessary, the government will make every effort to limit the consequences of the Commission’s proposals for already well-functioning supervisory systems such as the one in the Netherlands, including the possible increase in costs for the funds and supervisors,” the government stated.
Cross-border pensions
The Commission’s IORP proposal also forces the Netherlands to remove a threshold for cross-border value transfers of pensions. Dutch law prescribes a member referendum for this, in which two-thirds of respondents must agree. The Commission proposal reduces this to a simple majority.
The Dutch government seems to accept this change. It considers a “meaningful consultation of participants” in such a value transfer to be particularly important. The possibility of introducing a turnout threshold of 25% can guarantee this, it suggested.
In this context, the government is also pleased with a clarification in the rules that in urgent cases the Dutch regulator has powers to intervene in foreign pension funds with Dutch participants. The government had asked for this during the consultation on the IORP reform last summer.
This article was first published on Pensioen Pro, IPE’s Dutch sister publication. It was translated and adapted for IPE by Tjibbe Hoekstra.
