NETHERLANDS - Dutch government policy has contributed to the poor financial position of most pension funds, pension experts have claimed.

During the stable investment period of the 1990s, when yearly returns averaged 16.5%, pension funds squandered assets following a bill aimed at taxing their financial reserves, macroeconomist Frits Bosch has claimed.

Speaking on Dutch television programme Reporter, Bosch blamed the cabinet of prime minister Ruud Lubbers, which in the late 1980s decided it needed part of the pension industry's reserves to fill its own budget shortfall and therefore drafted the proposal to tax assets.

Although the bill was never passed, its threat led pension funds to encourage early retirement schemes and decrease or even fully abolish contributions, according to Bosch, who added that pension funds also returned assets to their sponsoring company.

In Bosch's opinion, without these steps, Dutch pension assets could have been twice as much as the €750bn at present, leaving pension funds' coverage ratio at 220% on average.

Jean Frijns, chief investment officer at the €230bn civil service scheme ABP between 1993 and 2005, agreed that the government had contributed to the poor health of Dutch pension funds.

"In the mid-'90s, when ABP was privatised, the shortfall of paid contributions was at least €15bn and possibly even €25bn," he said.

"ABP entered the financial crisis with a coverage ratio of 130%. Had its funding been 160%, then it would hardly have been having a problem now."

ABP's coverage ratio was 96% at the end of October.