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Optas' art deal 'morally contemptible' – Borgdorff

NETHERLANDS - Peter Borgdorff, exiting chairman of Dutch pensions association VB, has labelled plans to use the surplus from the former Rotterdam harbour pension fund to subsidise art as "morally contemptible".

Borgdorff made the comments at the IPE Awards Seminar in Vienna last week, while discussing the Optas case with Dutch Christian Democrat politician Pieter Omtzigt.

Borgdorff argued employers' and employees' contributions have been principally paid to build capital for the provision of pensions.

In March, Aegon announced it had reached agreement to acquire its fellow-life insurer and group pension specialist Optas in a €1.3bn transaction; soon after Dutch media reported assets from the harbour workers' pension fund, managed by Optas, would be used for an art subsidy.

"The VB does not know all details for the Optas-story and hence cannot pass judgement on the question if all relevant legal requirements have been followed correctly," a spokeswoman for the umbrella organisation for pension funds said in a written statement to IPE.

She added: "We don't know anything about the division of the surplus or who has taken decisions in this context; however the VB does have views on the moral aspects that are connected to this case."

The VB believes only after the pension rights have been indexed and paid to participants, can remaining assets - in circumstances, for instance, where a fund is being wound up - go to a different cause.

"Only the parties who have made the agreement about the pension arrangement can decide to which cause such remaining assets would go," said the spokeswoman.

The organisation says it is therefore content with an article in the new Pension Law which states arrangements, where a fund goes into liquidation, have to be defined in a fund's statutes.

Omtzigt told IPE Dutch pensions minister Piet Hein Donner has started an official investigation into the case.

"The minister is doing the research now and will report back to us by Christmas," said Omtzigt in an interview with IPE's deputy editor George Coats for the upcoming December edition of IPE.

He added the root cause of the problem is ownership in a defined benefit system is not well-defined legally: "We have 100% cover and 30% surplus."

In the mid-1990s, unions and employers agreed the harbour pension fund should be returned to the individual companies, after a period in which pension contributions had been used to fund early retirement.

This apparently happened to such an extent, it was decided to put an independent party in charge of the fund, though financial 'irregularities' appeared, Omtzigt told IPE.

The fund was then dissolved, and many companies went to an insurance scheme, while the surplus ended up in what Omtzigt calls a "weird nowhereland".

A spokesman for Aegon said the firm has paid a takeover sum of €1.3bn to the Optas foundation of the Rotterdam harbour for the pension fund.

"We will fully honor the pensions obligations we have towards Optas' policy holders, but we have no influence over the actions of the Optas foundation," he said.

He added Aegon can understand the confusion and anger in this affair, but stressed  the assets it has for the fund are purely meant to pay for the liabilities of the fund, and is different from the money Aegon paid to Optas.

In June, the Dutch union for harbour workers, CNV Havens, wrote a letter to DNB warning the Dutch central bank and pension regulator to be "extra cautious" in Aegon's takeover of the pensioenstichting Optas.

In an article in the Dutch newspaper Volkskrant, Stichting Optas was quoted as saying that the harbour employees have no right to decide over the money it was paid by Aegon.

Despite repeated attempts, IPE has been unable to track down officials who are authorised to speak for the Optas foundation.

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