Dutch government to review problem of pension-fund relocations

The Dutch government has said it plans to look again at the contributing factors behind the problem of local pensions fund relocating to other countries, and that it could make “legal adjustments” if deemed necessary. 

State secretary for Social Affairs Jetta Klijnsma, fielding lawmakers’ questions on the revised IORP Directive, said instances of pension funds moving abroad were “undesirable”, particularly if driven by regulatory arbitrage or higher discount rates for liabilities. 

She said the country’s new general pension fund, the APF, could provide Dutch schemes with an alternative to establishing cross-border pension plans.

She also sought to put the scale of the problem into perspective by pointing out that Belgian institutions were now managing no more than seven schemes on behalf of Dutch companies, and that the combined assets thereof amounted to just €550m, or 0.1% of overall pension assets in the Netherlands.

Klijnsma pointed out that the revised IORP Directive had provided the Dutch regulator with explicit criteria for blocking cross-border transfers – if individual pension rights were violated, for example, or in the event of underfunding relative to the new financial assessment framework (nFTK).

She also took pains to emphasise that both the company and pension-fund participants, as well as the regulators in both countries, had to approve a relocation.

She said the revised IORP Directive did not demand further harmonising of capital requirements for pension funds, or contain a delegated competence for the European Commission or EIOPA.

The state secretary said the EU had not been granted the ability to “cream off” pension assets, and that it would be up to EU member states to design their European Pension Benefit Statement (PBS).

The European Parliament still has to vote on the revised directive, scheduled to come into force at year-end.

After that, member states will have two years to incorporate the rules into their local laws.

The IORP Directive is to be evaluated after six years, Klijnsma said.