What is a pension fund?
The BES Pensions Act (Pw BES) defines a pension fund as a legal person in which moneys are or were collected for the benefit of a least two members or deferred members or their dependants and are managed under the terms of a pension scheme. The BES Pensions Act goes on to distinguish between two types of pension fund:
- a corporate pension fund: a pension fund for a particular company or group of companies; and
- an industry-wide pension fund: a pension fund for the benefit of one or more industries or parts of an industry.
An employer who concludes a pension agreement with his employees or employees must outsource the administration of this pension agreement. The BES Pensions Act determines to which categories of organisation the administration of a pension agreement may be outsourced:
- a corporate pension fund or industry-wide pension fund;
- an insurer;
- a pension institution from another part of the Kingdom of the Netherlands; or
- an insurer which has its seat outside the public bodies of Bonaire, St. Eustatius and Saba, provided that it is entitled to carry on the business of life insurer or non-life insurer under the BES Insurance Industry (Supervision) Act.
Duty of notification
Once a pension fund has been established notice of its establishment must be given within three months to the Minister of Social Affairs and Employment (the Minister) and De Nederlandsche Bank (DNB) under the BES Pensions Act. This must be done in a registration form adopted by the Minister.
Within the same period the board of the pension fund must file the following documents with the Minister and DNB:
- a copy of the deed of establishment;
- a board-certified copy of the pension scheme rules;
- a board-certified copy of the agreement setting out the arrangements for the payment of the employer’s contributions and the amount that the employer deducts at source from the members’ pay.
For the members of the pension scheme, it is of the utmost importance for the fund to have a prudent financial structure. This structure must be laid down in the actuarial and technical business report, in accordance with the rules of the BES Pensions Act and the underlying regulations. These provide that the board of a pension fund must explain how the pension agreement is to be funded. In broad outline, the actuarial and technical business report deals with the structure of the pension entitlements and their funding, the composition and valuation of assets and liabilities of the fund, the management and internal administration of the fund and the matching of its assets and liabilities. The capital adequacy requirement too is part of this.
Intervention by DNB
DNB does not have a right of approval in relation to the establishment of a pension fund. However, it does have responsibility for checking that the filed documents are in compliance with the relevant legislation and regulations. If DNB considers that the documents do not fulfil these requirements, it notifies the board of the pension fund and requests it to make the appropriate changes. Depending on the degree of criticism and the subject concerned, the fund is given a number of months in which to incorporate the comments into the documents. If necessary, DNB may then issue a direction or impose a fine.
If the pension fund makes changes at a later stage to the documents filed with the Minister and DNB at the time of establishment, this must be notified to the Minister and DNB. Under the BES Pensions Act the pension fund must do this within three months of the date on which the change takes effect. For this purpose it must send the Minister and DNB a copy of any changes to the pension fund constitution or a board-certified copy of the changes to the pension rules and, in so far as it is a corporate pension fund, a board-certified copy of changes to the agreement.