NETHERLANDS – PGGM, the second largest Dutch pension scheme, says government proposals on tax relief for old-age pensions are “of no practical value” to its members on low and average pay.
“PGGM appreciates the proposal to maintain full tax deductibility for pensions, but emphasises that the solution put forward by the Cabinet is of no practical value to our participants on lower and average salaries,” the chairman of the scheme, Karel Noordzij, scheme said in a letter to government officials.
“Tax legislation in particular will need to be amended in various respects if this approach is to succeed,” the Zeist-based healthcare and social work fund said.
It has put forward a seven-point plan to the government. “Our plan is essentially based on the view that the most appropriate way to achieve higher pensions is to enable participants to build up pension rights on a higher proportion of their salaries.”
It added that while it believes that the proposed ‘lifestyle’ savings scheme (‘levensloop’) is a good idea “in principle” – the current proposals have reduced it to an “artificial construction” to replace the pre-pension scheme.
It says it is “unrealistic” for workers in the health and social work sectors to save 12% of their gross salaries – and that individual schemes will always be more expensive than the existing collective pre-pension schemes.
“PGGM is firmly convinced that the best way forward is for the lifestyle pension schemes to be operated by pension funds. This will result in higher returns and lower costs than those possible under schemes operated on an individual basis.”