THE NETHERLANDS - The Dutch pensions sector should consider whether current legislation needs to be extended to cover all options allowed by the European Pensions Directive, says Netspar research.
The added option of ring-fencing will allow for solidarity groups, and probably also for mergers of pension funds which can keep providing for their own solidarity groups,
This is stated by Inge van Hoek in a Netspar paper on the impact on the Dutch system
of the European pensions directive under the Institutions for Occupational Retirement Provision (IORP).
Van Hoek's paper focuses on which structure will maximise the opportunities of European free market processes for the Dutch system, whilst minimising the threats, and without the loss of the crucial solidarity between and within generations.
According to the Netspar researcher, the present mandatory board structure requiring equal representation in Dutch pension funds could be a barrier to foreign schemes to move to the Netherlands, and vice versa. The directive allows for a professional supervisory board at pensions funds, she explained.
In addition, ability of pension schemes to contratct will facilitate contracting out or invitation for tenders, Van Hoek indicated.
In the researcher's opinion, a better definition of proper additional pensions is needed to find a suitable structure for the pensions provision in the Netherlands. In order to maintain solidarity, the sector must offer an insight into the correlation between paid contributions and built-up pension rights.
The pensions sector should also find out whether the mandatory participation should be changed from pensions providers to schemes, Van Hoek said. A next step could be a whole industry, or just individual employers, choosing a pensions provider, creating a free market process at the level of total collectivity, she pointed out.
Moreover, the pensions sector could ask itself whether the protective construction of mandatory participation is still necessary, the researcher indicated.