'Large number' of Dutch pension schemes facing benefit cuts – Kamp
NETHERLANDS - A "large number" of pension funds are facing benefit cuts in April 2013 if their financial positions fail to improve by the end of this year, social affairs minister Henk Kamp has announced.
Responding a question posed by MP Jesse Klaver of left-of-centre party GroenLinks, Kamp said schemes' financial position at the end of 2012 would be crucial for the question of whether they would need to prepare for a discount.
The minister referred to data from the Pension Federation showing that more than 100 pension funds - including several large ones - are at risk of failing to improve their financial positions sufficiently within the recovery-plan period between 2009 and 2013.
Earlier, pensions supervisor De Nederlandsche Bank said more than 200 pension funds had a funding shortfall at the end of August, with a coverage ratio of less than 105%.
Responding to MP Klaver, Kamp stressed that low long-term interest rates could not simply be attributed to the euro crisis, as interest rates have been falling "for a long time".
"Given the uncertainty on the financial markets, as well as the development of the world economy, it is unclear whether - and at what speed - the interest rates will rise again," he added.
Kamp tried to put the negative effect of low rates on pension funds' coverage ratios into perspective by arguing that rates had also probably boosted returns between the spring of 2010 and the spring of 2011.
He added that the development of schemes' funding ratios in recent decades showed there was no link between the current financial problems and the increased tax on 'surplus assets' of pension funds between 1982 and 1994.
During this period, the government decided to decrease pension contributions for civil servants to a less-than-cost covering level.
Kamp said that, by 2007, pension funds' coverage ratios had recovered to 144% on average.