NETHERLANDS – The collapse of the Dutch centre-right government last night could delay the implementation of the new Financial Assessment Framework, or FTK, pension experts have warned.
“As long as we have a government that is no longer in official function, they cannot take any new initiatives and they will be unable to pursue work that would otherwise have been pursued,” one pension scheme source told IPE.
“So what we would expect to happen is that the work on FTK comes to a stop, and it cannot be introduced at the date foreseen.”
FTK – currently due to be implemented from 1 January 2007 – was already delayed by one year last September due to “feasibility” issues.
According to the Dutch Ministry of Social Affairs and Employment, it is still too early to tell what impact the government’s collapse – due to an immigration row - will have on the FTK.
“We cannot comment right now because we don’t know what the consequences are,” said a spokesperson, adding that Dutch Prime Minister Jan Peter Balkenende and party leaders were today meeting with Queen Beatrix and advisers to decide the way forward.
“I think it will be clear in one week, two weeks maybe,” she added.
According to SEI Investment’s managing director for the Benelux and Nordic countries, Bart Heenk, FTK might be affected by the collapse.
“That may be an issue because, obviously, the cabinet has to formerly approve the pension law. FTK is part of the pension law and therefore it may be impacted,” he told IPE.
“But having said that, I think there is a reasonable understanding now on how FTK should be changed for it to be implemented. So there is a good chance still, I think, that FTK will go ahead even if there is not a formal pension law in place.”
He added that while it would have been good if the pension law were passed before the summer recess, FTK could still be implemented if it is approved or ratified some time in September/October.
According to Heenk, the collapse won’t impact the bond markets or the asset allocation of pension funds.
“Whether there is a right wing or a left wing coalition, it doesn’t make any difference whatsoever,” he said.
Commenting on the future of pensions reform, opposition Labour Party (PvdA) member Staf Depla told IPE that it is likely that a left-wing government would continue with FTK if it came to power.
Despite some changes, which might be made to the pensions law, the implementation of FTK was likely to continue on track.
However, he added: “It depends what kind of interim government we get.”
Meanwhile, the Finance Ministry told IPE: “At this point it is not clear yet what will happen now.”
According to legislation, an election should take place some 80 days after a government collapse. While opposition parties are pushing for an early election in September/October, the remaining two coalition parties are hoping to remain in office as long as possible in a “caretaking” arrangement.
According to sources, this is in a bid to assist the country’s economic recovery. The coalition parties believe that a delayed election will result in greater recovery and benefits for the Netherlands.
A finance ministry spokesperson told IPE that a decision would be made today as to whether elections would take place imminently or whether a temporary cabinet would be appointed for a short period to oversee next year’s budget, and ensure crucial proposed legislation continues. This would include a decision on FTK, he said.