Can the PPI offer a PEPP

1. 1
What is the legal margin for a Dutch PPI to operate a PEPP?
Alegal analysis byAn Wouters1
Concluding Q and A
In the Netherlands the debate on the PEPP proposal concentrates on the impact on the system of
mandatory participation when an IORP, perceived as a second pillar institution, is granted the
possibility to offer, what is in the eyes of the Dutch legislator, a third pillar pension product.
The main error in perception seems however the point of departure of the Dutch legislator: PEPP
is not a Dutch third pillar pension product, it is an European pension product. There is no EU law
definition of ‘pillars’. The applicability of the PEPP therefore should be based on characteristics
as attributed by the European legislator and by EU (case) law.
This analysis focusses on the question: if the PPI IORP operates a PEPP, is that in line with Dutch
and EU Law and how does that effect the Dutch system of compulsory participation to a pension
fund?
The conclusions of this analysis can be summarised as follows:
1
Fellow at Utrecht University, EU Pensionlaw. The author would like to thank Hans van Meerten for the discussions
and remarks during the writing process.

2. 2
Question Answer
Is a PPI ex article 1:1 AFS an eligible PEPP
provider?
Yes, provided the following conditions are
met:
- The PPI is exempted from biometric
risks;
- The PPI operates DC and individual
pension schemes
Which legal obstacles can be identified for a
PPI to manufacture and distribute PEPPs?
None when following the “AFS-route”;
To what extent do the proposed
amendments (41, 45 and 144)2 on biometric
risks fulfil the AFS-route?
They do comply with the reasoning in the
“AFS-route”.
When a PPI offers PEPP does this imply an
infringement of compulsory membership?
No.
2
The amendments on the proposed PEPP Regulation related to biometric risks. See also: draft version of the report
on PEPP by Sophia in ’t Veld : https://vbngb.eu/wp-content/uploads/2018/04/Pan-European-Pension-PEPP-201803-
EPRS_IDA2018615656_EN.pdf.

3. 3
Table of Contents
1. Introduction
2. Part 1: The Proposal
2.1.Objectives and Reasons
2.2.PEPPs: definition, providers, the Dutch problem
2.2.1. Definition
2.2.2. Providers
2.2.3. IORPs and PEPPs: the Dutch problem
3. Part 2: IORPs in accordance with the Pension Act and the Act on Financial
Supervision
3.1.Issue 1: Exemption from biometric risks
3.2.Issue 2: “the Pension Act”-route
3.3.Issue 3: “the Act on Financial Supervision”-route
3.3.1. Who is considered ‘beneficiary’?
3.3.2. Mandatory participation
4. Part 3: Reviewing amendments on biometric risks
5. Conclusion
6. Bibliography

4. 4
1. Introduction
This analysis will address the main question as to whether it is legally possible for a Premium
Pension Institution3
(PPI) defined in article 1:1 of the Act on Financial Supervision (AFS), to offer
a pan-European Personal Pension product4
as defined in the proposal for a regulation on a pan-
European Personal Pension product.5
The analysis consists of 3 parts:
The first part of the analysis will concentrate on relevant aspects of the proposal such as the
objective, reasons, the definition of PEPPs, its providers and aspects of, as in this analysis is
referred to the ‘Dutch problem’.
The second part will examine to what extent PEPPs can be manufactured and distributed by IORPs
in the sense of the Dutch Pension Act and the Act on Financial Supervision. It will start with
describing the nature of biometric risks. Then two possible routes will be explored to answer the
main question: the ‘Pension Act-route’ and the ‘Act on Financial Supervision-route’. In both parts
the focus will be on the compliance of an IORP offering a PEPP product with the principle of
mandatory participation. With the implementation of the IORP I Directive, the Netherlands has
created the PPI. The PPI, exempted from biometrical risks and insurance risks6
contains margin to
offer PEPPs (DC).
Finally, in third part, the European Parliament amendments7
concerning biometric risks will be
highlighted. A small commentary will conclude this section.
3
Hereinafter abbreviated as “PPI”.
4
Hereinafter abbreviated as “PEPP product”.
5
Proposal for a Regulation of the European Parliament and of the Council on a pan-European Personal Pension
product (PEPP), COM(2017)343 final, 2017/0143(COD), Brussels, 29 June 2017 (Hereinafter abbreviated as “the
Proposal”).
6
Due to article 42 of the proposed PEPP Regulation the focus in this report on biometric risks exclusively is chosen
deliberately. The aspect of a PPI exempted from insurance risks will not be explored in this analysis.
7
A draft version of the report on PEPP by Sophia in ’t Veld can be read by following this link: https://vbngb.eu/wp-
content/uploads/2018/04/Pan-European-Pension-PEPP-201803-EPRS_IDA2018615656_EN.pdf

