NETHERLANDS - Dutch social affairs minister Piet Hein Donner has rejected the possibility of changing the mark-to-market approach to calculating pension funds' liabilities.
During an emergency meeting of the parliamentary social affairs select committee on Tuesday, Donner said the present criterion of the 'risk-free' swap rate was crucial for making proper valuations.
Last week, Socialist Party MP Paul Ulenbelt requested the committee meeting to discuss looming rights cuts at 14 pension funds, where falling long-term interest rates have led to very low coverage ratios.
According to Donner, switching to a different interest criterion would merely "define away" pension funds' problems.
"We mustn't stick our heads in the sand," he said.
"It is better to apply a discount now and reverse the decision if things get better later than the other way round.
"If future returns don't compensate for the present losses of carrying on with insufficient cover, the shortfalls will become much larger."
The minister also opposed a guarantee scheme for elderly people with small pensions, as this was likely to be "financed by taxpayers".
"Moreover," he added, "a guarantee would remove the incentive for pension funds to keep any shortfall limited."
Donner declined to respond to proposals from several political parties to overturn the mandatory secrecy respecting pension funds.
The secrecy is a legal requirement, and revealing schemes' names would cause even more unrest among pension funds, the minister said.
He also pointed out that schemes could not be forced to communicate with their participants, as long they had not yet made a decision on an actual rights cut.
"Only after they have made such a decision must pension funds inform their participants within a month," he said.
Donner also cast aside accusations he caused panic by announcing a 'discount list' without revealing the names of the funds involved.
He said: "Already in April, it had become clear the 14 schemes were insufficiently able to recover without additional measures, and the option of a discount has been in their recovery plan since April last year.
"There have been consultations with the social partners of employees and employers, the pension funds' lobbying organisations and pensions regulator De Nederlandsche Bank."
Parliament is likely to discuss the issue again during a plenary meeting in the week of 6 September.