A disappointed Dutch pensions sector has urged the unions, employers and the government to do their utmost to restart negotiations over a new pensions agreement, with several commentators calling on the government to take the initiative.
Talks between the government and the social partners collapsed on Tuesday night when unions walked out, claiming the government had presented no solutions to their issues.
Corien Wortmann-Kool, chair of the €409bn civil service scheme ABP, said that pensions had been “taken hostage to a broader package of measures”, such as increasing the retirement age for the state pension (AOW) and pensions accrual for self-employed workers.
In a radio interview, she highlighted that the Social and Economic Council (SER) had produced “ready-made advice on a new pensions contract, which we want to take up tomorrow, as there is a lot of work to do”. The SER is a committee of independent members and representatives of employees and employers, which advises the government.
Wortmann-Kool said she could no longer explain to ABP’s members that the scheme couldn’t grant inflation-linked benefits for years to come, and may have to apply benefit cuts, even though the Dutch economy was booming.
“Our sympathy is running low as a result of continuously delayed decisions”
Corien Wortmann-Kool, ABP
“This further undermines trust in the pensions system,” she said. “Our sympathy is running low as a result of the continuously delayed decisions.”
Peter Borgdorff, director of the €206bn healthcare scheme PFZW, added: “The end of negotiations is very damaging to the trust in the system. Without a new pensions accord we need to muddle through with the current rules, while our members won’t benefit from the recovering economy.”
During October, the funding levels of PFZW and ABP fell by 3 percentage points to roughly 101%. They must be at least 104.3% funded to avoid benefit cuts in 2021.
Jos Brocken, chair of the €70bn metal scheme PMT, which is also at risk of benefit cuts, told Dutch newspaper FD: “If anything goes wrong, we have to cut pension rights. Even a monthly discount of a few euros will severely damage the brittle trust in the pensions system.”
Both PMT and its €47bn sister metal scheme PME are facing cuts in 2020 if their funding hasn’t recovered sufficiently at the end of 2019.
Negotiations to resume
Gerard Riemen, director at the Pensions Federation, said he expected the social partners and the government to restart negotiations.
“Given the scale of the problems of the system, they can’t simply afford to do nothing,” he told IPE’s Dutch sister publication Pensioen Pro.
In his opinion, the government should take the lead as it had made pensions reform part of its coalition agreement, and also has the final say on changes through legislation.
Elsewhere, Hans de Boer, chairman of employer organisation VNO-NCW, suggested that the collapse of the negotiations could be “fertile ground for social unrest”.
In his opinion, social affairs minister Wouter Koolmees must seek solutions through legislation based on the government accord, which focused on a new pensions contract with a direct link between paid-in contributions and pensions accrual.
The insurance industry association (VvV) also argued that the government should take the initiative.
Company schemes ‘don’t need reform’
“Resistance among workers is increasing against participating in a pension plan they don’t understand or they don’t trust”
Rogier Kerkhof, Korn Ferry
Frans Dooren, director of the €1.3bn Nedlloyd Pensioenfonds, said most company pension funds didn’t really need pensions reform, as they had already sufficient options for members including defined benefit, defined contribution and hybrid plans.
“Contrary to the large industry-wide schemes, which use an average contribution [method] for affiliated companies, company pension funds charge an actuarial premium for their DB plans,” Dooren said. “As a consequence, the problem of younger workers unfairly subsidising older colleagues doesn’t apply to them.”
Dooren explained that a new pensions agreement could even have a negative impact on company schemes, as new obligations could be at odds with their current pension plans.
Rogier Kerkhof, pensions and remuneration expert at consultancy Korn Ferry, said he expected recent developments to increase the pressure on employers to investigate the option of leaving mandatory sector schemes and setting up their own pension plans instead.
“I don’t think companies want to wait much longer,” Kerkhof said. “They have noticed that resistance among their workers is increasing against participating in a pension plan they don’t understand or they don’t trust.”