EUROPE – The defined benefit (DB) pensions vehicle known as the API, proposed recently by the Dutch government, would be too geared towards the domestic market to be a truly cross-border offering, Mercer has argued.
In the consultancy's initial response to the proposal, head of innovation Tim Burggraaf said: "The API was initially designed to house Dutch multinational companies' pension funds abroad as well.
"Although the proposals contain international references, it seems the API is going to be used to scale up Dutch pension funds, as has happened with the PPI defined contribution vehicle."
Burggraaf pointed out that Jetta Klijnsma, state secretary at the Ministry of Social Affairs, indicated that she might reconsider the mandatory participation in pension funds once the API vehicle was operational.
"Because an API can also implement DC plans, we would no longer need pension funds, insurers or PPIs," Burggraaf said.
"And because every organisation can establish an API, there will be no need for the different legal treatment of pension funds and insurers.
"If the distinction is to become purely an optional one, the pressure on mandatory participation might increase."
In his opinion, the API's added value for the Dutch pension system is the possibility of keeping different pension assets separated within a single organisation.
"But I question whether the API would become an attractive option for cross-border purposes," he added.
"Due to the relatively strict supervision in the Netherlands, it would probably be more attractive for Dutch employers to place their schemes in the less regulated Belgian pensions vehicle OFP."
However, Burggraaf did say that the government's consultation document had been a "first step in the right direction".
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