Pension fund governance
The fundamental principle of the Dutch pension system is that a large part of the working population is obliged to participate in a pension scheme. This mandatory pension scheme will be agreed by the social partners (representatives of employer and employee organisations). The social partners have traditionally also formed the management of the pension funds.
Five management models
The Pension Fund Governance (Further Measures) Act (Wet versterking bestuur pensioenfondsen) came into effect on 1 July 2014. The aim of this Act was to improve the expertise of pension fund boards, to strengthen internal supervision and ensure that those exposed to risk are adequately represented. Since 1 July 2014, a pension fund can choose one of five management models:
- the joint board model
- the independent board model
- three types of the one-tier board model
Whichever management model a pension fund chooses, the board has final responsibility and must give balanced consideration to the interests of all stakeholders in its management of the pension scheme and its decision-making. The choice of management model determines the composition of and mutual relationship between:
- the board (social partners/pensioners/independent trustees);
- the internal supervision (board of supervision/visitation committee or non-executive trustees); and
- the representation (accountability body or stakeholders body)
Representation of risk bearers
The risk-bearers for the pension capital that is managed by the pension funds are the current and deferred participants and the pensioners. They have input through the accountability body or the stakeholders body, and are at all times represented by the social partners that agree the pension scheme on their behalf.
The Pension Funds Code
Together with the Labour Foundation, the central consultation body for employer and employee organisations, the pension sector has itself formulated a code with guidelines for promoting professionalism and expertise on pension fund boards: the Code of the Dutch Pension Funds. This code, which is a good example of self-regulation, is anchored in the Dutch Pensions Act and obliges all pension funds to apply the standards in the code or to explain which standards they do not apply and their reasons for not applying them. Public reporting is at all times mandatory with respect to a number of standards. A specially appointed independent Pension Funds Code Monitoring Committee has been tasked with promoting the applicability and usefulness of the code and testing compliance with the code.