Pension funds have to abide by several general standards in the Pensions Act. The specific interpretation of these standards is sometimes set out in more detail in further regulations. An example is article 135 Pensions Act, which requires a pension fund to have an investment policy that corresponds with the so-called prudent person rule. DNB actively enforces compliance with this rule. An interlocutory decision by the District Court of Rotterdam on 24 November 2011 illustrates that higher requirements apply to DNB when enforcing such general standards. 

Vereenigde Glasfabrieken interlocutory decision

Stichting Pensioenfonds Vereenigde Glasfabrieken invested approximately 13 percent of its funds in gold bullion. DNB was of the view that among other things an investment of this proportion in one investment category carries an excessive dependence (concentration risk) with it and as such violates the prudent person rule. DNB subsequently imposed an instruction which obligates the pension fund to decrease its investment in gold substantially. The pension fund lodged an appeal against this instruction with the District Court of Rotterdam. The District Court concluded as follows:

  • article 135 Pensions Act refers to a general standard
  • if rules to explain those general standards are lacking, or vague, higher requirements have to be met when asserting a violation
  • the question whether a pension fund complies with article 135 Pension Act depends on the specific circumstances regarding the pension fund; enforcement thus requires a tailor-made approach by DNB
  • DNB was unable to clarify to the court which assessment framework and standards it used to interpret the general standards
  • the argument that no other Dutch pension fund had a comparable investment in gold bullion is by itself an insufficient ground to constitute a violation of the prudent person rule
  • the conclusion that the investment in gold bullion - as a percentage of total funds - deviated from a certain investment index was insufficiently explained by DNB

The District Court concluded that a proper reasoning for DNB's decision was lacking and gave DNB the opportunity to correct this. After DNB has taken a new decision, the District Court will again review the case. The case is also noteworthy because earlier in 2011 Stichting Pensioenfonds Vereenigde Glasfabrieken requested the judge in preliminary relief proceedings also before the District Court of Rotterdam to suspend the decision of DNB regarding the instruction. The court at that time concluded that DNB had substantiated its decision sufficiently and that DNB came to the conclusion rightly that there was a violation of the law. As is clear from the decision of 24 November 2011, the Court has since revisited its prior ruling.

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