ABP, PFZW, PMT and PME – the four largest underfunded schemes in the Netherlands – are likely to apply rights cuts over three consecutive years as of 2021, the Netherlands Bureau for Economic Policy Analysis (CPB) said.

In a prognosis for the mid-term, it is expected that the four pension funds would reduce pension rights and benefits by approximately 2.5% per annum on average.

The discounts are expected to be applied over a three-year period rather than the legally allowed 10 years, because metal schemes PMT and PME prefer a three-stage process to save costs.

Both metal schemes must already start cutting pensions in 2020 if they are still underfunded at the end of this year.

ABP and PFZW – the pension funds for the civil service and the healthcare sector, respectively – are facing discounts in 2021 if their coverage ratio is short of the required minimum by the end of December next year.

The CPB forecast is based on August-end figures; as funding has risen slightly since then, pension cuts could be lower.

It said that underfunded pension funds in the market sector were expected to apply cuts of 0.8% on average.


The CPB further forecasted rising pension contributions, and said that ABP would draw the increase on the prescribed lower assumptions for future returns.

PFZW would raise its premiums by using the levy of 2.5 percentage points, as provided in its regulations, in case of rights cuts, it added.

The CPB estimated that the contribution rise in the market sector woud be 0.5 percentage point in 2021, citing the low interest rates and new return parameters.

However, the Bureau’s forecast didn’t mention the effects of a limited premium rise on annual pensions acrrual.

Recently, several pension funds have warned that either contributions had to rise significantly or accrual had to be reduced in similar measure.

In its forecast, the CPB further assumed that pension funds would use premiums for early retirement plans, that would become available as many of these schemes would expire, for regular and surviving relatives pensions.

Pension contributions are likely to rise further as of 2022, when a levy is to be introduced to finance the transition from the current average pensions accrual to an – actuarially fairer – degressive one as part of the Dutch pensions reform.