Dutch scheme PFZW freezes pension contribution at 23.4%
NETHERLANDS - The €99.5bn healthcare scheme PFZW has anticipated deliberations in the new Pension Agreement between employers and employees by freezing its contribution at 23.4% of the pensionable salary.
In addition, it has decreased yearly pension accrual from 2.05% to 1.95% to compensate for increased longevity, said scheme director Peter Borgdorff.
Speaking at the Pension Congress in Rotterdam, Borgdorff pointed out that PFZW would only raise its premium by 2% as an emergency measure, in case its coverage ratio - 109% at present - dropped under 90%.
"If this in insufficient for recovery," he said, "we will cut benefits for all participants by 10%, whereas any necessary additional measure will be a 5% discount for active participants."
He said PFZW would like to see a new Pension Agreement as soon as possible, as it needs to integrate the details into its regular pension arrangements for 2011.
According to Borgdorff, the scheme's approved three-year recovery plan aims at a 50% indexation as soon as the funding ratio has risen above the required minimum of 105% and allows for a gradual further indexation at a coverage ratio of more than 117%.
"This more liberal indexation policy has been developed to benefit our participants," he said.
Borgdorff added that PFZW has not changed its asset mix, "as we refuse to assume that the present economic situation will not change".
For the same reason, the healthcare scheme has decided to stick to hedging one-third of its interest in inflation risk.