ABP chief: no Don Quixote vs. pension windmills
NETHERLANDS – The chairman of Stichting Pensioenfonds ABP says he doesn’t want to be seen tilting at imaginary pension fund windmills like Don Quixote.
In a reaction to the government’s proposed changes – which wants to end current systems of pre-pension arrangements and support more individual pension arrangements – John Neervens, head of the 150 billion-euro Dutch civil service pension scheme, has explained his own personal views in a newspaper article.
Neervens says he finds it strange that European observers of the Dutch system are much more positive about the current system than the Dutch participants themselves.
According to Neervens, the Dutch system is being looked at by Europeans as the way of addressing current ageing problems of society.
Few other European systems are able to cope with the new financial liabilities caused by lower contributions (fewer) and demographic ageing.
Neervens - and the ABP management - view the new arrangements set up by the leading Dutch pension funds, after the crisis of the financial markets, as healthy.
By addressing issues such as flexible coverage ratios, long-term recovery periods for potential negative ratios at a certain time, and increased pension contributions will be supporting a more leaner and flexible system able to counter future challenges.
The defining feature of Dutch pension funds, the so-called collective solidarity, will remain the cornerstone.
This also gives more flexibility and feasibility than the proposed individualistic approach of the government and some employer unions.
Neervens says he does not want to fight possible changes in the pension system in the manner of Cervantes’ well-intentioned though delusional character.
He just calls for further flexibility of the existing system, without loosing the basis on which the system has been built.
One possible change, according to Neervens, which should be implemented without delay, is the integration of the pre-pension and post-pension arrangements.
A more flexible attitude of pension age limits, work arrangements and part-time pension systems will be the answer to future challenges around. Individualism will not be the answer, solidarity of pensioners and workers will be the backbone to a more stable but rewarding future of Dutch pensions.