As explained in the second blog, in principle the pension commitments are transferred to the transferee. A number of exceptions apply to this main rule. One of those exceptions concerns the case where the acquiring party already had a pension plan. In that case, the transferee's pension plan may be continued and the transferor's pension commitments are not transferred. But is this also the case if the transferor was a member of an industry-wide pension fund (bpf)?
The various possible scenarios with the corresponding consequences on the basis of the legal regime are described below.
Transferor registered with Bpf, transferee not
This refers to the situation where the transferor was subject to a mandatory industry-wide pension fund, but the transferee was not, even after the merger. For this situation, the Sections 7:663 and following of the Dutch Civil Code do not contain any specific regulations, except that they reiterate the main rule that the employment conditions of the transferor (including pension) are also transferred. At the same time, however, there is no legal basis under the Act on Mandatory Participation in an Industry-wide Pension Fund (Wet bpf) to hold the transferee to the mandatory participation rules after the transfer, if that party does not fall within the scope of the pension fund in question. The question then is how the Act on Compulsory Membership of a Pension Fund (Wet bpf) and the related Compulsory Membership Decree of the pensioen fund relate to the main rule of Section 7:663 of the Dutch Civil Code.
In the Cordaan/SDS ruling, the Court addressed the above issue. In that case Cordaan was obliged to affiliate with the Pensioenfonds Zorg en Welzijn (PFZW), while acquirer SDS was not. However, in this case there was an obligation for SDS to voluntarily affiliate with PFZW. Why? The affiliation with PFZW had been agreed upon in the collective labor agreement. This CAO had been subsequently incorporated into the employment contracts with the employees of both Cordaan and SDS. According to the Court of Appeal, the participation in the pension fund therefore followed directly from the employment contract and the main rule of Section 7:663 of the Dutch Civil Code applied. In addition, SDS had not entered into any other insured pension scheme, so that none of the pension exceptions could be invoked.
Transferor not registered with a Bpf, transferee is
In the event that the transferor is not affiliated to an industry pension fund, and the transferee is, the employees who are transferred are obliged to participate in the industry pension fund of the transferee. It does not matter whether the transferor had a different pension plan (insured plan) or not. In this type of situation, however, it is always necessary to check whether the (business) activities of the transferee have changed to such an extent that the transferee is no longer an employer within the meaning of the relevant mandatory decree.
Transferor and transferee both registered with a Bpf
In the event that the transferor and the transferee are affiliated to the same industry-wide pension fund, the "exception to the exception" of Section 7:664 paragraph 2 of the Dutch Civil Code comes into play. According to article 7:664 paragraph 2, the exceptions as mentioned before ((a) through (c)) cannot be used if the transferor and the transferee before and after the transfer are subject to the same Bpf and the employees (continue to) participate in that Bpf.
In that case the main rule is that all rights and obligations from the employment contract are also transferred. There is in fact a continuation of pension participation, now that both parties are members of the same industry pension fund, only with a different employer.
Please note: in this situation, any pension premiums owed by the transferor are (usually exclusively in this situatin) transferred to the transferee. It is therefore recommended to check whether the transferor has paid all pension premiums to the fund before the transfer.
Transferor and transferee are registered with different Bpf's
In this case, the obligations from the pension agreement of the transferor are not transferred to the transferee. The employees who are transferred must join the industry pension fund of the transferee. See in this regard the exception of Section 7:664 paragraph 1 sub b of the Dutch Civil Code, on the basis of which the main rule of Section 7:663 of the DCC does not apply.
Transferor registered with a Bpf, transferee is granted an exemption
This situation is no different than the situation in which the transferor is affiliated to an industry-wide pension fund, and the transferee is not. Therefore, also in this case, the obligations of the transferor are not transferred to the transferee.
Please note: before the acquisition, check for which period the exemption has been granted by the fund, and for which reasons. Particular attention must be paid to whether these grounds for exemption will still apply after the transfer.
Transferor and transferee both have an insured pension plan
In this case, the main rule of Section 7:663 of the Dutch Civil Code applies: the obligations of the transferor are transferred to the transferee by law, unless the transferee makes an offer to participate in its own pension plan. This is the exception of Section 6:664 paragraph 1 under a of the Dutch Civil Code. In that case, the transferee must make the same offer to enter into a pension agreement as it has already made to its own employees prior to the transfer.
Transferor has insured arrangement, transferee does not
In this case, the obligations of the transferor are passed on to the transferee by operation of law. The transferee cannot invoke one of the exceptions as he did not have his own pension scheme in place even before the acquisition.
Note: Here too, it is worthwhile to conduct an audit before the transfer takes place and to identify the pension obligations. Suppose, for example, that this situation applies and that the transferor has a type of pension plan that the transferee prefers not to have. What option does the transferee then have? In that case, it is quite imaginable that the transferee will set up a pension scheme for its employees even before the transfer. After the transfer, the pension exceptions of Section 7:664 can then be invoked by making the same offer to the transferred employees.
Transferor does not have an insured plan, transferee does
Of course, it is also possible that the transferor did not have a pension plan at all for its employees. If the transferee does have a pension plan, Article 9 of the Pensions Act stipulates that the transferee is expected to make the same offer, as applies to his own personnel, to conclude a pension plan for the transferred employees.
Note: In such a situation, the transferee would be well advised to check whether the transferor did not in fact have an obligation to provide a pension plan. For example, should the transferor not have been obliged to affiliate with an industry pension fund? In that case, too, the obvious thing to do is to investigate the scope in order to identify any risks.
In conclusion, many pension situations with corresponding pension solutions are imaginable. It is important, however, that pensions receive the attention they deserve during the takeover process, preferably even before the intended takeover process. Our pension specialists at Dirkzwager will be happy to assist you in these matters.