5. 5
2. Part 1: The proposal
2.1. Objective and reasons
On 29 June 2017 the European Commission issued the proposal on PEPPs. Its main purpose is to
establish a pension product to be regulated partially8
on European level. The main objective can
be divided into 6 sub purposes9
:
• To set up a supplementary voluntary scheme. This so called “2nd
regime”, seeks to
complement the existing national schemes rather than replacing it10
;
• To enable providers to create a personal pension product on a pan-European level;
• To divert more household savings from traditional instruments11
;
• To provide measures that guarantee consumers are fully aware of the main features of the
product;
• To facilitate consumer liberty to elect a specific investment profile12
;
• To let consumers benefit from EU-wide portability, full transparency of costs and the
ability to switch from provider13
.
Why does the proposal focus on these objectives? Considering the reasons to draft the proposal
the current situation for individuals to complement pension savings is limited. This holds
implications for a proper functioning of the capital market. The European Commission starts from
those two perspectives to legitimate the elected goals.
From the first perspective, the possibilities for individuals to seek safe and long-term additional
pension savings, it is the view of the European Commission that current markets are poorly
developed: Firstly there are different types of products within the European Union that holds
diverging standards as to quality and return. Secondly, the choice for products based on long-
term sufficiency is limited.
Above all, the key element in the intention to provide a solution to meet the individual’s need is
consumer protection. The rights in terms of information and protection against poor investment
policies are to be envisaged within the proposal.
8
Provisions concerning retirement age, the decumulation phase, the minimum period of belonging to a PEPP scheme
and maximum period before reaching retirement age for joining a PEPP scheme are left to determine by Member
States. See Chapter VIII of the proposal.
9
Proposal for a Regulation of the European Parliament and of the Council on a pan-European Personal Pension
product (PEPP), COM(2017)343 final, 2017/0143(COD), Brussels, 29 June 2017, Explanatory Memorandum p. 3.
See also chapter 1 of the proposal.
10
The term “2nd
regime” (or 29th
regime) refers to a separate legal regime, existing apart from the 28 others. For more
detailed information, please consult the legislative history on the instrument to be found in f.i. the Explanatory
Memorandum on p.2-3 or European Council conclusions of 28 June 2016, EUCO 26/16.
11
For instance, to lead away from saving deposits.
12
Consumers will have a choice between a low risk (“safe”) default option as well as alternatives with different risk-
return profiles.
13
At the exchange of switching costs.

6. 6
Providing consumers a greater choice and safe pension product had implications for the
functioning of the capital market. When consumers are willing to buy pension products, providers
are required to step up. This leads to the second perspective, the functioning of the capital market
for long-term investments.
According to the European Commission market fragmentation prevents current personal pension
providers from maximising risk diversification, innovation and to employ economies of scale14
.
As a result the consumer is not inclined to buy personal pension products.
In the Explanatory Memorandum the European Commission listed six problem-scenarios that can
translated into the proposal’s objectives as previously explained:
• There is limited choice for eligible personal pension products;
• The absence of economies of scale leads to increased costs for consumers;
• There is a lack of liquidity and depth in capital market;
• Current personal pension products consist out of ill-features;
• Restrictions in terms of cross-border portability and
• Access to an umbrella policy framework.
Following the reasoning from the European Commission, the proposal thus aims at a
complementary regime to regulate certain features of PEPPs. This part is clear. The part that is
yet to be clarified is who may be considered as providers and what does this imply for Dutch
IORPs?
2.2. PEPPs: definition, providers and the Dutch problem
In order to understand which providers are allowed to offer PEPPs, it is needed to explore two
questions: First, what is the definition of PEPPs and, given this might hold a clue as to who it
may offer, second, which providers are according to the proposal allowed to sell PEPPs? Could
this introduce a problem for the Dutch pension system?
2.2.1. Definition
Article 2(2) of the proposed Regulation attributes five characteristics to PEPPs:
• Long-term savings products,
• Provided under an agreed PEPP scheme15
,
• By a financial undertaking authorised16
under European Union law to manage collective
or individual investments or savings,
14
See footnote 5, Explanatory Memorandum, p.2
15
An agreed PEPP-scheme refers to a contract, an agreement, a trust deed or rules stipulating which retirement
benefits are granted under which conditions on the basis of an individual retirement savings plan agreed with a PEPP-
provider (see article 3(4) of the proposed Regulation).
16
Article 4 of the proposal.

7. 7
• Subscribed to voluntary by an individual PEPP saver exclusively linked to retirement17
,
• With no or strictly restricted redeemability.
2.2.2. Providers
As emerges from the definition, providers must be authorised financial undertakings equipped
and allowed to both manufacture and distribute PEPPs18
. As stipulated in article 4 of the proposed
Regulation, the institution responsible for authorisation is EIOPA. Article 5 presents a list of
financial undertakings who may apply for authorisation of a PEPP product.
In the view of the European Commission, there are six eligible financial undertakings:
• Credit institutions authorised in line with Directive 2013/36/EU on activity of credit
institutions and prudential supervision of credit institutions and investment firms19
;
• Insurance undertakings authorised by Directive 2009/138/EC concerning direct life
insurance20
;
• Institutions for occupational retirement provision registered or authorised in accordance
with Directive 2016/2341/EU21
;
• Investment firms authorised by Directive 2014/65/EU with regard to portfolio
management or investment advice22
;
• Investment companies or management companies authorised by Directive 2009/65/EC23
;
• Alternative investment fund (“AIF”) managers authorised in accordance with Directive
2011/61/EC24
.
17
A PEPP saver is defined in article 2(3) of the proposed Regulation as: “a retail client as defined in point 11 of
article 4(1) of Directive 2014/65/EU of the European Parliament and of the Council”. (See: Directive 2014/65/EU
of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending
Directive 2002/92/EC and Directive 2011/61/EU, OJ L 173, 12.6.2014, p. 349–496 .
18
Article 2(3) of the proposal in conjunction with article 3(14) of the proposal.
19
Directive 2013/36/EU of the European Parliament and of
the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit
institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and
2006/49/EC (OJ L 176, 27.6.2013, p. 338)
20
Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the
Taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II) (OJ L 335,
17.12.2009, p. 1).
21
Directive 2016/2341/EU of the European Parliament and of the Council of 14 December 2016 on the
activities and supervision of institutions for occupational retirement provision (IORPs) (recast) (OJ L354,
23.12.2016, p. 37).
22
Directive 2014/65/EU OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 15 May 2014 on
markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU. (recast).
23
Directive 2009/65/EC of the European Parliament and of the Council of 13 July 2009 on the coordination
of laws, regulations and administrative provisions relating to undertakings for collective
investment in transferable securities (UCITS) (recast) (OJ L 302, 17.11.2009, p. 32).
24
Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 on Alternative
Investment Fund Managers and amending Directives 2003/41/EC and 2009/65/EC and Regulations
(EC) No 1060/2009 and (EU) No 1095/2010 (OJ L 174, 1.7.2011, p. 1).

