New Dutch pensions system facing further delays
The introduction of a new pensions contract in the Netherlands is facing further delay, according to several members of the Social and Economic Council (SER).
The contract is supposed to be the key element of a new, more sustainable pensions system.
Speaking at an industry event yesterday, Kees Goudswaard, chair of the SER’s committee for system reform, said that completing necessary legislation and implementing the transition to the new system by 2020 was going to be “a challenge”.
Doing this in a hurry would not be sensible because of the complexity of the issues involved, he said.
According to Chris Driessen, pensions strategist at workers’ union FNV, the target date of 2020 set by the Netherlands’ new government was “just symbolic”.
“This is unrealistically ambitious, as we just need this time for completing legislation,” he said. “Experience tells us that passing these things through parliament takes much longer usually.”
“It would be good if the foundation for a transition was in place in 2020,” added Hedda Renooij, pension secretary of employer organisations VNO-NCW and MKB Nederland.
She said that the transition would not be a “big bang” but a “very gradual process which would take up several years”.
However, none of the SER committee members wanted to elaborate on when the new system could be introduced.
In September, the government coalition partners granted employers and workers – who have been discussing the issue for several years now – additional time to come up with their own proposal for a new pensions contract.
The members of the SER committee confirmed the earlier prediction of Gerard Riemen, director of the Pensions Federation, that an introduction in 2020 seemed to be impossible.
In Riemen’s opinion, the transition process would take up at least five years, and possibly even 10.
Currently, the SER is fleshing out a new pensions contract involving individual pensions accrual combined with collective risk sharing, as an alternative for the predominantly defined benefit arrangements which are increasingly seen as unsustainable.
Goudswaard, a professor of economics at Leiden University, said his committee still needed to negotiate several hurdles, including clarifying the effects of such a contract on the volatility and stability of future pensions, in order to prevent some generations of pensioners losing out as a result of economic conditions in the accrual phase.
He also said that a decision needed to be taken about what level of volatility would be acceptable, and what the desired scale was for financial buffers as part of the new pensions contract.
Also during the event, Erik Lutjens, pensions lawyer and professor of pensions legislation at Amsterdam’s Free University, emphasised that second-pillar pensions were the prerogative of employers and workers, and that it would be difficult for the government to issue legislation.
“However, the cabinet could indirectly steer the process, for example through fiscally facilitating a pensions contract, a retirement age, or the percentage of tax-facilitated pensions accrual,” he said.