Life expectancy reduces PfZW indexation
NETHERLANDS - PfZW, the €84bn Dutch industry-wide pension scheme for healthcare workers, has granted its two million participants part indexation of 0.72% - lower than in previous years as officials at the pension fund anticipate life expectancy will rise in the future.
For the same reason, members of the Netherlands' second-largest pension fund also face a 0.6% rise in contributions to 23.1% of pensionable salary in 2010.
"Not only external demographic predictions, but also our own data, show a fast rise in life expectancy," commented Peter Borgdorff, director of PfZW.
"We therefore think it is sensible to take this risk into account for both indexation and the contribution levels for 2010," he explained.
According to PfZW, the decision to only part compensate for inflation follows its recovery plan, which is prescribed to pay a maximum indexation of 50% of the salary inflation of 2.85% until such time as the scheme meets its target cover ratio.
However, the pressure of rising life expectancy means the indexation payment has been limited to just 0.72%.
Recent figures from Statistics Netherlands (CBS) indicated life expectancy is increasing faster than as listed on longevity tables used by pension funds - for the period between 2002-2007 - and provided by the Actuarial Society (AG).
For example, the assumed average yearly rise of 2.3% for men between 60 and 69 during the next 45 years could in fact be over 3%, according to consultancy firm Hewitt Associates, after looking into the impact of the CBS data.
At present, the AG is working on an update of its forecasts - including an extension of its prognosis horizon by 10 years until 2060 - which it expects to publish later this year.
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