NETHERLANDS – The International Monetary Fund says there could be “macroeconomic consequences” of new pension fund coverage requirements in the Netherlands.

“New legal requirements to increase pension fund coverage ratios could have macroeconomic consequences,” the IMF said in a country report.

“Increasing the coverage ratio, depending on how it is spread out, could affect contributions in a way that affects savings and therefore consumption behaviour, and the macro economy.”

And the report also says the new regulatory framework known as the FTK could lead to changes in schemes’ asset allocations.

“Hypothetically, for example, pension funds could pursue a more risk-averse investment strategy, shifting away from equities to bonds.

“Given that reduced returns over the long run could also have a macroeconomic impact, the potential implications of the new requirements will need careful monitoring.”

The IMF stated that Dutch pension funds had roughly €505bn in assets at the end of 2004.

It recommended that the new pensions supervisory arrangements “allow sufficient flexibility in the specified timeframe for making up shortfalls in the coverage ratio, to prevent pro-cyclical effects, but without allowing unduly prolonged adjustment”.

The fund said the new arrangements improve transparency.