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Unions warn against drop in pensions accrual at ABP

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Dutch trade unions for government staff have urged social affairs’ minister Wouter Koolmees to seek a solution against deteriorating prospects for pensions accrual at the civil service scheme ABP.

The unions said the annual pensions accrual could decrease by 12% – from the tax-facilitated level of 1.875% to 1.647% – while premiums could rise significantly in 2021.

Bert de Haas, trustee at union FNV, attributed the accrual cut to a decrease of the discount rate for future returns.

As a consequence of reduced parameters for the various asset classes, the discount rate is to drop from 2.8% to 2.4% next year.

In the opinion of the unions, the reduced accrual rate is unacceptable, as civil servants and teachters would no longer be able to accrue a pension of 80% of their average salary within 42 years.

The unions also warned the minister against ABP’s intention to increase the scheme’s contribution to a costs-covering level.

They argued that the current premium of 24.9% would have to rise to approximately 40% as a consequence.

“We want to show that it is all about very far-reaching adjustments, leading to either very high costs or unacceptable target reductions,” said De Haas.

ABP said it would publish next year’s contribution level later this month. A spokeswoman said it was too early to provide clarity about the contribution for 2021, as the scheme’s board still had to discuss the matter.

During the past three years, ABP’s contribution has gradually risen from 18.8% of the pensionable salary in 2016 to 24.9% in 2018.

The increase was largely caused by an earlier reduction of the discount rate for future returns from 3.6% to 2.8%.

 

 

 

 

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