Unless in case of ‘catastrophic circumstances’, Dutch social affairs minister Aart Jan de Geus won’t interfere in the acquired pension rights of the baby boom generation to benefit younger workers, he said.
“We must respect the rights where pensions are deferred salary. Otherwise it might cause a loss of trust in society,” he said during a meeting about solidarity organised by civil service scheme ABP (page 6).
All speakers agreed that communication is crucial for pension funds, in order to keep their members informed about developments and their options. “It will be the main issue of the pension debate during the coming years,” de Geus predicted.
The minister was dismissive about the principle of ‘generation accounts’, as proposed by Coen Teulings. The economics professor has proposed setting up separate pools of pension money for different generations.
“This will create more clarity for the next generation about which money is whose. And it will prevent political games at the expense of the younger employees,” Teulings argued.
“Because the politicians don’t want to burn themselves on the issue of asset-splitting, the pension funds must take the initiative and offer guarantees to the younger workers,” the professor stated. “Otherwise they might leave the pension funds.”
The minister rounded on the proposal for its “oppressive shortsightedness”, saying it does not take into account the risks if people leave their pool in an untimely way. “A joint pool, which covers a longer period, is a much better option,” de Geus said. “Because the collective schemes generate better returns and offer more security, we must keep the mandatory participation in pension funds.”
ABP’s financial director Dick Sluimers agreed with de Geus that individual pension arrangements are undesirable.
“I’m very worried that we’ll be heading to individual pensions, which are causing great problems in the UK and the US,” he said. “Especially in the US, there is a looming pensions crisis, because many workers haven’t made sufficient reservations for their pension, or they have taken the wrong investment decisions.”
Sluimers recalled the enthusiasm of international experts for the Dutch mixed collective pension system, during a congress last spring. “ABP has been invited by the World Bank to explain its pension deal,” he said.