NETHERLANDS - The €242bn civil service scheme ABP has said it supports the new Pension Agreement.

It said the agreement would be able to deal with the effects of quickly rising longevity, and factored in market risks for all generations in a balanced way.

It also offers pension fund participants a clear view on the risks, based on a realistic coverage ratio, it said.

ABP is the first Dutch pension fund to issue a considered response to the accord.

It said: "The agreed measures are the necessary steps toward a sustainable pension system, with equal chances for younger and older workers for a solid and affordable pension."

In ABP's opinion, the new pension contract will also provide greater certainty, as social partners can choose to build up financial buffers and spread risk over time.

"However," it added, "a guaranteed pension won't exist in the future either. Because the Pension Agreement will lead to a more long-term supervision, pension funds' coverage ratios will become less volatile, allowing schemes to plan for realising their long-term ambitions and avoid unnecessary worries.

"Moreover, future supervision will be based on real funding, rather than on nominal funding, and therefore take indexation targets into account."

The civil service scheme said merging existing and new pension rights was very important for sharing risks among generations.

"Furthermore," it said, "it is crucial that pension funds base their policy on realistic assumptions for returns, build up adequate financial buffers and translate the effects of the financial markets in a phased way into pension benefits."

The Pension Agreement indicates a maximum period of 10 years to spread windfalls and financial blows, to reduce the uncertainty for achieving pension funds' goals.

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