8. 8
2.2.3. IORPs and PEPPs: the Dutch problem
As referred to in the reasons of the proposal and reiterated in the objectives, the underlying idea
of the proposal is to establish a personal pension product of which elements are regulated on a
pan-European scale. It intends to set up a voluntary scheme that enables individuals to buy
additional, safe personal pension saving products.
Given the omission of pension schemes in relation to an employer, one might deduce the proposal
is refrained to, in terms of Dutch legal pension infrastructures, so called “third pillar” pension
products. Nevertheless, holding this view might be a too simple reading since the European
Commission explicitly mentions IORPs as eligible PEPP providers25
. The European Commission
attributes authorised IORPs manufacture and distribute the PEPP product.
In other words, IORPs, implemented in the Netherlands as a “second pillar” institution, are, in the
view of the European Commission, allowed to manufacture and distribute personal pension
products – products that according to current legislation belong to the area of the “third pillar”.
Given the differences in nature between the two pillars, it is imperative to explore whether this
situation will cause difficulties. The discussion will not be examined from a bottom-up Dutch
pillar point of view but rather from a legal point of view: What is it the legal margin for an IORP
to manufacture and distribute PEPPs? In answering this question a distinction between providers
under the Dutch Pension Act and Act on Financial Supervision will be made.
Before continuing with Part 2 of the analysis, an important remark to add to the list of questions
in the previous paragraph is the inclusion of the reference to the “option to cover for biometric
risks” in the proposal26
. This holds a clue in determining eligible IORPs in the Netherlands.
Part 2 of the analysis will explore the matter of IORPs (PPI and pension funds) in the Netherlands
and their abilities to manufacture and distribute PEPPs.
25
See article 6(1) of Directive 2016/2341/EU. Directive (EU) 2016/2341 of the European Parliament and of the
Council of 14 December 2016 on the activities and supervision of institutions for occupational retirement provision
(IORPs), OJ L 354, 23.12.2016, p. 37–85.
26
Article 42 of the proposal.

9. 9
3. Part 2: IORPs in accordance with the Dutch Pension Act and Act on Financial
Supervision.
Part 2 of this analysis will concentrate on the PPI as an eligible PEPP provider. The main question
is: “To what extent is the entity of the PPI, which is in principle exempted from covering
biometrical risks itself, from a legal point of view, equipped to provide PEPPs without interfering
with the Dutch 2nd
pillar?”
In order to answer this question first, attention must be drawn to the issue “exempted from
biometrical risk”. Second 2 particular thinking paths will be explored: The “Pension Act- route”
and the “Act on Financial Supervision-route”. The matter of mandatory participation will be
discussed within the context of both routes.
But first a brief recapitulation of the PEPP product and the IORP as eligible providers.
In part 1 the PEPP product was described as a long-term saving product exclusively linked to
retirement, provided under an agreed PEPP scheme by an authorised financial undertaking. It is
requested voluntarily by an individual and there is no or only a limited option to redeem. In the
Netherlands, pension products without a link to an employer are considered as third pillar products.
The proposal enables an IORP to both manufacture and distribute PEPPs. In order to designate
providers, it refers to the definition of an IORP as stipulated in the IORP Directive in article 6 (3).
IORPs are considered as second pillar vehicles.
In the Netherlands the IORP Directive was implemented in the Pension Act and in the Act on
Financial Supervision27
. Second pillar pension schemes are either Defined Benefit (DB) or
Defined Contribution (DC). DB pension schemes are covered in the Pension Act while DC pension
schemes are to be found in both the Act on Financial Supervision and Pension Act.
3.1.Issue 1: exemption from biometrical risks
The proposal facilitates the option for PEPP providers to cover the “risk of death and other
biometric risks”28
. Article 42 of the proposal specifies biometric risks are risks related to death,
longevity and disability. When read in combination with the entity of the IORP as an eligible
provider, it seems to imply a clear vote for a PPI as manufacturer and distributor of PEPPs.
27
To read more about the implementation of the 2003 IORP directive in Dutch legislation see H. van Meerten, De
Premiepensioeninstelling, Van Maar Ook Op Alle Markten Thuis (The PPI, Active on All Markets)? (December 16,
2008). NTER, No. 12, p. 347, December 2008. Available at SSRN: https://ssrn.com/abstract=2130685
28
See footnote 5, Explanatory Memorandum proposal, p. 14.

