Federation calls for legal changes to improve net pension plan
The Dutch Pensions Federation has warned that participants in the new net pension plans for high earners could lose up to 30% of their paid-in premiums when they convert their savings into fixed benefits at retirement.
It has urged the government to come up with legal adjustments to fix the problem which, in its opinion, would be relatively easy.
Net pension plans were introduced in 2015, after the government decided to cap the tax-facilitated pensions accrual at a salary of €100,000.
The federation said the problem was a particular issue at pension funds with a low funding ratio, as benefits at retirement need to be purchased in a scheme’s basic plan against the pension fund’s required coverage, which is approximately 125%.
At January-end, however, the average funding of Dutch pension funds stood at 104%.
A spokesman for the €382bn civil service scheme ABP confirmed that it was unable to properly implement the net pension plan under existing rules. It said employers and workers should look into the matter.
The €182bn healthcare scheme PFZW indicated that it was even considering to cease offering net arrangements if legal changes failed to materialise.
A spokesman for the €5.2bn pension fund PNO Media, however, said that cancelling its net plan was not on its agenda for now.
As the net pension plans have been introduced recently, hardly any participants have suffered from adverse effects so far.
ABP made clear that so far no more than six of its participants with net pension arrangements have retired.
Meanwhile, Helma Lodders, MP for the liberal party VVD, has urged the government to come up with a solution for the problem before the national elections in March.