PGGM hikes pension premiums
NETHERLANDS – The 57 billion-euro Dutch health care pension fund PGGM has increased its premiums to 15.5% of gross salary for 2005.
Over the past four years, PGGM’s premiums have almost doubled, rising from 7.6% to 15.5% of in 2005. A spokesman said the premiums would increase to 17.5% in 2006. PGGM looks after the pensions of some 1.8 million workers.
The fund, the second-largest in the Netherlands, said the increase was necessary in order to strengthen its financial buffers following the tough global stock market climate of the past few years.
Holland’s biggest pension fund, ABP, is also said to be considering a premium hike, but will not take a decision until the end of this month.
Earlier in the year, PME, the 15 billion-euro scheme for165,000 metal industry workers, increased its pension premiums for next year. A spokesman said premiums will rise from 22% to 25% of salary (minus a franchise of €17,500).
PME said the premium hike was pushed through after its average coverage ratio over the last eight quarters had reached 107%. “It is standard practice for us to increase premiums by 3% if the coverage ratio is somewhere between 100 and 110%,” the spokesman said.
A spokesman for PGGM said the premium hike would be paid for on a 50-50 basis by the employers and employees. PGGM decided against indexation for 2005, because wages have not increased.
DNB, which acts as the pensions watchdog, has recently been in talks with all the major pension funds about beefing up their finances following the global stock market slowdown in 2000-2002. Premium increases are part of DNB’s plans to restore the pension funds’ financial buffers.