Transfer of €2,000bn assets to new Dutch pension system raises ‘legal problems’

The transfer of €2,000bn of assets from the current Dutch pension system to the new system raises “insurmountable legal problems” according to Professor Hans van Meerten.

As part of the transfer to the new system, the existing benefit agreements need to be converted into contribution agreements. However, van Meerten believes the responsible Minister of Social Affairs, Wouter Koolmes, must look for alternatives.

“The conversion will be a major problem in the development of the new pension system. The reactions to the draft bill were predominately (very) negative. This is theft, that’s how most of the reactions can be summed up. And indeed, many stakeholders, lawyers, and economists are very concerned about the need and sustainability of conversion,” he stated.

One of the issues relates to how the infringement of European property rights is justified, as van Meerten said changing from a benefit agreement to a premium scheme is an infringement of the European right to property that cannot be easily justified.

“Many pension funds are afraid of legal claims if they convert the schemes – because they are ultimately liable for this if things go wrong. The fear of claims is further reinforced by the fact that the individual right of objection under Section 83 of the Pensions Act is inactivated with regard to conversion.”

Instead, van Meerten believes that ‘parking’ existing rights in a separate entity and to decoup the new claims from it, while retaining an individual right of objection. However, he said this is dismissed by the sector as too complex.

“I think this is not the case; several pension funds are already implementing different schemes. And this is nowhere near as complex as the Dutch conversion.”

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