Dutch pension funds, such as the world’s third-largest ABP, will get more time to improve their solvency ratios to prevent measures such as cuts in pensions, the Dutch social affairs minister said. Pension funds, which are expected to have a solvency ratio of at least 105 percent under current guidelines, will have five years instead of three to restore their ratios, Dutch Social Affairs Minister Piet Hein Donner told reporters.
The Netherlands has about 650 pension funds which managed 736 billion euros ($925.5 billion) at the end of September, Dutch central bank (DNB) data shows, and about half of them had fallen to levels below of 105 percent, Donner said. ABP, the world’s third-largest state pension fund after Japan’s and Norway’s, reported last month that the value of its assets shrank to 173 billion euros at the end of December 2008 from 195 billion euros a year earlier, bringing the solvency ratio to 90 percent.
Dutch regulations also demand that pension funds can recover to a solvency of about 125 percent in 15 years time to have a sufficient buffer and to give inflation compensation.