As we start a new year, Dutch pension schemes find little reason to be jolly.
Regardless of whether they had been good or bad, they did not get their long anticipated Christmas present – a brand spanking new supervisory framework.
Much of the pensions industry breathed a sigh of relief when state secretary for pensions Jetta Klijnsma announced on 1 October that she would opt for a single, unified pension framework and abandon plans for a dual FTK which would have required a choice of either nominal pension rights or real pension promises. And many schemes were elated when, in addition, she promised to submit a legislative proposal introducing the new FTK to parliament before the Christmas recess.
Joy to the pension world. At last, an end to years of regulatory uncertainty seemed in sight.
But no such luck. Santa and his elves at the ministry of social affairs and labour had been working frantically to make good on that promise, but to no avail. In the first week of November, Klijnsma admitted that the Christmas deadline would not be met.
She argued for a delay, citing complications – forging a single hybrid contract out of the two initially envisaged is a tricky business – and the time needed to confer with stakeholders, some of whom, she conceded, “are not immediately eager to embrace a single system”, including the country’s two largest pension funds, €293bn ABP and €134bn PFZW.
Klijnsma set a new deadline of 31 January. Now, reportedly, even that late date is not feasible. According to the state secretary, all this does not mean that the Dutch won’t have a new pension system in place a little over a year from now. After having already postponed the date by which the FTK is to take effect by one year to 1 January 2015, Klijnsma now insists that the new framework will become effective on that date as scheduled, despite the latest delays. Needless to say, not everybody in the pensions industry is convinced.
If that isn’t bad enough, quite a few Dutch schemes may not get their most fervent wish: a funding rate on the rosy side of the mandatory minimum of 105%. The average Dutch scheme clocked in at around 110% at the end of November. But that left an estimated 37 schemes anxiously watching the dial, willing the needle to climb out of the red and into the black before the new year. If it does not, they will have to announce (further) benefit cuts.