NETHERLANDS – The Dutch Financial Markets Authority (AFM) has called for changes in the pensions accrual system in order to level the playing field for younger participants.

At a pensions seminar in Wassenaar, AFM director Harman Korte said the current rules for accrual came at the expense of younger employees, as their increased job mobility kept them from fully benefitting from their contributions.

He said younger workers ought to accrue more pension rights for their average contribution through a "degressive" accrual.

According to Korte, the current average contribution covers more costs for younger workers than for older workers.

He said this "subsidy" would be permissible if all participants had the same pension fund over the course of their careers.

But he said it would be harder to justify as increasing numbers of workers changed jobs and left the scheme.

"Therefore," he said, "the question is whether leavers should subsidise the participants who stay in the pension fund."

Korte noted that, in order to minimise negative effects for older participants, ample time would be needed for a transition.

He also argued that age-differentiated tax relief would help achieve a "degressive" pension accrual.

In Korte's opinion, pension funds are often too reluctant to provide clarity about the quality of their pension plan, which depends on accrual rate, indexation policy and contribution arrangements, among other things.