EUROPE - A group of Dutch pensions associations has warned that the European Commission’s proposed financial transaction tax (FTT) could lead to a 5-10% reduction in individual pension savings.
In a letter to Dutch finance minister Jan Kees de Jager, the group - comprising the Pensions Federation, the Dutch Association of Insurers, the Dutch Fund and Asset Management Association and Eumedion - estimated that institutional investors could be out of pocket by as much as €4.1bn a year due to the tax.
The group said it understood that the Commission wanted to make “quick capital” less attractive and was looking for ways to free taxpayers from the burden of the financial crisis.
“However,” it added, “the transaction tax is a disproportionate measure, causing pension fund participants, policyholders and participants in investment funds to foot the bill ultimately.”
It also claimed the tax would increase the Netherlands’ contribution to the EU by €860m a year.
The €6bn pension fund for housing companies (SPW) agreed that the FTT would have a “disproportionate” effect on pensions.
It also estimated that the 0.1% levy on each transaction would lea to annual costs of more than €500 for each participant, who would stand to lose as much as €30,000 in pension accrual in total.
Ino van den Besselaar, MP and pensions spokesman for the Freedom Party, largely agreed, saying: “The FTT must not be introduced, [but if it is], it ought to contain an exception for pension funds. We don’t want any additional pension costs.”
Paul Ulenbelt, MP and pensions spokesman for the Socialist Party, said his constituents supported the tax, but wanted lower rates for pension funds, as they did not “gamble with money”.
Pieter Omtzigt, MP for the Christian Democrat party, disapproved of the tax, warning that it would “cause pension funds to conduct their financial transactions outside Europe”.
The Dutch Bureau for Economic Policy Analysis previously concluded that the FTT was a “bad idea” that would fail to stabilise the financial system.
In a study for the Dutch cabinet, it added: “It is [also] less efficient than other taxes on the financial sector, such as VAT on financial services, a bank tax or a financial activities tax.”