The Dutch minister for Social Affairs, Henk Kamp, has said in a statement that pension funds will be able to select boards that consist entirely of external professional members.

The Minister said in a statement that the only time employers, employees and pensioners would have to be asked for their approval by such a board, would be in the case of "important decisions" and not when a matter concerns the daily running of the scheme.

Currently Dutch pension scheme boards consist of 50% employer and 50% employee representatives.

In a draft bill, the minister says pension funds can also opt for a board model consisting of employers, members and pensioners. With this choice Kamp is providing pensioners the chance to have a say in matters concerning themselves, and for all members to ensure good governance is carried out.

When schemes use this second (in-house) model, pensioners on the board can only account for 25%. Employees can make up a maximum of 37.5% but only if contributions have reached the highest level, otherwise they too are limited to making up 25% of the board at the most. Members can also be denied access to the board if their knowledge of pension related matters is not sufficient.

However, occupational schemes and company schemes still need to install a committee which oversees the board's actions.

A spokesperson for the Federation of Dutch Pension Funds (De Pensioenfederatie) told Pension Funds Insider that the organisation was not pleased with the Minister's proposals.

"Though creating more expertise on pension scheme boards and paying more attention to getting the necessary skills is an important issue for the federation, we are in serious doubt as to exactly how the Minister deals with these matters.

"By giving a committee the responsibility to approve matters which have been decided upon by an equal board made up of all necessary parties, the Minister does not do justice to the initial idea that responsibilities and possibilities should lie with those who are directly affected by the decisions at hand (e.g. employees, employers and pensioners)."

Stronger governance is very important, the federation says, "but it is not up to a separate committee to be at the helm. This brings risks and takes away the appeal of our Dutch pension model which currently receives praise from around the world."

The spokesperson said the organisation also regretted that the minister dropped the option of a one-tier board; a structure many funds were interested in starting to implement and has already proven to work in the US, the UK and Canada.

Kamp says in a statement he made the proposal based on an online consultation and says the department tried to include as many suggestions as possible.

First published 29.02.2012

azeevalkink@wilmington.co.uk