The Dutch pension funds for the building, metal and cleaning sectors and the scheme for hairdressers have granted their affiliated employers leeway for paying their pension contributions.
The schemes have allowed employer companies to defer premium payment by up to two months in order to cushion the impact of the COVID-19 crisis.
Earlier, the schemes for hospitality workers (Horeca & Catering), the travel industry and the retail sector introduced similar measures.
The €67bn pension fund for the building industry (BpfBouw) said that, in order to ease the pressure on employers, it had extended the term of payment by two months until 1 June.
Annemarie de Beun, the scheme’s operational director, said a couple of dozen companies had requested deferment; she added that this number is expected to rise quickly.
PMT and PME, the country’s pension funds for the metal sector, said they had also allowed affiliated employers to pay their contributions later.
PME also granted a two-month leeway, while PMT allowed for its quarterly bills to be paid one month later. PMT added that tailored arrangements were possible for struggling firms.
PME said that its goal is to enable companies to quickly and easily apply a reduction of working hours, thereby improving their liquidity position.
It added that it assumed that the announced government’s financial support will also offer a solution for the payment of pension premiums.
Else Bos, supervisory director at pensions watchdog De Nederlandsche Bank (DNB), emphasised that pension rights will remain if contributions aren’t paid, and a two-month leeway is legally possible.
At the presentation of DNB’s annual report last month, Bos said the supervisor, the cabinet and the industry organisations were discussing options in case of a continued crisis.
“The question is whether and how the government’s emergency measures apply to employers’ premium payments,” she pointed out.
“The question is whether and how the government’s emergency measures apply to employers’ premium payments”
Else Bos, supervisory director at DNB
Bpf Schoonmaak, the €6bn pension fund for the cleaning sector, said it had extended the payment term by 30 days. It said, however, it didn’t know how many of the affiliated companies were struggling with liquidity problems.
Gerard van de Kuilen, chair of the €1.1bn scheme for hairdressers (Kappers) said his sector was “seriously hit” by the forced closure of salons. He said that already 3% of the 6,500 affiliated employers had requested arrangements for deferred payment and that this percentage was likely to rise fast.
Peter Borgdorff, director of the €238bn healthcare scheme PFZW, added that approximately 200 employers were facing difficulties paying their contributions. He said that, instead of a general payment deferment, his scheme will assess requests case by case.
Commenting on the effects of deferred premium payments, Marc Heemskerk, actuary at Mercer, said this situation “won’t amount to much, as contributions only represented a fraction of liabilities”.
He added that premiums were already financed against an already low coverage ratio.
Corine Reedijk, actuary at Aon, echoed that deferred contribution payments could have a “limited and temporary effect” on schemes’ funding. However, she noted that it could also cause a liquidity challenge for some pension funds, which could lead to problems in paying benefits.
Wichert Hoekert, senior consultant for retirement solutions at Willis Towers Watson, also indicated that the effect of a short deferment on a scheme’s funding would be minimal.
“However, the most important risk is that employers ultimately fail to pay contributions. This could affect a pension fund’s liquidity planning, while additional liquidity may be required because of dollar and interest rate developments,” he explained.
— to www.ipe.com