NETHERLANDS - The Foundation of Company Pension Funds (OPF) has called for amendments to be made to the Pension Act to allow individual company pension schemes to work together in a companies' pension fund.

The OPF is hopingis to stop the decrease of the number of company schemes as "between 100 and 150 pension funds are in liquidation or considering to take this step", according to Frans Prins, OPF director.

"Since 1998, one in three company schemes has disappeared, mainly because of the increased pressure from new legislation and regulation. The present credit crisis also underlines the need for scaling up," he added.

The Pension Act so far only allows company schemes to cooperate within groups of companies or based on historic ties.

The present option for small company schemes wishing to remain independent is to join an industry-wide scheme, or to make direct arrangements with an insurer.

However, company schemes would prefer to be able cooperate with related schemes and want to avoid the usually higher costs of insurers, Prins made clear earlier.

"The proposed changes to the Pension Act are limited," stressed Mila Hoekstra, secretary at OPF and architect of the proposed concept.

"We don't propose any change in the existing arrangements for collectivity or solidarity. The collectivity of each individual company pension fund would merely be placed within a communal companies' scheme," she pointed out.

In order to allow a merger of company schemes, the ‘demarcation of territory' in the Pension Act needs to be widened, the OPF argued.

In addition, individual schemes must be allowed to ring-fence their assets, it said.

The OPF believes a companies' scheme would offer economies of scale in asset management, purchasing power and administration and at the same time would ease personal pressure on schemes board and their supporting staff.

By pushing for a change in the Pension Act, the OPF said abandoned its bid to use the pending pension vehicle API, its director told IPE.

"We are expecting long discussions before the API is ready, and we cannot afford to wait any longer," Prins explained.

"If the proposed amendment of the Pension Act is swiftly enacted by the legislator, it could be law by 1 January 2010."

The OPF proposal is supported by the other lobbying organisations for pension funds  the Association of Industry-wide Pension Funds (VB) and the Union of Occupational Pension Funds (UvB).

It is also supported by the pensions regulator De Nederlandsche Bank, a spokesman confirmed.

If you have any comments you would like to add to this or any other story, contact Julie Henderson on + 44 (0)20 7261 4602 or email julie.henderson@ipe.com

Topics