Conversion from DB to DC: The EU Pension Custodian
By: Hans van Meerten
Worldwide we see a move to DC schemes. Most – if not all countries – choose the operate DB next to DC.
However, in The Netherlands, the legislator choose for so-called conversion: transforming ‘old’ DB- to ‘new’ DC.
In 2011, the Dutch legislator introduced the so called ‘Pension Custodian’. It could only be used for the Dutch 2nd pillar DC IORP, the PPI.
This Pension Custodion should *not* be confused with the IORP II Custodian.
However, with the implementation of the IORP II directive, the Pension Custodian can also be used for European pension funds.
This offers new – but already existing! – opportunities for cooperation between pension funds in Europe. All the mechanisms that apply to the Pension Custodian already exist since 2011 when the PPI Act came into force.
The Pension Custodian can thus potentially be used as the ultimate ‘ringfencing tool’ for pension funds where DB en DC rights can be operated simultaneously. The Pension Custodian creates a hard property law separation between assets belonging to pension schemes. As the right of ownership is also not affected and the individual objection is preserved, the Pension Custodian, as outlined above, can be a very good alternative to the Dutch conversion.
Sources: @PapersSSRN
