I meet with my old colleague Ronald, who is now CEO of the pension fund for forklift truck drivers - Pensioenfonds Vorkhef. Ronald and I used to work together at Wasserdicht, before he went to the forklift truck drivers and we often meet for a coffee when I am passing through Utrecht. The street is buzzing with late summer shoppers as I approach our rendezvous, one of my favourite near the cathedral.

Ronald is already there when I arrive. I notice he is staring at his copy of Het Financieël Dagblad but he doesn't seem to be reading it. ‘How are things?' I ask breezily as I hang my jacket on the back of my chair and sit down. ‘Not good', replies Ronald, and orders a double espresso from the waitress. ‘We have had a visit from the regulator and they are making us cut our pensions from 1 January next year.'

Ronald's fund is not the only one that will have to make cuts - there are quite a few others. The problem is that despite good investment performance in 2009, we Dutch pension funds have to use the swap curve as our discount rate in order to mark our liabilities to market. And falling rates mean higher liabilities. Like the other pension funds that have to cut pensions, Ronald's fund currently has a coverage ratio of well under 100%.

I order the same as Ronald - a stiff double espresso - and feel fortunate that my coverage ratio is 117%. But I don't tell Ronald that. I keep it under my hat, as they say in England. I also recall a conversation we had a few years back. Ronald thought interest rates were too low to hedge his liabilities. Then rates dropped like a stone and he had a big problem on his hands.

‘I'm sorry to hear this,' I tell Ronald, with a sympathetic look. ‘The minister has been quite over the top in forcing this policy and remember, it might not come to cuts in the end.'

‘Yes, we can all hope,' says Ronald. ‘But I'm not counting on the markets bailing us out. I'm devising a plan to let all the members know what we plan to do.'

‘Whatever you do, don't tell your members over Twitter or with an SMS,' I quip.
Ronald doesn't laugh. ‘Piet, retired forklift truck drivers don't use Twitter,' he says, with a stern look. ‘We will inform them in a letter'.

I decide to drop the matter and change track. ‘What does your chairman of trustees say?' I ask. ‘I think he is in shock. Since he is also a pensioner of the fund, he is also going to have to take a cut.'

Presumably he will have to write a letter to himself. I think this but I don't say it.
‘It's a sad day for our pension system,' I say instead.

‘I know,' replies Ronald, pouring a very large spoon of sugar into his espresso as it arrives.

‘You don't usually have sugar in your coffee, Ronald.'

‘True,' he replies. ‘But it's the only thing I have to sweeten this bitter pill right now.'

Pieter Mullen is investment director at Wasserdicht Pension Funds