Pension Right and Entitlement Conversion ('Invaren'): Lessons from the Netherlands with Regard to the Meaning of the EU Charter

Abstract

In the Netherlands, a way of dealing with the challenges is the so called “conversion” of pension rights. This “conversion” means the collective conversion – established on the basis of changes to the applicable legal/regulatory pension framework, implemented upon governmental act – of accrued pension rights and entitlements arranged by Dutch pension funds into rights with a different, and especially (more) conditional character without the explicit consent of the individual scheme member (hereinafter: conversion). On this basis, pension rights will be stripped of their unconditional (i.e. in principle guaranteed) character. As a consequence, the pension funds are –at least to a certain extent – released from the relevant obligations, enhancing the financial position of such IORP and sustainability of the remaining pension arrangements, so is the general idea. However, this act of government brings about questions of compatibility of this conversion with European law. The Dutch government issued a report where the compatibility with European law was investigated. Under the given facts and circumstances no breach of European law was found. However, in many studies Dutch authors and the Dutch policy makers seem to ignore to a great extent the applicability of the Charter of Fundamental Rights of the European Union (hereinafter: the Charter) in connection with the conversion.