NETHERLANDS - Employers and employees have aimed too high in their negotiations of the Pensions Agreement, and the resultant deal is now overly complex and inadequate, according to Towers Watson.

Bart den Hartog, retirement solutions leader at the consultancy, said: "The social partners should only have made agreements on the main subjects - that rising life expectancy cannot lead automatically to rising pension costs, and that market volatility is not allowed to affect companies' balances."

Den Hartog said the agreements should have been hammered out during negotiations at the company or sector level, which still needs to be done anyway.

"If employers and employees conclude that current pension promises cannot be met at current contribution levels, then either the pension level needs to come down or premiums need to go up - that's not too complicated," he said during the presentation of the paper 'New élan or blind wall?'

The authors of the publication claim that the social partners have laid the foundation for a "very complicated and hardly explicable system" in an effort to keep control over the elaboration of the Pensions Agreement.

They said this happened despite the fact "proper communication about pensions is considered as important as the pension itself".

Den Hartog further questioned whether a participant could fully understand his pension if he needed to deal with merging old and new pension benefits, 'soft' pension benefits and "almost incomprehensible" value transfers between generations.

"The discussion must be re-focused to the main subject," he concluded, referring to plunging markets and long-term interest rates and the risk of a collapsing euro.

The authors further noted that most workers already appeared to realise that things needed to change.

Towers Watson's own research shows that two-thirds of staff at international companies already anticipate working beyond the current retirement age of 65, and that half acknowledge they will need to provide for a pension themselves.

Den Hartog said: "Maybe the new élan needs to start at the fundamental question of how much of his income a worker wants to reserve for retirement, and maybe we need to postpone too drastic changes in the system until that question has been answered."