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Dutch Labour Foundation calls for extension of premium cushioning

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  • Dutch Labour Foundation calls for extension of premium cushioning

NETHERLANDS - The Dutch Labour Foundation (STAR) has called on Henk Kamp, the new social affairs minister, to continue to allow pension funds to cushion their contributions.

In a letter to Kamp, STAR said it was concerned that supervisor De Nederlandsche Bank (DNB) would force pension funds to raise their premiums as a recovery measure, despite the fact contribution levels were already very high.

The Pension Act allows pension funds to cushion the cost-covering contributions in order to avoid volatility. However, the DNB has made clear that pension funds still short of their planned recovery should consider raising premiums.

STAR acknowledged that the DNB was also adhering to the Pension Act, which states that rights cuts are permitted only after all other steering instruments - including contributions - prove insufficient.

But the Labour Foundation said this "tension" in legislation must be resolved as soon as possible, as the DNB's policy "might lead to a premium rise of as much as 30%" or to a "lower accrual of pension rights at many pension funds".

"Neither option is realistic," STAR said, adding that companies could ill afford an increase of contributions, whereas lower pension accrual would hit only workers.

"Moreover," it added, "these measures will seriously disrupt the elaboration of the Pension Agreement between employers and employees."

The Labour Foundation said the premium cushioning policy would be required for at least 2011, or until the social partners reached an agreement on a new pension contract.

STAR said: "Because pension funds need to decide on their next year's contributions no later than early November, the case is very urgent."
 

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