Proving support for compulsion

There are over 700 pension funds in the Netherlands. Most of them carry out schemes for employees themselves. Eleven funds focus on the liberal professionals. These occupational pensions funds serve physiotherapists, marine pilots, artists, general practitioners, medical consultants, notaries, obstetricians, vets, pharmacists, dentists and the oarsmen of the Rotterdam port. Together they have approximately 90,000 participants, deferred and pensioners and represent total assets of approximately €17bn.
The occupational pension schemes are mandatory, following the mandatory participation in an occupational pension scheme Bill. In 2000, the Dutch government announced the abolition of the legislation, unless the occupational funds agreed to additional solidarity in their schemes and that the support for the mandatory status would be proved periodically. Six years later, the new bill, which contains both requirements, has come into force.
To visualise the support for the mandatory schemes, a separate association with the sole purpose of providing an occupational pension scheme, needs to be established. It is assumed that, if it least 60% of the participants of the scheme is a member of the association; the mandatory status of the scheme has sufficient support.
The association has a number of legal tasks, for example applying for the mandatory status, approving changes of its rules and appointing board members of the pension fund. The occupational schemes recognise the necessity of intrinsic quality of the association for making them really interesting to the participants. That’s why the occupational pension funds are deliberating about the model of the association.
Every scheme is entitled to the choices which fit its own occupational group. However, they all need to answer the same questions, for example, who can be a member? Is it only the participants to whom the mandatory status applies, or is it the deferred as well, or the pensioners who also have an interest in rules changes and the appointment of board members? How can membership of the association be organised in a service-based way? Who should be on the board and what should be the relation with the occupational body, which had the responsibility for the pension scheme up to now, and which is still looking after the social economic interests of the fellow professionals?
If the pension scheme has a council of participants, what will be the relation to the occupational pension association? Will there be a division of tasks, or will the council merge with the association? Will the association get its revenues from members’ contributions or from being subsidised by the pension fund, or from a combination of both?
It is important of course that the board of the occupational pension association can rely on sufficient expertise and adequate support. This is just a handful of the many questions around the modelling of the occupational pension association, which needs to be established by 2007 if an occupational scheme wants to keep its mandatory status.

To further enhance the intrinsic quality of the association, another task, which relates well to the legal instruction, is conceivable As of 2006, the Dutch pension funds are supposed to apply their governance code for transparency and openness of board functioning. One of the pillars of pension fund governance is the accountability body, which must judge whether the board of the pension fund properly looks after the interests it is supposed to guard.
It is within the context of the occupational pensions to let the association act as accountability body as well. At the same time, this will enhance the members’ participation. Since the occupational pension funds embrace the motto ‘from, for and by fellow professionals’, their rate of participation has always been high.
The large influence of the members is being expressed by the composition of the funds’ boards, which consist totally of the schemes participants. After the modelling of the occupational pension association has been finalised and the concept constitution can be written, the communication can be taken up.
In the meantime, most schemes have already started making a communication plan for informing the participants on the new legislation, and the importance of the occupational pension association. The first communication to the participants can be expected in the spring of 2006.
After a difficult delivery, the mandatory occupational pension schemes Bill has finally emerged into the world, and it needs more solidarity and support. The occupational pension funds will do everything to make sure it is a
René Bastian is director of the Union of Occupational Pension Funds

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