DNB still in the pension firing line
A bitter spat has erupted over the refinancing of the pension funds of the Dutch central bank and pension regulator the PVK - with the head of the bank branding an MP’s comments “tendentious and grievous”.
The row follows Christian Democrat Pieter Omtzigt’s parliamentary questions about a E55m cash injection to the plan disclosed in the DNB’s annual report. MPs are critical of this move, saying the DNB is still guaranteeing full indexation of its pension subscribers, while asking other Dutch pension funds to economise.
According to the DNB scheme’s own rules, the extra cash should only have been necessary if the coverage ratio was below 100%. At present, the ratio is between 100-118%.
Due to the extra cash, all pensioners will receive extra payments over 2003 of 2%, and overall pensions will increase by an extra 0.5%.
This move – contrary to all recent developments in the Netherlands – has been widely questioned. DNB pensioners will have still unconditional indexation, while everybody else has been moving towards conditional indexation.
And the DNB will pay the full pension subscription, while other Dutch employees currently pay part of the premiums themselves.
Additionally, DNB employees can still take a pension at 62 - despite DNB governor Nout Wellink asking people to work longer. `
These moves have been criticised as luxurious by Omtzigt, who also slated the PVK for not changing its current final salary system to a career-average with indexation.
Omtzigt said: “The PVK will be now the only one with the final salary system, while forcing other pension funds to change it.” The PVK injected another E2.3m in 2003. Omtzigt has asked finance minister Gerrit Zalm to put the supervision of the PVK in the hands of his own ministry. Zalm is not yet willing to do this. Omtzigt has also proposed turning the PVK/DNB pension into a normal civil service scheme, which could be dealt with by ABP or another big pension fund.
In a four-page open letter, sent on August 4, DNB president Nout Wellink said the bank's directors considered the comments “tendentious and grievous”. He claimed that the DNB pension had been negotiated between the management and employees and was a fair deal, and asserted that the new arrangement would put a greater distance between pension fund and the central bank.
These issues will be part of a major Parliamentary discussion in early September.