10. 10
The PPI was introduced in the Netherlands as a first phase institution in the process to implement
the IORP I Directive29
. Contrary to for instance a pension fund or an insurer30
, initially a PPI
focused only on the accrual phase. Very much like the PEPP does.
It is, in fact, an institution especially designed to operate pension schemes that do not entail
biometric risks. In terms of operation, this implies that, at the end of the accumulation phase, the
PPI transferred the capital to a biometric covering entity, i.e. an IORP or a Solvency II entity.
Therefore, a PPI operates Dutch defined contribution (DC) pension schemes, although technically
the accrual phase of (foreign) DB are also possible.31
In part 1, the matter “the Dutch problem” was introduced briefly. At the centre of the problem lies
the assumption that an IORP (second pillar) is legally not able to manufacture and distribute
personal pension products that are envisaged as “third pillar” products.
The discussion has a high political dimension32
. This analysis wishes to contribute to this
discussion by delivering a legal exposure of the abilities of a PPI. For that reason, it is necessary
to concentrate on two aspects of the political discussion while discussing the routes:
• An opinion that is frequently stated is that when an IORP does indeed manufacture and
distribute PEPPs the principle of separation of responsibilities is at stake.
• In order to apply the proposed PEPP Regulation the existing Dutch national law has to be
amended that, in turn, could then ‘harm’ the system of mandatory participation.
29
Amendment of the Financial Supervision Act and some other acts in connection the introduction of premium
pensions institutions, 2008-2009, 31 891, nr 3, p.1.
30
According to the list of eligible providers in the proposal, an insurer is entitled to manufacture and distribute PEPPs
as well. This analysis will not elaborate on this. It merely seeks to answer the question whether a PPI, as an IORP, is
an eligible provider.
31
H. van Meerten, De Premiepensioeninstelling, Van Maar Ook Op Alle Markten Thuis (The PPI, Active on All
Markets)? (December 16, 2008). NTER, No. 12, p. 347, December 2008. Available at SSRN:
https://ssrn.com/abstract=2130685.
32
The government’s point of view is expressed in the BNC-fiche (Fiche 3, COM(2017)343) p.6-7. Other parties are
i.a., the Pensioenfederatie (their view can be read by accessing the following link:
https://www.pensioenfederatie.nl/website/themas/europa/pan-european-personal-pension-product) and het Verbond
van Verzekeraars who are more enthusiastic (see: https://www.verzekeraars.nl/publicaties/actueel/verbond-en-ppi-
s-shoprecht-bij-persoonlijk-europees-pensioenproduct).

11. 11
3.2. Issue 2: “the Pension Act-route” (the PA-route)
A pension provider’s general duty is embodied in article 32 of the Pension Act. As provider of
pension schemes its general task is to perform a pension agreement based on an agreement of
affiliation or affiliation regulations ex article 1 of the Pension Act. In article 32 of the Pension Act
an agreement of affiliation is defined as an agreement between an employer and a pension provider
which governs the administration33
. Article 116 of the Pension Act contains a prohibition on
ancillary activities. A pension fund must refrain from activities other than work and pension
related. A minor exception to this rule might be captured in article 117 of the Pension Act: in the
event of an existing base pension scheme performed by the same pension fund it is accepted to
carry out a voluntary pension scheme if this supplements the current one.
A similar scenario occurs for compulsory professional pension schemes: Article 114 of the
Mandatory Professional Pension Schemes Act (MPPA) postulates the prohibition on ancillary
activities with the minor exception of the case of supplementing an existing base pension scheme
by a voluntary pension scheme34
.
The prohibition on ancillary activities is the foundation of the separation of responsibilities
between pension funds, pension institutions and insurers. The matter of separation of
responsibilities is closely linked the issue of mandatory participation which is an imperative
feature of the Dutch second pillar pension infrastructure.
In the event a second pillar IORP, in the meaning of the Pension Act, wants to manufacture and
distribute PEPPs, considered as third pillar pension products35
, a complex and political hurdle
must be overcome.
This hurdle is noticed by the Dutch government and social partners in the consultation phase of
the PEPP Regulation36
. According to the Dutch government the second pillar structure must be
left intact. The proposed PEPP Regulation seems to, thus is the view of the government, touch the
second pillar structure. To be more particular, when a second pillar IORP is eligible to manufacture
and distribute PEPPs (presumably so called “third pillar”), the existing division of pension
products to be operated by several market parties will need to be readdressed. Broadened even,
which implies a snowball effect to the system of mandatory participation.
For that reason, the Dutch government is taking a reluctant and sceptical view on the proposed
PEPP Regulation. Taking this view as a leading voice into the debate, one should be aware of its
premises. Again emphasize must be that in the following reasoning the PEPP is regarded as ‘third
pillar’, which is not – legally speaking- correct.
33
Article 1 Pension Act also list additional pension agreements as subject matter to the agreement.
34
See articles 1, 114 and 115 MPPA.
35
They are considered third pillar products because of the following reasons: they are additional, personal (so not
linked to an employer’s agreement) and voluntary.
36
BNC fiche, p.7.

