The solidarity provision legally unravelled
“Solidarity provision provides a measure of fairness in proposed new pension provision but needs to be better defined”
The solidarity provision is a mandatory buffer for occupational pensions in the proposed new pension legislation. It will share profits and losses on investments and accommodate changes in life expectancy and deaths between different generations. But it also elicits various legal questions, such as possible infringement of competition law and whether voluntary schemes should also have a solidarity reserve.
Key Takeaways for the Industry
- The concept of the solidarity reserve justifies infringing competition law.
- The proposed restriction of the solidarity reserve to mandatory sector pensions or a pension fund for professionals is not adequately argued.