NETHERLANDS – The €274bn Dutch civil servants scheme ABP has warned that plans by the new coalition government to cap tax relief for pension savings could reduce future pensions by as much as 20% and affect younger generations disproportionately.
ABP spokeswoman Jos van Dijk said the scheme was particularly concerned about the new Labour-Liberal government's plans to change the pension savings rules known as the Witteveen framework.
"By limiting the accrual percentage by 0.4% – on top of a 0.1% curb imposed previously – the goal of achieving a pension amounting to 70% of the average wage is becoming evermore unattainable," she said.
"0.4% may not seem like much, but, over the course of 40 years of pension accrual, this will in fact result in a pension savings amount that is 20% lower. ABP believes it will become difficult for younger generations in particular to accrue pensions on a par with those of today's retirees."
In addition, the country's largest pension scheme – ranking third in the world by assets under management – is unhappy about the new government's announced intentions to cap fiscal facilitation of pension savings for incomes of €100,000 and up.
"Capping deductibility of pension contributions shatters the principle of collectivity that underpins our system," Van Dijk said.
"If fiscal boundaries should be moved further out in future, this would risk undermining the pension system."
According to Van Dijk, the government pact as presented by the two coalition partners remains largely silent on another issue – whether Dutch pension funds should invest more in the local economy.
"The coalition agreement's wording remains vague on this issue," she said.
"For ABP, however, the issue is crystal clear. The scheme's number one priority is the pension of our participants. Investments must add value to pension contributions. Investment returns and diversification play an important role in this process."
This is not to say ABP is opposed to domestic investments.
"If such investments can be made in the Netherlands, provided the first priority – pensions for our participants – can be achieved, so much the better," Van Dijk said.
"One example would be the inflation-linked investment vehicle structured around construction work done on national route N33.
"These types of investment structures offer additional possibilities in the Netherlands – related to housing projects, for instance."