12. 12
The first critical note concerns the bottom-up approach rather than the top-down approach. The
instrument chosen to regulate pan-European personal pension products is that of a Regulation.
Apart from the direct applicability as a main characteristic, it also implies a top-down approach:
the PEPP product is an European product aimed at establishing a feasible capital market on which
long-term, additional, voluntary personal saving pension products are circulating. It is, de jure, nót
a Dutch third pillar product.
The second critical remark involves the IORP. According to the European Commission, an IORP
eligible to manufacture and distribute PEPPs, may call in an option to cover biometric risks. This
suggests a vision in which IORPs manufacture and distribute PEPPs do not exclusively contain
the requirement that all second pillar IORPs. Only those IORPs that are not carrying biometric
risks.
An IORP on the “PA-route” is unlikely to manufacture and distribute PEPPs. A DB IORP cannot
in principle not ringfence.37
Thus the PEPP cannot be legally separated from the other schemes
the DB IORP operates. Cross-contamination between the PEPP and the other schemes might then
occur.
Allowing DB IORPs to offer a PEPP could potentially open up the second pillar market. By effect
it would create a breach to the existing privileged second pillar market that comprises out of
mandatory industry-wide pension funds that benefit from an exclusive right to operate pension
schemes. This is governed by the Act on Compulsory Membership of Sectoral Pension Fund 2000
(Hereinafter addressed as “Bpf Act”).
Mandatory participation was established by the Bpf Act38
. As a result participation in a pension
scheme for employers and employees in certain sectors of industry is made compulsory through
government intervention. Provided a pension fund meets certain criteria, such as the legal form of
foundations, it is allowed to operate these pension schemes39
. Its main features are collectivity and
solidarity. In the event other market parties should enter this closed section, it adds new parties
the existing second pillar market. It also would enable pension providers who previously were
operating with “benefits”40
exclusively attached to the closed second pillar market to operate
PEPPs and thus operating under a privileged modus preventing a proper level playing field. That
is true. This is however not required, not at stake, not necessary. For the proposed PEPP Regulation
does provide the option for an IORP to measures covering biometrical risks.
37
See for more detail: H. van Meerten, B. Hooghiemstra, PEPP – Towards a Harmonized European Legislative
Framework for Personal Pensions: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2993991
38
See article “Compulsory Membership of pension schemes and the free movement of services in the EU” by H. van
Meerten and E. Schmidt, European Journal of Social Security, 2017, Vol. 19(2) 118-140.
39
Ibid; Article 1 Pension Act.
40
An elaborate discussion on the “large” mandatory participation can be read in the article on compulsory
membership of pension schemes as referred to in footnote 36.

13. 13
Since the Netherlands already employs PPIs to operate DC pension schemes there is no need to
amend legislation that would reorganise the second pillar social features. The separation of
responsibilities is not at stake. Mandatory participation is not to be breached by the proposed
Regulation.
Given the possible quod non of the PA-route, the separation of responsibilities and mandatory
participation another route will be investigated: the AFS-route.

14. 14
3.3. Issue 3: “the Act on Financial Supervision-route” (the AFS-route)
Rules concerning the PPI are – besides the Dutch Pension Act, laid down in the Act on Financial
Supervision (AFS)41
The definition of a PPI is stipulated in article 1:1 of the AFS. It defines a PPI as an undertaking
that has been set up with the aim of executing DC schemes and other schemes in which the
premium pension institution does not bear any insurance risk that has been classified as
occupational pension schemes under the applicable legislation. Article 3:36 of the AFS refrains a
PPI from taking on other activities than authorised ex article 2:54g (1) of the AFS.
The PPI is an institution that fits within the framework of the IORP Directive. It was established
with the purpose of providing labour related pension benefits. Back then, the novelty was the given
that, in contrast to existing institutions, a PPI had been set up independent of any contributing
company or trade. It is financed based on funding42
.
A PPI is refrained to operate pension schemes which are envisaged by national social and labour
law. In the Netherlands the Pension Act and Obligatory Occupational Pension Scheme Act are
guiding43
. A PPI cannot carry an underwriting risk. It is, in particular, designed to operate pension
schemes that do not entail risk insurance44
and to manage DC pension schemes.
In terms of the criterion of exemption from biometric risks, there is no reason to withhold a PPI
from manufacturing and distributing a PEPP product. The same applies for the link with operating
labour related benefits. Similar with the PPI, the PEPP product and their providers should envisage
the pension objective45
. The latter was explained in Part 1 when describing the characteristics of
the PEPP product and their providers.
3.3.1. Who is considered as ‘beneficiary’ of pension provision according to AFS?
With the introduction of the PPI in the AFS, a new concept in this act was introduced, being the
'pension participant'. This pension participant is a "natural person who, on the basis of his
professional activities46
, will be entitled to receive pension benefits in accordance with the
provisions of a pension scheme." This is a broadening of the term pensioner under the Pension
41
Tax matters will not be discussed in this analysis.
42
Explanatory Memorandum, Amendment of the Financial Supervision Act and some other acts in connection the
introduction of premium pensions institutions, 2008-2009, 31 891, nr 3, p 4.
43
In this regard it is intriguing to look at which laws are considered. One could argue that legislation and caselaw
concerning consumer protection and article 38 (consumer protection) of the EU Charter of Fundamental Rights has
to be taken into account as well.
44
See footnote 35, p. 4.
45
See: discussion paper of IOPA. European Insurance and Occupational Pensions Authority, Discussion Paper on a
possible EU-single market for personal pension products, 16 May 2013, EIOPA/13/241,7.
46
‘beroepswerkzaamheden’

