Reforming Pension Fund Governance in the Netherlands: Finding a Collective Voice

As in other European countries, the introduction of more freedom of choice in the pension system has been hotly debated in the Netherlands. Much of the debate has focused on the contents of pension plans, such as flexibility in retirement age, benefits levels and investment options. A second dimension of freedom of choice, however, is pension fund governance or the way in which choice is being expressed. This paper will interrogate the institutionalization of freedom of choice by analyzing new developments in pension fund governance in the Netherlands. In particular, it will focus on the institutional structures through which plan participants are able to exert control over their own retirement provision. One characteristic of the occupational pension system in the Netherlands is that individual employers and employees have very little say about their occupational pensions: participation is legally mandated and the contents of the plans are decided by social partners at the industry level. As the performance of occupational pension funds has declined considerably in the wake of the financial crisis, there have been widespread calls from plan participants for more control over occupational pensions. This Fall, the Minister of Social Affairs is therefore introducing new legislation that would improve the representation of plan participants on occupational pension boards.

This paper will review a recent policy experiment with collective voice in the Dutch occupational pension system, namely the introduction of so-called pension associations for the liberal professionals (beroepspensioenverenigingen). Unlike most sectors, where the governance of occupational pension funds is left to representatives of the social partners, participants in these professional funds have a collective say over the contents of their pension plan and the way in which their pension fund is governed. Having only been operational since 2007, the pension associations offer an interesting case to study how participants reach collective decisions over their pension plan and pension fund. Based on in-depth interviews with representatives from various pension associations, this paper interrogates the institutional structures of these associations, their daily practices and their role within the broader occupational pension system.  What emerges from this analysis is that the top-down introduction of collective voice through these pension associations has created a myriad of practices. The paper shows that the implementation of collective voice options has been complicated by three interrelated factors: the institutional legacies of strong and independent pension boards, the absence of a participatory culture among plan participants, and legal uncertainties created by the new Pension Act. The paper will conclude with a number of recommendations on how these problems can be remedied.