The Dutch pensions system should be a hybrid arrangement consisting of mandatory second-pillar accrual for incomes up to the national average and an additional personal and voluntary build-up of pension rights, according to Ruud Hagendijk, chief executive at the €105bn asset manager MN.
Hagendijk – who is to step down from MN after 10 years as chief executive and 18 years at the company – said this set-up would be necessary to counter the effects of ever-increasing life expectancy, which, in his opinion, poses the biggest threat to the current system.
Speaking at his company’s New Year meeting this week, he warned that, under the existing system, pensions will be unaffordable even for current generations.
He argued that dual pensions accrual would provide certainty for an income after retirement, and would come with the extra option for additional pensions saving.
While he acknowledged that the current system could benefit from a “pause” and more regulatory stability, MN’s chief executive stressed that a fundamental update was inevitable.
He predicted that the Dutch government would clarify the coming changes to the system within the next two years, and that “drastic measures” would be agreed during the negotiations for a new coalition.
Hagendijk said that, due to the effect of low interest rates on funding ratios, people were under the mistaken impression that Dutch pension funds were “dirt poor”.
“However, the opposite is true,” he said.
Hagendijk also expressed doubts about the new financial assessment framework’s (FTK) ability to stabilise the pensions system.
“The reality is that more assets will be hoarded up, resulting in no indexation for years to come,” he said.
MN manages assets for almost 2m participants and pensioners affiliated with 35,000 employers in both the Netherlands and the UK.
Among its Dutch clients are the large metal schemes PMT and PME.
In other news, the €72m Dutch pension fund of security firm G4S has said it will join the €1.1bn industry-wide scheme for private security (PPB).
In a joint statement, it cited the increasing requirements for expertise, as well as increased costs.