15. 15
Act, with which it was also intended to bring foreign self-employed persons47
under the concept
of participant within the meaning of the IORP I Directive (2003/41 /EC)48
.
However, it is not entirely clear in Dutch law what is meant by 'professional activities', as both the
IORP Directive and the parliamentary history of the PPI Act do not deal with this issue. The IORP
Directive stipulates that national social and labor law applies to the relationship between the
participant and the sponsoring undertaking. This indicates that on the basis of Dutch social and
labour legislation, an assessment should be made of ‘professional activities’.
The PEPP-saver is defined in article 2(3) of the proposal as: (a) a retail client as defined in point
(11) of Article 4(1) of Directive 2014/65/EU of the European Parliament and of the Council49
; (b)
a customer within the meaning of Directive 2002/92/EC of the European Parliament and of the
Council50
, where that customer would not qualify as a professional client as defined in point (10)
of Article 4(1) of Directive 2014/65/EU;
"PEPP scheme" means a contract, an agreement, a trust deed or rules stipulating which retirement
benefits are granted and under which conditions on the basis of an individual retirement savings
plan agreed with a PEPP provider51
;
It seems justifiable that a PPI, when offering a PEPP, the PEPP saver can qualify as a ‘pension
participant’ ex 1:1 AFS.
But how does this interact with the definition of the PPI and article 3:36 AFS?
Following the definition of the PPI, in my view, the applicable legislation includes also the AFS.
Especially its provisions regarding consumer protection. The definition of ‘social and labour law’
in the Dutch Pension Act is not exhaustive52
.
47
With regard to this issue one might wonder whether the separation between so called “second pillar” providers and
products and “third pillar” providers and products is set in current legislation. Looking at for instance the matter of
“nettoregeling” it is not carved in stone that a self-employed person (participant under the IORP Directive) cannot
buy an occupational pension that is tied to the second pillar market. See for instance:
file:///C:/Users/A.Wouters/Downloads/blkb-2014-2132-conceptbesluit-premieovereenkomsten-2015.pdf.
48
Directive 2003/41/EC of the European Parliament and of the Council of 3 June 2003 on the activities and
supervision of institutions for occupational retirement provision, OJ L 235, 23.9.2003, p. 10–21.
49
Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014on markets in financial
instruments and amending Directive 2002/92/EC and Directive 2011/61/EU, OJ L 173/349, 12.6.2014, p.349.
50
Directive 2002/92/EC of the European Parliament and of the Council of 9 December 2002 on insurance mediation,
OJ L009, 15.1.2003, p.3.
51
Article 3(4) of the proposal.
52
See for instance case law as discussed in the section on mandatory participation and on consumer rights i.c.w.
article 38 of the EU Charter.

16. 16
In other words, when a PEPP saver performs professional activities, a PPI can offer a PEPP to
individuals. This is not in conflict with the IORP Directive (which makes also contracts with
individuals possible, nor with the Dutch legislation. `
With regard to article 3:36 AFS which stipulates that a PPI is not allowed to pursue another
business than the business the license was granted for.
However when the line of reasoning above is followed, article 3:36 AFS is not applicable. There
is simply no activity that the PPI, when offering a PEPP, is pursuing contrary to its license.
Offering a PEPP fits in the legal definition of the PPI.
3.3.2. Mandatory participation
When a PPI manufactures and distributes PEPPs, could that be perceived as an infringement of
the principle of mandatory participation?
Taking into account European case law on mandatory participation and alleged breaches on article
56 TFEU is it defendable the answer is negative. That is to say, at this point, following the
reasoning in case law, there is no ground to state that a PPI manufacturing and distributing PEPPs
would breach provisions on mandatory participation.
Article 56 TFEU53
prohibits all restrictions on the movement of capital and payments between
Member States and Member States and third parties. By inversion, the article ensures freedom to
provide services.
Cases such as Säger v Dennemeyer and Corsica Ferries France v Direction Générale des
douanes54
support the reasoning that any form of discrimination against a service provider on
ground of nationality or other barriers limiting the provision of services is in breach with the
principle of freedom to provide services.
Mandatory participation is subject to rulings of the ECJ from several perspectives. The
significance of the rulings is to be found beyond the specific area of interest and in coherence with
multiple cases.
The case of Albany for example concerned an infringement of provisions of Competition law55
.
The Court reasoned that collective agreement making affiliation to a Dutch pension scheme
obligatory falls beyond the scope of competition law56
. As a result so does the decision by the
public authorities to make affiliation to a sectoral pension fund mandatory. Although the Court
argued that violation with competition law was present, it also stated that the breach was found
53
See also preamble 22 of TFEU.
54
Säger v Dennemeyer (C-76/90) [1991] EU: C1991:331 and Corsica Ferries France v Direction Générale des
douanes (C-49/89) [1989] EU:C:1989:649.
55
Albany, Brentjens’ Handelsonderneming BV v Stichting Bedrijfstakspensioenfonds voor de Handel in
Bouwmaterialen (Brentjens) (C-115/97-C117/97) [1999] EU: C:1999:434; Maatschappij Drijvende Bokken BV v
Stichting Pensioenfonds voor Vervoer- en Havenbedrijven (Drijvende bokken) (C-219/97) [1999] EU: C:1999:437.
56
Ibid, points 45 and 61 (first preliminary question).

