EC asked to investigate Dutch compliance with EU pension law

The Dutch MEP, Antonius Manders, has written to European Commissioner, Mairead McGuinness, to ask the European Commission to investigate Dutch compliance with European regulation on indexation.

Manders, who also made a formal complaint, said he had a personal interest in the issue because it is mandatory for him to be a part of the Dutch fund ABP.

“I am personally involved when it comes to the European and national rules that apply to pension funds, the management of those funds and the implementation of the Institution for occupational retirement provision (IORP directive),” he wrote.

Manders explained that pension benefits and entitlements of most of the pensions in the Netherlands, including his, were obliged to calculate with discounts or non-indexation for the pensions in the period from 2008 to 2022. In this period mandatory Dutch pension funds did not index, which Manders said has caused a purchase power loss of around 25 per cent.

“This means that many pensions, including my pension, will be much lower than foreseen when joining this compulsory pension fund. In my opinion, this is a breach of the IORP I and II directives and also in distortion of the rulings of the European Court of Justice,” he said.

As part of his argument, he cited the court case Albany (C-67/96), in which the European Court of Justice held in point 109: "Such a situation would arise particularly in a case where, as in the main proceedings, the supplementary pension scheme managed exclusively by the fund displays a high level of solidarity resulting, in particular, from the fact that contributions do not reflect the risk, from the obligation to accept all workers without a prior medical examination, the continuing accrual of pension rights despite exemption from the payment of contributions in the event of incapacity for work, the discharge by the fund of arrears of contributions due from an employer in the event of insolvency and the indexing of the amount of pensions in order to maintain their value."

Manders believes that this point shows that Dutch pension law is in breach with EU law.

“How does the Commission view this lack of indexation? Does the Commission consider this a breach of pension rights? In the YS case (C-223/19) the ECJ held that pension rights and indexation in principle cannot be touched, or only to a very limited extent,” he said.

Furthermore, Manders also raised concerns about the infringement of property rights, as pension rights are property rights, according to European law.

“All interventions by the Dutch State on the conditions under which this right is granted can therefore be seen as infringements of the right of ownership. This involves the introduction of the risk-free interest rate as a discount rate, but also buffer requirements, the requirement for future-proof indexation, the strengthening of these requirements in the new Dutch financial assessment framework and the conversion of the DB to the DC system.

“Therefore, my question, is the non-indexation an infringement of property rights under Article 17 of the Charter if the Dutch pension rights under a compulsory contract are decreased in a way that the criteria in the Albany case and the YS case are not met?,” he asked.

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