ABP raises contribution by 0.4%
NETHERLANDS - ABP, the €190bn civil service pension scheme, will raise pension contributions by 0.4% of participants' salaries next year.
The premium or contribution required to finance the old-age and surviving relatives' pensions has been set at 20%, following the advice of the scheme's council of participants and employers.
Employers will pay 70% of the contribution while workers will pay 30%.
The premium rise is not connected to the scheme's financial position but caused by the composition of its participants, indicated Jos van Dijk, spokeswoman for ABP.
"Employees are deciding to retire later while a decreasing number of workers profit from lower premiums based on the transitional arrangements of flexible pension and retirement FPU," she explained.
That said, a higher contribution is little effect as an instrument for increasing the cover ratio, according to Van Dijk.
"In order to raise the funding ratio by 1%, the premiums need to be raised by 5%," she pointed out.
ABP usually decides on both premiums and indexation in November - it raised contributions by 10 basis points for 2008 - however given the ongoing volatility on the financial markets, the scheme has postponed the indexation decision until the middle of December, stated Van Dijk stated.
PfZW, the €81bn pension fund for healthcare workers, will also decide on both premiums and indexation in the second half of December, said a spokesman for the fund.
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