17. 17
justified given the essential social function of the fund57
. In this case, the Court also delivered a
definition of services offered by pension providers58
: services of general economic interest (SGEI).
Because of the qualification of services offered by pension providers in Albany and AG2R59
,
mandatory pension schemes and the French compulsory healthcare costs insurance scheme at stake
in AG2R were able to rely on article 106(2) TFEU. Article 106(2) TFEU provides that
undertakings of which services can be qualified as SGEI are subject to the rules on “in particular”
competition on the condition their application is not in breach with tasks assigned to them60
.
What does this imply for provisions as stipulated in article 56 TFEU? Unfortunately, the Court
has not yet clarified the relationship between the exception postulated in article 106(2) TFEU and
article 56 TFEU. In Commission v Germany61
and Viking62
the IORP Directive had not been issued
yet63
. One can, though, assume, the application of the exception in article 106(2) TFEU on, inter
alia, the provisions on free movement64
.
In Kattner Stahlblau65
the Court ruled on mandatory participation in a social insurance scheme for
labour-related accident. It stated that although social security schemes is a discretion left to
Member States, it must be exercised in accordance with the freedom to provide services. This was
not the case at Kattner Stahlbau: here the Court ruled that the way in which the system was set up
it would imply an infringement with the Treaty. Such an infringement is only accepted when there
are grounds of justification relating to the public interest66
. This was not the case and therefore the
restriction did not stand the test of article 56TFEU in conjunction with article 106(2).
Recently the Court reasoning in UNIS67
that, in the event a Member State’s public authority
executes an exclusive right the principle of transparency must be taken into account. A ministerial
decision to appoint a single body to execute the administration of an insurance or pension schemes
is an example of an exclusive right68
. The principle of transparency originates from the principles
on equal treatment and non-discrimination.
The Court states in UNIS that the principle of transparency implies “a degree of publicity sufficient
to enable, on the one hand, competition to be opened up, and on the other hand the impartiality of
57
Ibid, point 122.
58
Ibid, points 102 and 104.
59
AG2R Prévoyance v Beaudout Père et fils SARL (C-437/09) [2001] EU: C2011:112.
60
See also: “Compulsory membership of pension schemes and the free movement of services in the EU”, by H. van
Meerten and E. Schmidt, European Journal of Social Security, 2017, Vol. 19(2), p. 126.
61
Commission v Germany (C-271/08) [2010] EU C: 2010:426.
62
Viking (C-438/05) [2007] EU C:2007:772.
63
Furthermore the grounds for justification differ when tested against discrimination on the basis of nationality.
Although intriguing, this is not a central point. For a more extensive reading, please consult the article as referred in
footnote 48.
64
Ibid; footnote 48.
65
Kattner Stahlbau GmbH v Maschinenbau-und metall- Berufgenossenschaft (C-360/07) [2009] EU: C:2009:127.
66
A justified breach must also pass the test of proportionality and fit the alleged objective.
67
UNIS (C-25/14) [2015] EU: C:2015:821.
68
See f.i. Kattner Stahlbau as referred to in footnote 53 on Member States’ discretion.

18. 18
the award procedure to be reviewed” 69
. In combination with Viking, this means that the
“requirements of fundamental freedom apply not only to actions of public authorities but extend
to rules of any nature aimed at regulating in a collective manner gainful employment, self-
employment and the provision of services70
”
So both social partners and public authorities are subject to requirements of fundamental freedom.
When we combine this with the ruling in UNIS, it is defendable to assume that the principle of
transparency, originating from the principles of equal treatment and non-discrimination as listed
in article 56 TFEU, must be envisaged by social partners too. Applying this line of reasoning to
the situation at hand in the Netherlands71
, the principle must be considered. The fact that the Act
Bpf does not provide for margin to allow other pension providers, seems not in line with article
56 TFEU.
To conclude, when the PPI executes only DC schemes that falls outside the scope of the system
of mandatory to a pension fund, the relevant (and recent) EU case law seems not to apply to the
question whether a PPI PEPP might endanger the mandatory participation. Studying the relevant
case law, one simply cannot conclude that this might occur.72
In the non-mandatory sector, where
the PPI operates, the employer has freedom of choice which entity executes the pension scheme.
Of course, article 56 TFEU applies.73
But a PPI PEPP as such does not have consequences for the
system of mandatory participation.
69
See Unis, point 46.
70
Viking, point 55.
71
The situation being, affiliation made mandatory by only one type of Dutch pension provider: a
bedrijfstakpensioenfonds.
72
See for more details and case law: H. van Meerten, E.S. Schmidt, Compulsory membership of pension schemes
and the free movement of services in the EU (as referred to in footnote 60).
73
C-678/11, Commission vs Spain ”It must be noted that the services offered by pension funds and insurance
companies in relation to occupational pension schemes are services within the meaning of Article 57 TFEU. They
are services normally provided for remuneration, the essential characteristic of which lies in the fact that it constitutes
consideration for the services in question.”

