To give mandatory industry pension funds more possibilities to expand, the cabinet proposes giving these funds the option of merging with temporarily separated assets. This looks like it will be an unnecessarily complex scheme. Simpler legal alternatives are available.
The cabinet has chosen the following starting points:
- Legal merger in the sense of article 2:309 of the Dutch Civil Code et seq is the basis of the proposal.
- A maximum of three mandatory industry pension funds may form a merger fund together.
- The merger fund can use separated financial and property assets.
- The asset separation is temporary (a maximum of 5 years with limited extension options).
- Every merger requires that the management boards of the funds to be merged must draw up an explanation for this. The cabinet proposal is further filling in the conditions that the proposal and explanation must meet.
- De Nederlandsche Bank is given the authorisation to prohibit a legal merger or legal split of mandatory industry pension funds.
- Expansion of the scope of the mandatory requirement of a merger fund is not permitted during the period in which temporarily separated assets are maintained.
- The first definition of the statutory scope of the merger fund may not include more than the original statutory scopes of the merged industry pension funds.
- Voluntary affiliations of an employer with a merger fund ‘are tested at the level of the individual employer’.
- A merger fund may not be divided into smaller collectives; the existing solidarity circle must be retained.
- Finally, the proposal desires that a merger fund maintains separate merger capital and a ranking scheme is proposed.
The cabinet proposal is a broad proposal. However, the ambition is to have this take effect as of 1 January 2018. Provisionally, it looks very much as if a complex scheme is being rigged up for 50 mandatory industry pension funds, while the question is whether this is really necessary. Read more about the important points, risks and alternatives here.