The Dutch Pensions Federation has said it is unconvinced that the proposal for defined contribution (DC) pension schemes with personal accounts should replace existing defined benefit (DB) or DC arrangements in the Netherlands.
In its contribution to the nationwide debate on the future of the Dutch system, the industry group said it expected the new plan to be incorporated into the Pensions Act, alongside classic DB and DC schemes.
The so-called ‘third option’, which has gained momentum of late, is meant to offer companies and industries more leeway in accommodating pension schemes.
The Dutch Social and Economic Council (SER), in its submission, sang the benefits of DC arrangements with individual accounts, but with collective risk-sharing, and concluded the option warranted “further investigation”, while Netspar, the influential network for pension researchers and professionals, recently came to a similar conclusion.
In its comments, the Pensions Federation also warned of potential “transitional” problems that might be caused by the replacement of the current average-contribution set-up with a method considered fairer for all generations.
The Dutch Bureau for Economic Policy Analysis (CPB) recently put the cost of such a transition at approximately €100bn.
Meanwhile, the Dutch Pensions Federation called on the government and regulator De Nederlandsche Bank (DNB) to hold talks with the pensions sector to discuss how best to deal with low interest rates.
The industry group echoed concerns expressed recently by Marcel Andringa, CIO at the €40bn metal scheme PME.
“The low interest rates are a big problem,” the financial daily Het Financieele Dagblad quoted a Federation’s spokesman as saying.
The spokesman added that, as a result of the current environment, pension funds’ participants would miss out on indexation, and that new rights cuts could not be ruled out over the long term.