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VPL purchasing factors amended to prevent reduction of pension entitlement
In June 2018, we reported on the Dutch Central Bank’s Q&A about the funding of VPL-conditional pensions. DNB’s intention was to ensure that pension funds fund the VPL-conditional pension in at least a coverage rate-neutral manner. Complying with DNB’s amended position would have substantial financial consequences for social partners and participants. The Minister of Social Affairs and Employment believed that these consequences were undesirable, and announced that the rules would be amended. The Council of State supported the Dutch Central Bank’s position. However, a decree published in late December 2018 shows that the minister has overruled both the Dutch Central Bank’s position and the Council of State’s advice. Under the decree, the fee basis for the purchasing factors may not be more adverse for the fund’s financial position than the fee basis for the premium charged by the fund for the basic pension scheme. The decree also requires that pension funds set the purchasing factors after a discussion with the pension fund bodies. According to the minister, the decree meets the interests of all parties involved in the most balanced manner.