ABP and PFZW, the two largest pension funds in the Netherlands, have urged the government, employers and unions to press on with agreeing pensions reform.
At the presentation of their third-quarter results, three of the country’s five largest schemes indicated that a cut to pension payouts and accrued pension rights remained a real threat in the coming years.
Corien Wortmann, chair of the €419bn civil service scheme ABP, said she could no longer explain to members that her pension fund was not allowed to grant indexation for the forseeable future, even though the economy was booming and salaries were rising. “This should be a strong encouragement to put lots of work into a new pensions system,” she stated.
ABP’s funding has been improving in recent months and rose to 104.7% over the last quarter, exceeding the minimum required level by 0.5 percentage points. Wortmann said this would limit the chance of cuts next year to almost zero, but would not allow for inflation compensation for a number of years. Dutch schemes cannot grant even partial indexation until they reach a funding ratio of at least 110%.
Peter Borgdorff, chairman of the €203bn healthcare scheme PFZW, said it was still too early to exclude the possibility of cuts as the scheme’s funding stood at 101.5%, despite improving 0.9 percentage points in the third quarter.
