mast image

Impact Investing

IPE special report May 2018

Sections

Dutch government to abandon average pensions accrual by 2020

Related Categories

The Dutch government has announced that the current uniform cross-generational pension accrual system must be replaced with ‘degressive’ accrual – where younger employees accrue proportionately more pension rights than older workers – by 2020.

In a long-awaited update on the government’s plans for a new, sustainable pensions system, Jetta Klijnsma, state secretary for social affairs, said participants would be compensated if they missed out on rights accrual during the transition.

The Cabinet previously indicated that it wanted an alternative that would be fair for all generations and maintain support for younger workers in a collective pensions system.

Under the current average premium – a fixed percentage of salary – younger workers pay proportionally more, as their contribution is to generate a bigger return over time.

In its latest update, presented to Parliament on Friday, the government said it expected the transition process to take up to 25 years and cost as much as €40bn in tax revenues.

Klijnsma said an additional survey would establish whether the transition term could be shortened to 10 years.

The government emphasised, however, that transition periods would vary for each individual pension fund.

It said it would further explore two pension contracts with collective buffers – the ‘target contract’ based on risk-free interest rates, and individual pensions accrual with the accrual of financial buffers made dependent on investment returns.

Readers' comments (1)

  • So far I have not seen a verifyable calculation algorythm to compare the results of average accruel systems with the degressive accrual systems. In particular the influence of changes in the discount interest rate on premiums and pension right may be reason for concern.

    Unsuitable or offensive? Report this comment

Have your say

You must sign in to make a comment

IPE QUEST

Your first step in manager selection...

IPE Quest is a manager search facility that connects institutional investors and asset managers.

  • QN-2435

    Asset class: CLOs.
    Asset region: Global.
    Size: USD 50m.
    Closing date: 2018-05-22.

  • QN-2436

    Asset class: Real Estate - Core Open-ended Real Estate Equity Fund (non-listed).
    Asset region: Asia Pacific.
    Size: Approx. CHF 70-100m per investment.
    Closing date: 2018-05-25.

  • QN-2438

    Asset class: High Yield Bonds.
    Asset region: US.
    Size: USD 300 million.
    Closing date: 2018-05-25.

Begin Your Search Here