Conversion by Pension Funds: “This Is How To Do the Conversion”
In this paper, the researchers describe and analyze the process of plan conversion, from the lead-up to the amendment of the pension agreement by the employer (social partners) all the way through to the conversion decision by the pension fund. The conversion decision results in an internal collective value transfer, whereupon the conversion is completed. The goal is to provide guidance in the decision-making process for pension funds acting in consultation with the social partners.
The relevant provisions in the Future of Pensions Act (Wet Toekomst Pensioenen, or WTP) regarding this are sometimes unclear, which is leading to questions about what actions the social partners and pension funds need to take. The WTP contains thousands of pages of laws and regulations and parliamentary history. But the explanation or information provided in it is sometimes confusing or contradictory, in part because subsequent amendments and growing realizations have led to some initial positions being revised.
The conversion process involves three distinct steps:
i) The employer’s modification of the pension agreement into a solidarity-based
or flexible pension agreement;
ii) The conversion request from the employer; and
iii) The pension funds’ conversion decision.