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Minister to submit major pension reform package to Dutch lawmakers

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  • Minister to submit major pension reform package to Dutch lawmakers

NETHERLANDS - Dutch minister of social affairs and labour, Henk Kamp, expects to present a comprehensive package of pensions-related measures to parliament in September, including guidelines detailing the extent to which pension schemes will be allowed to apply a new 'ultimate forward rate' (UFR) discounting method to determine whether they need to cut benefits in 2013.

The UFR methodology is to be part of a new financial framework to take effect in 2014, but chances are schemes will be allowed to apply the new method as early as December, when they must make a final decision on benefit cuts planned for next year.

Application of the new discounting method may help stave off some of the most extensive cuts, although the umbrella organisation of pension funds in The Netherlands, the Pension Federation, has warned the public not to get their hopes up.

"There is no reason to assume benefit cuts that were announced earlier are now off the table," it said.

"On the contrary - considering the current adverse economic situation, the Pension Federation believes benefit cuts may in fact be so extensive that it would be desirable to spread them over a number of years."

The measures to be presented in September will be hammered out in more detail over the summer, when Kamp meets with the Federation and representatives of trade unions and employer organisations.

Kamp made his announcement during a parliamentary debate last week - one of the last parliamentary sessions before the annual summer recess - where Dutch MPs expressed cautious support for the proposed overhaul of the pensions system.

The Christian Democrats stressed that any change in discounting method should be prudent, while the liberals said any pain or gain should be distributed fairly across generations, and the socialist party expressed relief that the new plans no longer included what they considered 'casino pensions'.

It is still unknown whether the pension measures will be presented before or after the election on 12 September.

According to the pensions specialist of the socialist party SP - the number two political party, according to some recent polls - the main priority must be to prevent benefit cuts, "as they would affect people who had no part of the crisis and would yet be asked to foot the bill".

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