Low interest rates will only be a problem for pension funds for the short term, Mario Draghi, the president of the European Central Bank (ECB), has suggested.

Addressing the Dutch Parliament on Wednesday about the ECB’s monetary policy, Draghi emphasised that the ultra-low interest rates policy was crucial for economic recovery, which will also benefit pension funds for the long term.

The Netherlands’ predominantly capital-funded and defined benefit pensions system, with approximately €1.2trn of assets, has been particularly hit by low interest rates, with politicians and pension funds voicing strong opposition to the policy.

The ECB’s deposit rate has not been above 1% since 2009.

Recently, experts estimated the damage to Dutch pensions at €60bn: a €100bn rise in liabilities caused by the low rates was only partially offset by a €40bn rise in asset values, they calculated.

While acknowledging the negative impact of low interest rates on pension funds that guarantee benefits, Draghi said that low rates were necessary for recovery and employment.

“We need to offset short-term negative effects against the positive effects for the long term,” he said.

According to the ECB president, with an economic recovery, interest rates and returns would also improve and liabilities would decrease.

Draghi did not address questions about legal proposals from 50Plus, the Dutch political party for the elderly, to introduce a minimum discount rate for liabilities of 2%.

“The ECB has not been tasked with setting the supervisory rules for pension funds,” he said.

Dutch pension funds must use a discount rate based on the market rate, with the application of an ultimate forward rate of currently 2.8%.

The official discount rate, as prescribed by supervisor De Nederlandsche Bank, stands at approximately 1.68% at the moment.