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PVK consults on funding calculation

NETHERLANDS - The Dutch pension regulator, the PVK, has raised the possibility of raising the minimum funding level to 130% in a consultation document.

A spokesman for the Pensioen- & Verzekeringskamer confirmed: “We have sent a document to the VB, it is a rather technical matter.” The spokesman however declined to discuss the document further as it was still going through a consultation phase and would become official in mid-October.

A spokeswoman for the VB, the Dutch Association of Industy-wide Pension Funds, which is currently co-ordinating the consultation, said the level could rise to 130%. She added there was an on-going consultation about technical details such as calculation methods.

Speaking about the possible impact on pension funds’ investing policies, the spokeswoman said it was still a matter confined to calculation methods.

Michel Meijs, spokesman for the 156 billion-euro civil service scheme ABP, said: “At present pension funds are involved in a consultation by the PVK on the basis of a concept sent by the PVK last week. The VB coordinates this consultation.” Meijs declined to make any further comment.

A consultant, who asked not to be named, said it was difficult to forecast how pension funds might respond to any change.

The consultant said that that pension funds could opt for long- or short-term solutions, depending on conditions and their relationship with the trade unions.

Possible short-term solutions, which the consultant said cannot last long, include the temporary suspension of pension indexation and the raising of contribution rates.

And schemes would also review their asset allocation, possibly changing their allocation to equities.

A long-term solution for funds would be to change their pension promise and alter their structure.

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