Social partners of Dutch multi-sector scheme PGB who want a buffer to protect pension benefits in the new defined contribution (DC) system will have to opt for the solidary contract, PGB’s board announced last Thursday at a congress organised by Pensioen Pro, IPE’s Dutch sister publication.

The solidarity contract is one of two types of arrangements social partners can choose from in the new DC system, which will come into force gradually between 2025 and 2028. Contrary to the flexible contract, the solidarity contract has several collective features including a solidarity buffer of at least 5% of assets and a collective investment policy.

Too costly

PGB currently caters for a mosaic of companies in several sectors, most of whom participate in the fund on a voluntary basis. PGB president Jochem Dijckmeester said during a panel debate with several PGB stakeholders at the congress that adding an optional risk-sharing buffer to the flexible contract would be too costly and difficult to implement.

“Too keep it affordable and manageable, we will have to cross out some possibilities,” Dijckmeester noted.

PGB expects it has to handle about 500 separate transition requests by social partners. As such, it prefers to limit the options as much as possible and has decided to only include a buffer in the solidarity contract. The maximum size of the buffer has been set at 5%, and it can only be used to stabilise current pension benefits.

Disappointment

The removal of collective risk sharing in the flexible contract was against the wishes of pensioners and affiliated employers who consider the decision a “limitation” to their options.

“We would have preferred to have the option of a risk-sharing buffer in the flexible contract too,” said Fieneke van Brink, board member of PGB’s pensioners’ association.

Jannet Visser, a member of PGB’s accountability body on behalf of the employers, also spoke of a feeling of disappointment. “Employers who would prefer the flexible contract would have no choice but to go for the solidarity arrangement if the unions or workers’ councils of companies insist on having a buffer,” she said.

Yet all the restrictions were universally accepted by all stakeholders. “It was a diabolical dilemma. You want to make a certain choice, but then you can’t. We would prefer to make everyone happy, but we also realise that not everything is possible,” concluded Visser.

This article was first published on Pensioen Pro, IPE’s Dutch sister publication. It was translated and adapted for IPE by Tjibbe Hoekstra.

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