NETHERLANDS - Dutch pension funds will not have to raise their contributions in 2011 to improve coverage ratios, the pensions supervisor De Nederlandsche Bank (DNB) has decided.

However, the regulator added that schemes would be exempt from the rule only once they had presented a suitable financial recovery plan for 2012.

The DNB's announcement came in response to a recent request by the Labour Foundation (STAR) - the consultation platform of employers and employees - to social affairs minister Henk Kamp to allow pension funds to continue to cushion their contributions.

STAR had argued that the DNB's initial insistence that pension funds with a funding shortfall must consider raising premiums might lead to a premiums increase of as much as 30% - or to a lower accrual of benefits.

Kamp said he shared STAR's concerns, given the "potential of the problem".

Although the DNB has insisted premiums must go toward recovery in the event of a funding shortfall, it has now conceded that pension funds must be given the chance to work out structural measures.

Willem Kroes, deputy secretary at STAR, said: "The social partners are pleased with the outcome. It is in line with the pension agreement, which says the social partners must have designed a new pension contract by 1 January 2012.

"The new contract will be more explicit on risks and more expensive, as the rules of the financial assessment framework FTK will also be tightened."

CSO, the umbrella organisation for elderly lobbying groups, has opposed increased flexibility on contributions, due to concerns the exemption will undermine pensioners.