SPF, the €13bn pensions fund for Dutch railway workers, cannot lower its contribution level, despite the reduction of the tax-facilitated annual pensions accrual from 2.15% to 1.875%, according to a union leader.

Speaking with IPE sister publication FD PensioenPro IPN, Roel Berghuis, sector leader for transport at union FNV Bondgenoten, cited tighter rules for establishing premiums in the new financial assessment framework (FTK).

“Currently, as a well-funded scheme with a coverage ratio of 123%, SPF can charge a smoothed cost-covering contribution based on expected returns,” he said.

“However, the proposals for the new FTK won’t allow this in its current set-up, as inflation must also be taken into account.

“At the moment, the annual accrual at SPF is 2.15% of the salary, but, under the new FTK proposals, it won’t be possible to achieve an accrual of 1.875%.”

In his opinion, the current premium of 20% of the pensionable salary would need to rise by several percentage points to meet the maximum allowed accrual.

The union representative said the board of SPF was still looking at the combined financial effects of the adjustment of the tax-friendly accrual and the FTK, and that it was still too early to discuss alternatives for a premium increase.

However, he already indicated that his union would not welcome an increase of the franchise, the part of the salary that is exempt from pension accrual.

SPF declined to comment on Berghuis’s assessment.

The negotiations between employers and unions on the pension arrangements for the railways sector are scheduled to start after this summer.

In other news, a spokeswoman for the Dutch Treasury has indicated that a further rise of the target retirement age to 68 in 2016 was no longer likely.

Last April, Eric Wiebes, state secretary for the Finance Ministry, had hinted in a letter to the Senate that he expected such an increase would be introduced on 1 January 2016. 

The spokeswoman said Wiebes’s wording in the letter was ill-chosen, and that the most recent prediction of Statistics Netherlands (CBS) did not support the need for a further increase of the target age for retirement at the moment.

Such a rise must be announced a year in advance.

On 1 January 2014, the government raised the target age from 65 to 67.