Dutch pension funds can use outline of Pensions Act when weighing rights cuts
NETHERLANDS - Dutch pension funds will be allowed to consult an outline of the new Pensions Act when making final decisions on possible rights cuts at the end of this year, according to social affairs minister Henk Kamp.
The act is scheduled to come into force in 2014.
During a debate in Parliament, Kamp said he would produce a memorandum with the profile of the planned adjustments - such as the new financial assessment framework (FTK) and a new discount rate for liabilities - in April.
However, he stressed that a new FTK would not make the current combined funding shortfall of €200bn "disappear". He said combined assets at Dutch pension funds had risen to €875bn.
According to the minister, the re-introduction of the previous and fixed discount rate of 4% - to replace the current discount against market rates - would be not only unwise but also illegal.
Both the Socialist Party (SP) and the right-of-centre Freedom Party (PVV) had called for the measure as a means of boosting schemes' funding to a discount-free level.
According to Kamp, such a nominal rise would be insufficient. He said an additional increase of at least 2% would be necessary to keep up with inflation.
"This level of returns doesn't exist," he said, arguing that schemes' average return of 7% last year had mainly been due to rising bond markets following falling interest rates in the last quarter.
The minister also stressed that he did not support an incremental increase of the current pensionable age of 65 from next year, rather than single increases to 66 in 2020 and 67 in 2025, as recommended by the liberal democrat party (D66) and the left-of-centre green party (GroenLinks).
Although he acknowledged the financial benefits of their proposal, Kamp said he wanted to stick with the hard-fought Pensions Agreement to "avoid new problems and new negotiations".
The minister also rejected GroenLinks' calls to abolish the collective surviving relatives pension for people born after 1972 and replace this collective insurance with a private one.
"This won't affect the current coverage ratios at all, as the existing rights will continue," Kamp said, adding that a surviving relatives pension was to be concluded by employers and employees.