By Ilonka Oudenampsen
The Dutch Pension Federation has welcomed Social Affairs Minister Henk Kamp’s intention to continue with proposed changes to occupational pensions despite the resignation of the government, but added that there are also critical remarks to be made.
It said that although his so-called broad outlines resolution offers chances and starting points for structural changes to the pension system, it is no miracle cure against the financial crisis and the current low coverage ratios of pension funds.
The main points for the federation are the introduction of the life expectancy adjustment mechanism (LAM), which makes it easier to share the costs and benefits between generations; the realisation of the pension contract and making the risks in the contract explicit, so that members have realistic expectations; and the introduction of a more stabile assessment framework, which will stabilise coverage ratios and give more room for the long-term management of pension funds.
However, it pointed out that the contract is incomplete on some important components, for instance about the interest rate which schemes have to use to calculate their liabilities.
The federation also believes that the LAM should be made compulsory for all pension contracts to ensure the sustainability of pension funds. A final point it made is that there is insufficient clarity about the calculation method of the cost-covering premium, which could have considerable consequences for members, sponsors, funds and might even have macro-economic consequences.