Solidarity a theme at VB annual meeting
NETHERLANDS – The difference between Dutch and French or Spanish concepts of solidarity were highlighted yesterday at the annual meeting of the VB, the Association of Industry-wide Pension Funds.
Vereniging van Bedrijfstakpensioenfondsen chairman Ton Wennekus said: “The concept of solidarity in France means no capitalization and no funds, just pay-as-you-go, with the most extreme form of solidarity between generations.
“Most of the public in France and Spain do not like the form of capitalism where you give your money to insurance companies to deliver you’re your pension.” So it comes down to the young paying for the old, he said.
“This is understandable, but wrong in terms of the shrinking proportion of young ages in the population.” On the other hand the Dutch system was ‘generation proof’.
But Wennekus was aware of the major issues when introducing a funded system alongside a pay-as-you-go system. “When you do this you are doubling the cost on one generation.”
He added that he could understand the difficult problems this posed for French politicians. “This is not an easy political decision to take.” The Dutch system may be the best in the world, but how many “buyers” are there for it, he asked. “We certainly would like to export it.”
There had to be concerns about the pension of French people under this system. “Inevitably there would be a sharp reduction in benefits in 10 to 15 years time, as these PAYG systems are simply unaffordable any longer.”
The French premier may have retained his position, but he would be powerless to solve the pension issue since over half the French public is against it. “The same attitudes apply in Spain and Italy.”
Looking at the domestic scene, Wennekus, who represents the employee side on the VB, whose 82 member schemes cover one million scheme members, said of the past turbulent years: “The main thing is that we have survived.”
Even after the sharpest decline in markets since 1929, the Dutch funds still had an overall surplus of 110% of funds. “Stock markets are a problem for us, but are not decisive.”
One of the main issues facing pensions nationally was that the Dutch did not know how well they are taken care of. “They trust us without knowing why.”
This is an area that the VB was tackling through more communication involving a major information campaign. “We want to introduce a higher state of consciousness about the real state of pensions.”
Wennekus also referred to the need for pension funds to be more transparent and to pay more attention to governance matters. “It is our members’ money and our obligation is to be transparent.”
The governance issues facing VB members are being addressed, he said. “In the next few months we will produce a code of conduct for our members.”