Falling funding levels at some of the largest pension schemes in the Netherlands are preventing nearly 3m workers from transferring between schemes when changing employers.
Over the third quarter of this year, four of the five largest industry-wide pension funds – civil service scheme ABP, healthcare pension fund PFZW and the metal schemes PMT and PME – saw their official coverage ratios drop below the critical 100% level.
As a consequence, they are legally obliged to suspend incoming and outgoing value transfers.
The four large sector schemes have nearly 2.8m active participants in total, representing more than one-third of the Dutch workforce.
The €39bn PME, for example, which has 167,000 active participants, said it had received almost 9,000 requests for value transfers last year.
The €5bn sector fund PNO Media, the €800m Dutch scheme of publishing company Reed Elsevier (SPEO) and the €3bn occupational pension fund for physiotherapists (SPF) also had to cease value transfers for participants changing jobs.
According to the latest statistics, dating back to 2010, research company SEO Economisch Onderzoek calculated that 114,600 employees in total transferred their pension rights to the pension fund of their new employers.
In its analysis of the survey – commissioned by the Ministry for Social Affairs – it said the number represented 40% of workers who had actually been in a position to transfer their pension rights.
At the time, the number of pension funds was much higher than the approximately 265 schemes that exist at the moment.
The number of schemes being forced to suspend pension-right transfers is set to increase, as the policy funding – based on a scheme’s coverage over the previous 12 months – at many Dutch pension funds is now just over 100%.
As long as a pension fund’s policy coverage remains short of 100%, it will have to suspend value transfers.