NETHERLANDS - The Association of Industry-wide Pension Funds (VB) has expressed serious doubts about the introduction of more conditional rights for pensions members and questioned the use of the real cover ratio as a benchmark for a scheme's health.
Willem Noordman, VB's chairman, told IPE during the pension body's annual meeting: "It might lead to ‘softening up' of the already accrued pension rights, combined with a hard indexation promise, and I expect it will be the prelude of lower pensions."
He continued: "Decreasing pension rights will have a much bigger impact on participants than the absence of indexation during a number of years.
"By just keeping inflation compensation conditional to a pension fund's financial position, we think that's enough as a ‘soft' pension right," said the chairman, in response to the recently published view from social affairs minister Piet Hein Donner.
"Increasing certainty through a real funding ratio will be very expensive and lead to a decrease of pension benefits," the VB chairman added.
In Noordman's opinion, the minister should refrain from introducing measures - such tighter parameters for the allowed assumptions on future returns - which might affect the necessary contribution level, "as pension arrangements are the prerogative of the social partners of employers and employees" he argued.
Noordman was also critical of pensions supervisor De Nederlandsche Bank (DNB), as director Joanne Kellerman had advocated the application of the real cover ratio, the introduction of experts in pension funds' boards as well as scaling down the number of pension funds to approximately 100, in a recent television interview.
"DNB should stick to its role as supervisor and, rather than interfering with pension funds' communication with their participants about their cover ratios, it should be flexible towards pension funds seeking co-operation," he commented.
VB is the representative body of 80 industry-wide pension funds, with combined assets under management of €500bn. By proxy, it represents 4.9 million active participants, 8.1 million deferred members and 2.1 million pensioners.