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IPE special report May 2018

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Dutch political youngsters revolt against 'unfair' Pensions Agreement

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  • Dutch political youngsters revolt against 'unfair' Pensions Agreement

NETHERLANDS - Five youth branches of mainstream political parties have started a "Pensions Rebellion" against the Pensions Agreement because they fear it will come at the expense of the younger generations through too liberal indexation and too optimistic assumptions for returns.

In a joint statement, the organisations said: "The pensions pot is being emptied because pension funds still base their policy on unrealistic growth perspectives, which enables them to mask their financial shortfalls."

According to the youth branches, a revision of the pensions deal is necessary to achieve a fair division of the financial burden on young and old participants of pension funds.

Currently, pensioners receive roughly 85% of their last salary, while workers in their 30s and 40s are facing benefits of no more than 55%, the organisations claimed.

In their manifesto, they said pension funds should cease to grant indexation and - depending on their financial position - cut benefits to prevent a future bill for younger workers.

The political youth branches also want average pension contributions to be abolished, "as this undermines the solidarity between younger and older generations".

They said a quicker increase of the retirement age of the state pension AOW was crucial for safeguarding a pension for everyone.

Under the Pensions Agreement, the AOW age will be raised in one step from 65 to 66 in 2020, and it is likely to be increased further to 67 in 2025.

The youth organisations also want the current mandatory participation in a pension fund to be replaced by a general obligation to provide for a pension.

The Pensions Rebellion is an initiative of Alternative for Labour Union (AVV), a union for workers who are hardly represented in consultation bodies.

The youth branches of left-wing green party GroenLinks, the labour party PvdA, the liberal party VVD, the liberal democrat party D66 and the conservative religious party SGP are participating in the protest.

The youth organisation for the CDA party has said it supported the initiative, but would not "climb the barricades".

Gert Kloosterboer, spokesman for the Pension Federation, said: "The Pensions Agreement has been concluded between the social partners of employers and employees and social affairs minister Henk Kamp, and it has been endorsed by parliament, so the youth organisations should approach their political parties if they want change."

He also stressed that pension funds' boards were responsible for serving the interests of all participants in a balanced way.

"I am sure the supervisors will keep on checking for this," he added.

In June, risk expert Theo Kocken said "discounting against predicted returns and using a healthy looking funding ratio for granting indexation straightaway to pensioners will be inter-generational fraud".

Jean Frijns - professor for investment management at Amsterdam's Free University (VU) and former chief investment officer at the €240bn civil service scheme ABP, agreed with Kocken - saying: "Applying expected returns as discount criterion is odd."

During the parliamentary debate about the Pensions Agreement in September, social affairs minister Kamp promised to "legally secure a generation-proof pension contract that balances the benefits and burden between younger and older generations".

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