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Dutch regulator confirms more than 100 pension funds facing discounts

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  • Dutch regulator confirms more than 100 pension funds facing discounts

NETHERLANDS - More than 100 Dutch pension funds will be forced to cut pension rights and/or benefits if their financial circumstances fail to improve sufficiently this year.

The discounts are expected to be about 2.3% on average, but 34 schemes said they would probably be unable to avoid a discount of less than 7%, according to the Dutch regulator (DNB).

A list compiled by the Pension Federation shows that the worst hit scheme was the pension fund for glassmaker Royal Leerdam, which announced a three-stage cut of nearly 22% in total before the end of 2013.

The pension fund, with almost 500 participants, had a funding ratio of 77.8% at December-end.

The DNB said it arrived at its estimate by analysing the recovery plans of the nearly 300 pension funds currently reporting a coverage shortfall - approximately 75% of the total number of schemes.

Of the hardest hit pension funds, 15 have confirmed that they will use the option of a maximum cut of 7% on 1 April 2013, the regulator said.

It said the schemes might have to implement additional discounts if they failed to achieve a minimum funding ratio of 105% at the end of 2013.

It said most pension funds would implement cuts on 1 April 2013 and will take decisions on the exact percentage at the end of 2012.

However, eight pension funds, with combined liabilities of €2.9bn and 59,000 participants in total, will already apply an average discount of 6.8% on 1 April 2012, the DNB said.

It estimated that the measures would affect approximately 7.5m workers, pensioners and deferred participants, who might have more than one pension plan with previous employers.

Over the coming months, the DNB will assess the submitted evaluations with the view to publishing its conclusions next May.

Legally, the regulator is prohibited from publishing the names of the pension funds involved, but 80 pension funds facing a discount have voluntarily submitted details to the Pension Federation.

The representative organisation's list shows that other pension funds facing large discounts include the schemes of office equipment manufacturer Ricoh Netherlands (17.8%), Media Group Limburg (13%), plastic laminates producer Alkor-Draka (7-11%) and ocean instrument maker Datawell (10.9%), as well as the occupational scheme for public pharmacists SPOA (13.8%).

The Pension Federation stressed that the announced discounts would affect pensioners' purchasing power by no more than a couple of percentage points, "as the state pension AOW is more than 50% of the total pension on average".

Moreover, the AOW will be increased slightly, it added.

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