NETHERLANDS - Dutch pension funds should work with social partners and providers to start putting together worst-case scenario strategies, according to Benne van Popta, employers chairman of the Association of Industry-wide Pension Funds (VB).
Speaking at a seminar organised by pensions supervisor De Nederlandsche Bank (DNB), he said future discussions on a "crisis approach" should emphasise "out of the box thinking".
To prevent every scheme from implementing its own solution, the DNB, the Pension Federation and the department of social affairs should take the initiative and co-ordinate the process, Van Popta said.
During the meeting, Xander den Uijl, vice-chairman of the €240bn civil service scheme, attributed the currently low coverage ratios mainly to the "extremely low" interest rates and reiterated ABP's objections against the current swap curve as the criterion for accounting liabilities.
According to consultant Aon Hewitt, the average coverage ratio of Dutch pension funds is currently 97%.
However, representatives of both the DNB and the department of social affairs again voiced their opposition to any "drastic changes" to the current discount method.
Olaf Sleijpen, the DNB's director of supervision, said: "We are not in favour of an average discount rate because that is not what you do if you take someone's temperature."
He stressed that there was no legal rule prescribing pension funds to take measures based on the interest rate of a single day.
Sleijpen responded to a recommendation to allow a temporary increase of the discount rate, as the currently low interest rates are "probably artificial" and caused by European governments.
But Sleijpen said: "We need to be very careful with changing the rules of the game, as we don't know what will happen to the interest rates, which might stay very low."
Maarten Camps, director-general at social affairs, added: "Increasing the discount rate will define away the problem."
Earlier during the meeting, Joanna Kellerman, the DNB's director of pensions, reiterated her opposition to using expected returns as discount rate.
Instead, she advocated a "clear, uniform and objective" rate that did not depend on fund-specific investment policy and was based on current market data.
According to Henk Schuijt, director of the €2.3bn pension fund of supermarket chain Ahold, pension funds should take responsibility and decide for themselves whether to cut pension benefits, rather than wait for guidance from the supervisor.
"The problem has been around for three years now - time alone probably won't solve it," he said.