NETHERLANDS – Moody’s Investor Services says the size of private retirement savings will help offset the problems of an ageing population in the Netherlands.
The ratings agency said it was “less concerned about pressure on the nation's top rating from the long-term national challenge posed by an ageing population - a problem faced by most of the European Union member countries”.
“Due to the demographic shift, the financial base intended to support old-age pensions and healthcare is set to shrink substantially, and expenditures will rise.”
Moody’s vice president Alexander Kockerbeck said the challenge was mitigated “partially by the accumulation of significant private sector retirement assets that will complement public sector pension funding".
The comments come in Moody’s annual sovereign credit report on the Netherlands. It said the country’s Aaa rating, with stable outlook, "rests solidly on the country's sound fiscal situation and is well positioned”.
“This favourable condition has been strengthened by declining general government debt ratios, a healthy net external-creditor status and a stronger public-finance profile.”
A long period of economic expansion and a “vigorous banking sector” were seen as positive credit factors.
"These positives also reflect the fact that comprehensive structural reform over the past two decades has enhanced competitiveness, productivity and economic flexibility, most notably in the labour market," Kockerbeck said.
He said that labour market reforms were probably needed over the medium term to control inflation and increase the potential growth of labour resources.