NETHERLANDS - Dutch pension funds are facing a combined shortfall of €105bn - taking into account full indexation for future inflation and salary rises – says Watson Wyatt Netherlands.
According to research partner Roland van Gaalen the figures are based on a survey of 160 client schemes. The outcome must be fairly representative for the whole pensions industry, he assumes.
Van Gaalen said he has considered the market value of the investments and the liabilities of the schemes at the end of 2004. “The drop of the market interest from 4.3% to 3.7% in the meantime, has been roughly offset by the rise of equities and bonds,” he added.
The nominal liabilities of the pension funds are almost totally covered, the survey has also revealed. Moreover, between 35% and 45% of the indexation is covered by capital as well, the researcher said.
“At most schemes however, the solvency margins are insufficient,” Van Gaalen stressed. “Recovery measures are still necessary.”
In his opinion, the position of Dutch pension schemes is “remarkably strong”, after the decline of equities and interest rates three years ago. “Especially compared to the US, where the pension system is in deep trouble.”
At most Dutch pension funds indexation is a promise, which will only be carried out if a scheme has sufficient financial buffers.