The €459bn Dutch civil service scheme ABP is to keep its contribution for the regular old-age pension as well as for the surviving relatives benefits for 2020 unchanged.
However, it said the additional premium for labour disability pensions would be raised by 0.4% to 0.82%.
The fund stated that, as a result of people working longer, the risk of labour disability had increased.
ABP added that it also expected more workers to apply for labour disability benefits, as it had been pro-actively informing its participants about the option.
Premiums at ABP are being paid by the employers and workers in a 70-30% ratio.
The pension fund said it expects that for 2021, it has to raise its contribution level, and/or reduce its accrual rate, because of the increasing costs of pensions.
The civil service scheme added that it wasn’t able to grant inflation compensation, because its funding – 93.2% at October-end – was far too low.
Its coverage ratio must be at least 110% before it is allowed to start granting inflation compensation.
Indexation in arrears will have accumulated to 19.1% next year, it indicated.
Last week, the board of the €238bn Dutch scheme PFZW announced that it would keep its contribution at 23.5% in 2020, while also maintaining the annual accrual rate at 1.75% of the salary.
It said that it would not be able to raise pensions to keep up with inflation. At October-end, its funding stood at 94.1%.
The scheme added that, ahead of 2021, it had to make a decision about raising its premiums and/or reducing the accrual rate.
Minister to discuss admin problems with sector
Wouter Koolmees, the Dutch minister for social affairs, plans to discuss administrative problems with pension funds, as highlighted by a collective of investigative journalists.
The researchers suggested that up to hundreds of thousands of pensions might be too low following employers paying in insufficient contributions.
During a debate in parliament last week, the minister said that incorrect information would be “a stimulus to simplify the system”. He cited the pension plan for military personnel at ABP, which was “virtually impossible to implement because of its complexity”.
However, in his opinion, it was too early to demand an audit of the administration and IT systems at providers, as requested by Corrie van Brenk, MP for the party for the elderly 50Plus.
Roald van der Linde, MP for the liberal party VVD, said the elaboration of the pensions agreement must lead to a new system that enables participants to check whether their pension entitlements are correct.