Donner allows three-year leeway on pension cuts
NETHERLANDS - Pension funds working on short-term recovery plans are not required to cut benefits during the next three years, according to Social Affairs' minister Piet Hein Donner.
In a written statement to parliament. Donner said schemes which find they may need to take as strong a measure as cutting member benefits will have to do so before 1 January 2012.
The minister had initially set the mandatory date for making necessary cuts in benefits as occurring on 1 August 2010, and further possible cuts, following a deteriorating cover ratio at the end of 2009, would then have to made on 1 January 2011.
However, Donner has now said he and pensions regulator DNB will consult the pension funds' lobbying organisations and the Labour Foundation in 2010 about the validity of cuts based on the circumstances at that time.
The consultation is expected to take into account the schemes' cover ratios, developments in the economy and the financial markets, as well as pending advice on the parameters for calculating liabilities and an evaluation of the financial assessment framework FTK, according to the minister.
Donner also indicated that he will allow pension funds with a five-year recovery plan to make a binding decision at the end of 2011 as to whether their recovery measures could be replaced by an alternative in a reviewed recovery plan.
VB, the Association of Industry-wide Pension Funds, has welcomed the extra margin for recovery granted by the minister.
"Pension funds will now have more options in which to fulfil their responsibilities towards all their participants," commented Gert Kloosterboer, spokesman for VB.
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