19. 19
4. Part 3: reviewing amendments on biometric risk
In this section amendments with regard to biometric risks will be highlighted followed by
comments. This will be presented through an overview. It will be complemented by a brief
commentary.
Proposed amendment Point of reflection
Amendment 41:
Adding definition of biometrical risks to
article 2 (new indent)
• In line with reasoning in Part 2.
• No comment
Amendment 45:
Article 5: Adding feature of DC, exemption of
biometrical risks for an IORP.
• Article 5 is currently referring to the
definition in article 6 (3) of IORP II.
Adding “DC, exemption from
biometrical risks” to the definition
would mean an additional referral.
• The proposed amendment does
comply with the AFS-route in Part 2.
Amendment 144:
Alternation of current article 42: “PEPP
providers may offer PEPPs with an option
ensuring the coverage of the risk of biometric
risk. For this purpose biometric risks mean
risks linked to longevity, disability and death”
Into:
“Without prejudice to article 5, PEPP
providers may offer PEPPs with a
supplementary option ensuring the coverage of
the risk of biometric risk”
• “an” option  “ a supplementary
option”
• What is the added value of the
substitution?
Commentary
The proposed amendments do consider the feature of “DC, exemption of biometrical risks”
which would, in theory74
, facilitate PPI DC to manufacture and distribute PEPPs in the
Netherlands. To that end adding the predicate serves a clear purpose.
74
As argued in this analysis given the exemption of biometric risks.

20. 20
5. Conclusion
The main question of the analysis was whether a PPI, exempted from biometric risks, given its
legal margin, could be an eligible PEPP provider.
The answer is affirmative since the proposed PEPP Regulation does envisage the option for an
IORP to cover for biometric risks. Moreover, both the PPI operating DC pension schemes and
the proposal are tied by the pension objective.
In the Netherlands some pension funds are reluctant to comply with the proposed PEPP
Regulation because it would disturb the principle of mandatory participation and require
amendments of the Pension Act that entails a broadening of the separation of responsibilities. It
is argued in this analysis that these concerns are either not relevant (given the fact that pension
providers on the PA-route are not exempted from biometric risks and therefore not likely to
operate PEPPs), or, not legally correct tested against apparent EU (case) law and Dutch
legislation for providers on inter alia the AFS-route.
To conclude the analysis, the EU Parliament amendments related to biometric risks were
considered. Ensuring that the exemption from biometric risks is included in the text of the
proposal, would lead to a reading in which in the Netherlands, qualifying PPIs would be able to
manufacture and distribute PEPPs without breaching Dutch or EU legislation and without
breaching compulsory membership to a pension fund.

21. 21
6. Bibliography
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Personal Pension product (PEPP), COM(2017)343 final, 2017/0143(COD), Brussels, 29 June
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(Proposal for a Regulation of the European Parliament and of the Council on a pan-European
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32).
Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 on
Alternative Investment Fund Managers and amending Directives 2003/41/EC and 2009/65/EC
and Regulations (EC) No 1060/2009 and (EU) No 1095/2010 (OJ L 174, 1.7.2011, p. 1).

22. 22
European Insurance and Occupational Pensions Authority, Discussion Paper on a possible EU-
single market for personal pension products, 16 May 2013, EIOPA/13/241
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Netherlands, Estonia, Finland and Hungary, NETSPAR, November 2015, M33.

23. 23
L. van der Vaart, H. van Meerten, De pensioen opPEPPer?, TPV 2017/44, december 2017.
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FISMA/2015/146(02)D (https://ec.europa.eu/info/sites/info/files/170629-personal-pensions-
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• Pensioenfederatie
https://www.pensioenfederatie.nl/website/themas/europa/pan-european-personal-
pension-product
• Verbond van Verzekeraars
https://www.verzekeraars.nl/publicaties/actueel/verbond-en-ppi-s-shoprecht-bij-
persoonlijk-europees-pensioenproduct
• Sophia in ’t Veld, draft report PEPP: https://vbngb.eu/wp-content/uploads/2018/04/Pan-
European-Pension-PEPP-201803-EPRS_IDA2018615656_EN.pdf
• DNB: http://www.toezicht.dnb.nl/3/50-227812.jsp
Cases:
Case C-76/90 Säger v Dennemeyer
Case C-49/89 Corsica Ferries France v Direction Générale des douanes
Case C-115/97-C117/97 Albany, Brentjens’ Handelsonderneming v Stichting
Bedrifjstakpensioenfonds voor de handel in Bouwmaterialen
Case C-219/97 Maatschappij Drijvende Bokken BV v Stichting voor Vervoer-en Havenbedrijven
Case C-437/09 AG2R Prévoyance v Beaudout Père et fils

24. 24
Case C-438/05 Viking
Case C-271/08 Commission v Germany
Case C-360/07 Kattner Stahlbau GmbH v Maschinenbau-und metall Berufgenossenschaft
Case C-25/14 UNIS

25. 25

26. 26