50Plus, the Dutch political party for the elderly, has tabled a bill that would allow pension funds to use a discount rate for liabilities of at least 2% during the next five years.

Currently, pension funds must discount liabilities against market rates with the application of an ultimate forward rate of 2.8%, which translates into a discount rate of approximately 1.2%.

The party launched its initiative in order to prevent schemes cutting pension rights after having been underfunded for a consecutive period of five years, as required by the new financial assessment framework (nFTK).

Clarifying the proposal, Martin van Rooijen, a candidate MP for 50Plus for the parliamentary elections next week, said that the 2% rate would automatically be cancelled as soon as the European Central Bank (ECB) stops its programme of quantitative easing.

The ECB today decided to maintain its programme, which will see it purchase €780bn worth of bonds by the end of the year.

The five-year period suggested by the party matches calculations of the Netherlands Bureau for Economic Policy Planning (CPB), which found that the effect of a 2% discount rate on the various generations of workers and pensioners would be limited.

Van Rooijen, who is currently a senator for 50Plus, also referred to Han de Jong, chief economist at ABN Amro Bank, who recently argued in favour of a higher discount rate.

According to De Jong, it would be “historically absolutely unique, if pension funds would not achieve higher returns than 1.2% on a properly diversified investment portfolio”.

In other news, John Kerstens, MP for the labour party PvdA, warned against reducing the accrual limit, as several political parties promise in their election manifestos.

During a meeting of KPS, the lobbying organisation of pension specialists, he argued that employers and unions need support from their rank and file for adjustments to the pensions system.

In his opinion, this won’t happen if politicians start interfering with the level of tax-friendly accrual, which is currently capped at an income of €103,317.

The left-wing green party GroenLinks along with the religious right-wing parties ChristenUnie and SGP have all announced that they would decrease the tax-facilitated accrual, while socialist party SP said the issue was “negotiable”.

The Pensions Federation made clear that it was still too early to comment on the issue, as the manifestos of the 15 parties likely to win seats following the election varied too widely.

PGGM, the pensions provider for the €185bn healthcare scheme PFZW, indicated that the plans to limit tax-friendly accrual were ill thought-through and would undermine support for the pensions system.

Meanwhile, the PvdA and the liberal democrat party D66 said they wanted to reduce the income level subject to mandatory pensions accrual.

However, Pieter Omtzigt, MP for the Christian democrats CDA, rejected the plan of PvdA and D66, arguing that this would come at the expense of solidarity between higher and lower paid workers within companies.