Discounted premium and Wtp transition in the notarial profession: court dismisses claims by retired notaries

The District Court of The Hague has ruled in extensive proceedings regarding the premium policy and transition plan of Stichting Pensioenfonds Notariaat (SPN). Eight retired notaries argued that they were disproportionately disadvantaged compared to active participants (current (candidate) notaries and other employees in the notarial profession) due to years of using a reduced cost-covering premium and the agreements under the Pensions Future Act (Wtp). The sub-district court judge did not follow this argument and dismissed all claims.

The ruling is of importance for pension funds and social partners preparing for the Wtp transition, particularly regarding premium smoothing, a balanced consideration of interests, and compensation for active participants.

Since 2015, Stichting Pensioenfonds Notariaat ( SPN ) - and its legal predecessors - have applied a dampened cost-covering premium based on the expected real fund return. Pensioners in the notarial profession, united in the Vereniging Pensioengerechtigden Notariaat ( VPN ), argued that as a result, the fund collected too little premium for years. According to them, this has led to lower fund assets and a lack of indexation, effectively eroding their pension rights.

The conflict gained extra significance due to the transition to the new pension system under the Pensions Future Act ( Wtp ). The transition plan adopted in December 2024 includes a compensation scheme for active participants due to the abolition of the average salary system. This compensation is financed from the fund assets. Pensioners considered this unacceptable, but also unlawful, as they were of the opinion that they were thereby contributing to a scheme from which only the active participants (the current (candidate) notaries and employees in the notarial profession) benefit. The 'part of the fund assets' that supposedly belonged to the retired notaries would thereby effectively be taken away from them.

The plaintiffs sought - briefly summarized - declarations that:

• The use and maintenance of the dampened premium is unlawful;
• There is abuse of power, breach of duty of care, and unbalanced representation of interests;
• Their property rights (Art. 1 Protocol No. ECHR) have been violated; and
• Active participants have been unjustly enriched and pensioners have been discriminated against.

In addition, they asked the court to prohibit SPN from implementing the transition and implementation plan as long as it does not include compensation for pensioners.

The court stated at the outset that the Pension Act (old) expressly permits pension funds to smooth premiums, inter alia by basing them on the expected return rather than the risk-free market interest rate. This prevents volatility in the premiums to be collected from employers and employees, which the legislature deems undesirable. Consequently, the majority of pension funds in the Netherlands smooth premiums, as SPN has done. In doing so, SPN has consistently acted within the (strict) statutory parameters for premium smoothing and under the supervision of the DNB. Moreover, the smoothed premium policy has not resulted in a disproportionately detrimental outcome for specific groups of participants, such as pensioners.

According to the court, there is (therefore) no question of abuse of power.

The court further emphasized that liability requires not only unlawful conduct but also concrete damage and a causal link. These are lacking here. The plaintiffs have not demonstrated that their individual pension benefit was affected by the premium smoothing.

However, even if that were the case, it does not follow that the claimants have also suffered individual damage. After all, by virtue of their pension scheme, the claimants have only a claim to a pension (Article 1 of the Pension Act), but not (also) to SPN in respect of the fund assets. Those assets are owned by SPN and not (in part) by the claimants as pensioners.

The court also ruled that there is no violation of Article 105, paragraph 2 of the Pension Act, which regulates the balanced representation of the interests of all stakeholders. SPN has, in fact, convincingly refuted that it weighed the interests of all the different groups when determining the smoothed premium.

The court also clarified that conditional indexation does not qualify as property. The absence of indexation in previous years therefore does not constitute a violation of Article 1 of Protocol No. 1 to the ECHR. Furthermore, the fact that fund assets have been used for purposes other than indexation does not mean that pensioners' property rights have been infringed.

Only existing pension rights qualify as a property right (within the meaning of the ECHR):

A conditional right to a supplement is dependent on a future uncertain event. As long as that event has not occurred or will not occur, the conditional supplement cannot be regarded as a pension entitlement or pension right, nor as a property right. Such an uncertain prospect of an increase in value is (in contrast to an unconditional indexation right) not a property right.

The failure of SPN to index the plaintiffs' pensions during that period therefore did not lead to an infringement of their pension rights and, consequently, their property rights.

The court further concluded that the assertion that the active participants have been unjustly enriched at the expense of the retired notaries since 2015 is incorrect.

This position assumes that active participants paid lower premiums for their pension accrual than the retired notaries. However, it follows from the court's earlier ruling in this judgment that the dampened premium policy is (and has been) a prudent policy and that the collected premiums are not (and have not been) too low. Moreover, the fund assets have a collective character. Specific parts do not belong to separate groups, but are used precisely to absorb windfalls and setbacks collectively. Against this background, it is not clear how a premium based on the real fund return would lead to the enrichment of active participants and the impoverishment of the retired notaries. Nor have they stated what their impoverishment would concretely consist of.

If it is indeed the case that active participants have benefited in any way as a result of premium smoothing, this does not qualify under the defined benefit scheme as unjust enrichment at the expense of pensioners within the meaning of the law (for the fundamental principle of defined benefit schemes is  the solidarity associated with them ). Nor can there be talk in this context of discrimination against pensioners compared to the aforementioned active participants. On this point, a parallel can be drawn with the indexations of the pensions of retired notaries that took place in 2023, 2024, and 2025 and were also charged to the fund assets; these, too, do not constitute an enrichment of pensioners, nor an impoverishment of active participants.

With regard to the transition plan, the court considered that the legislature explicitly acknowledged in the Wtp that the abolition of the average salary system could have adverse consequences for active participants. It is for this reason that the Act provides scope to adequately compensate this group, whereby the fund assets may be used as a source of financing:

The parliamentary history shows that the legislature was mindful of the fact that active participants may suffer disproportionate disadvantage as a result. It has been noted that a balanced transition requires that this group be compensated adequately and in a cost-neutral manner, whereby social partners have freedom of negotiation when making the agreements. Furthermore, it has been explicitly considered that this change justifies compensation only for active participants, and that the fund assets can and may be used to finance this compensation.

For this reason, the court deemed it justified that the social partners in the notarial profession designated the fund assets as the source of compensation for the active participants.

In conclusion, the court stated that the transition plan must be assessed by SPN:

Incidentally, the transition plan must still be assessed by SPN. If SPN agrees with the content, it will draw up its own implementation plan, which must be submitted to DNB, acting as the supervisor, for approval.

The final decision regarding the use of the fund assets for the compensation of active participants rests with SPN and is recorded in the implementation plan.

This ruling has confirmed that:

• premium smoothing remains a permissible instrument for pension funds within the statutory framework;
• The transition plan subject to assessment by the pension fund is, whereby the balanced interests criterion leaves pension fund boards broad discretion;
• A balanced transition to the new pension system requires that active participants who are disadvantaged by the abolition of the average salary system be compensated, whereby social partners have freedom to negotiate in the implementation thereof and fund assets may be used to finance this compensation;
• Property rights are not the appropriate route for pensioners to influence the transition plan or the premium policy pursued.

Following the ruling, the appeal was withdrawn, thereby definitively ending the dispute and paving the way for further implementation of the new pension scheme in the notarial profession.