Trade unions and employer organisation have written a letter to the Dutch cabinet asking for a “transition regime” to the new pensions contract to prevent “unnecessary” pension cuts and contribution hikes.
Many pension funds are responding to their rapidly worsening financial situation by hiking pension premiums or cutting pension rights, trade union FNV and employer organisations VNO-NCW and MKB Nederland stated in the letter which was published yesterday.
Until they make the transition to the new defined contribution contract by 2026, Dutch pension funds will continue to be governed by the current, much stricter rules that dictate pension funds will have to be cut if funding ratios are below 100%.
The gradual introduction of a new, lower ultimate forward rate (UFR) from next year will lead to further pressure on already low funding ratios.
The social partners said they fear “social unrest and negative macroeconomic consequences” if companies have to increase their contributions in the coming years to prop up pension funds’ funding ratios.
In the private sector, higher pension premiums are detrimental to economic activity, investment and purchasing power, they warned.
When the government and social partners concluded negotiations about the new pensions contract last summer, the government called on pension funds to keep premiums and pension rights stable.
Social affairs minister Wouter Koolmees reduced the minimum required funding ratios pension funds need to have at the end of this year to prevent having to cut pensions from 100% to 90%.
Without this temporary emergency measure, which was also in force in 2019, pension funds would have already had to apply drastic cuts as the funding ratios of most of the largest pension funds currently hover around this 90% level.
“But it’s now also important to provide clarity for the years hereafter,” said newly appointed VNO-NCW president Ingrid Thijssen, implicitly calling for a continuation of the reprieve.
The three organisations stopped short, however, from communicating any other specific demands to the government about what the “transition regime” should look like.
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— to www.ipe.com