NETHERLANDS – Glass manufacturer Royal Leerdam has reported the lowest coverage ratio of over 50 pension funds and is expected to cut benefits by 7% both this and next year, according to a provisional list of rights cuts compiled by the Dutch Pension Federation.
The association compiled a list of cuts to benefits the 51 schemes would have to implement in order to increase their coverage to the minimum required funding of 105% by year-end.
As a consequence, the Royal Leerdam fund will apply a 7% rights cut on 1 April, to be followed by an equal discount next year due to a funding ratio of 84.9%.
However, the largest single cut is to be carried out by the pension fund of Norit – a provider of activated carbon – which has announced a 10% cut this year as a result of a 97.5% funding ratio.
Most underfunded schemes have chosen to limit their discount to 7% this year, as allowed by supervisor De Nederlandsche Bank (DNB).
The regulator said that 68 schemes – with combined assets of €410bn – of the 415 Dutch pension funds, must cut pension rights this year, affecting 2m active participants, 1.1m pensioners and 2.5m deferred members.
The 51 schemes announced cuts varying between 0.5% and 7%, and equating to 1.9% for participants on average.
Earlier, the €281bn civil service said that it would cut pension rights by 0.5% this year, adding that an additional discount of 1.6% is still possible next year.
"It is for the first time in history that so many workers and pensioners are facing such a decrease of pension rights," commented the Pensions Federation.
"Although 80% of the pension funds don't have to apply a discount, the participants and pensioners of most of them have been affected as well, as they haven't received compensation for inflation," the lobbying organisation added.