In January, Gerard Riemen, director of the Dutch Pension Federation, called for a new occupational pension design with personal accounts and risk sharing. He tells IPE about his aims
Why did you speak out when you did?
The work to look for an alternative to defined benefit (DB) schemes started over six months ago with the Social and Economic Council of the Netherlands (SER) and the Dutch Pensions Federation (PF) participating in this. The government has announced that it will start in the first quarter of the year to work out a possible alternative to DB.
Everybody, including our members, should realise that 2016 is the year where we have to draw conclusions on this alternative; you need a debate with your members, in politics and the SER. The beginning of the year is a good opportunity to refresh memories. It is also part of our vision for the future and our working plan for 2016. It became time to inform the public that we are developing.
Why can’t this wait until 2017? How urgent is the reform?
There are two reasons why this is urgent. The first is the general election in 2017 and if we as the pension sector and social partners do not come forward this year with a good alternative that is embraced by everybody then it will be in the hands of the politicians, who will be starting discussions about a new government in 2017. The second is that we have to tell our members that there is a large chance that benefits and accrued pension rights will be cut again in 2017. From the financial crisis in 2008 until now, we have had no optimistic perspective for many current DB scheme members that there is a light at the end of the tunnel. The large pension funds with millions of members are really in trouble and have been for more than eight years now. There is no sign this will end very soon. If we can’t tell people we are working on a reasonable alternative then the participation of the schemes will be endangered.
What will it take to develop the new model?
We don’t yet have a name for this new pension contract. It is an individual account on a collective basis with shared risks. What we are looking for is a bridge between an individual account and still having substantial solidarity and collectivity. Our target is to have a good picture of how this new contract will work. Then we need the government to make this possible through legislation. After that we have the unsolved problem of transition to this new pension scheme.
The aim is to create a new kind of pension contract next to the existing frameworks, and you will see that some of the social partners will try to adopt it as quickly as possible; others will stick to DB and others will move to the new system over a longer time horizon. We really want the social partners to make a decision if and when they want to change. The design is not ready yet and we are still looking to make things happen.
Are you optimistic the sector can achieve what it wants this year?
I’m rather optimistic. We all feel that something has to be done and we all realise if we are not together we will end up nowhere and that is obviously the worst scenario. We have all the academics and specialists together. We all have the same goal – a better pension scheme for everyone – so I hope that by the end of the year 2016 we will have an alternative based on a social consensus.
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Interview: Gerard Riemen - Dutch Pension Federation