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Third of Dutch employers do not see future in DB schemes

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  • Third of Dutch employers do not see future in DB schemes

NETHERLANDS - A third of Dutch employers do not expect their company's defined benefit (DB) scheme to exist in 10 years, according to a study by PricewaterhouseCoopers (PwC).

Further, of almost 180 employers questioned, 83% said the cost of pensions was reducing their company's interest in providing one, but even more conceded that providing a "good quality" pension was important for a company's overall reputation.

More than four-fifths of respondents said they worried about the effects that providing pensions had on their balance sheet, while 61% said company DB schemes were facing drastic changes in the future. 

Adrian Jones, senior manager at the consultancy's human resources services, said this seeming contradiction was due to Dutch companies' paternalistic approach to pensions and how they bore these costs "as a consequence of being a good employer."

Jones said: "Their reputation with employees is important, and the risk of employee unrest is one of the factors preventing them from making changes now.

"Companies are also uncomfortable with the bad press that could result from pension changes."

However, despite 34% of respondents expecting changes to the DB scheme or their closure in 10 years' time, 70% of companies surveyed did not expect to introduce a defined contribution plan for employees.

"A lot of people said they don't see a future for DB pensions in 10 years' time, but they didn't necessarily see themselves changing in the next five years," Jones said.

"They feel something needs to be done, but they are not yet ready to do it themselves."

Overall, 94% think it is their responsibility to support their employees in retirement, but close to half planned to share more of the risk involved in pensions with employees.

Of the responses, 15% came from companies with more than 5,000 employees, while another 27% fell between 1,000 and 4,999 employees.

The remaining 58% of respondents were from smaller companies.

A government-backed review, headed by Professor Kees Goudswaard, earlier this year said that pension funds must scale down their benefit ambitions and alter their risk approach if they hoped to keep the Dutch pension system viable.

The findings have been backed by both employer and employee groups, which since have agreed to raise the retirement age to 66 in the next decade.

Jones said: "What we will see is a movement away from a fixed, guaranteed pension toward something that depends more on what can be afforded."

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