NETHERLANDS - Officials at PfZW, the €81.9bn industry-wide pension fund for Dutch healthcare workers, are hoping by next summer to have completed a three-year bid to secure a new pensions contract for all of its members and partners.
Peter Borgdorff, director at the pension fund, revealed there is a substantial sum of work going on behind the scenes at PfZW to try and secure a new pensions contract which will accommodate all of the changing market conditions, regulatory needs and longevity circumstances of his pension plan, in a bid to provide all members will a more secure pension plan long-term.
Speaking to IPE in a special video interview, Borgdorff said the work has been ongoing for three years but he is hopeful a new contract can be agreed by next summer.
"Our ambition for 2010 is to create a new pension contract. Before the summer of next year we will have a new contract. We have open ends so we want to have a full contract," said Borgdorff.
Some of the tough questions yet to be settled, he noted, is whether the pension fund can present any kind of guarantee to members, and if so what it should be, likewise with indexation, as well as what tools should the scheme have at its disposal to solve any risk management, investment and governance problems the pensions board encounters.
PfZW is well equipped to handle the current member levels against those who have already retired, according to Borgdorff. But by 2030, the number of active members will be fewer than the number of retirees so plans have to be put in place to begin tackling the changing demographic.
The pensions board is also discussing what it can do to protect pensions assets should there be a future financial crisis, as the belief is that changing the asset management could lower benefits in the process.
That said, officials will also try to secure a decision on whether it should cut the scheme's risk strategy once the cover ratio climbs back over 170%. The pension fund had enjoyed a cover ratio of 148% until the crisis hit home in 2008, but it had recovered to 92% by
Whatever contract the pensions board eventually secures, officials said they expect a battle with trade unions about the increase to retirement age, as the government as they are against the idea even though parliament has voted it should also be applied to second pillar pensions.
Officials therefore hope they can secure a new pensions deal for the benefit of all participants, sponsors and interested parties by next summer.
Click here to view the video interview with Peter Borgdorff.
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