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Dutch schemes face government overhaul

NETHERLANDS - The Dutch Ministry of Social Affairs has proposed overhauling the Dutch industry pension funds along the lines of the models used – and now seemingly discarded - by corporate schemes such as Philips.

Under the proposals - prompted by the European pension fund directive - Dutch industry pension funds would have to separate policy from management and administrative tasks, with the latter company operating on the free market.

Both KLM’s Blue Sky Group and Philips’ Schootse Poort have had varying degrees of success in getting new business. Blue Sky has said it is actively exploring cooperation possibilities, while Schootse Poort has been renamed and closed to new business.

A Ministry spokesman could not comment on why it had opted for the same model, adding she was “not aware” of the firms’ status.

The Dutch pensions system, which consists of a mixture of free market elements and collective solidarity, is “unique in Europe”, Dutch Secretary of Social Affairs and Employment Aart-Jan de Geus writes in a letter to the consultative body STAR (Labour Foundation).

However, the Ministry of Social Affairs is worried the European pensions directive “could lead” to an end of the solidarity principle. The new European rules are aimed at liberalising the occupational pension fund market.

It is therefore proposing a model in which administrative and management tasks are completed separated from the policy side of a pension fund. The new model is to fall under the responsibility of pensions watchdog DNB/PVK.

This effectively means pension funds like ABP and PGGM could be split up into two separate entities, in which the pension fund board will set policy while a market-driven company will be in charge of asset management and administrative affairs. This company is expected to compete for new business on the free market.

In this model, the pension fund board is to operate as a not-for-profit entity. This means the obligatory participation of Dutch workers in company pensions schemes would be maintained, De Geus writes.

The Labour Foundation is to advise de Geus on the new proposals before February next year.

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