By Ilonka Oudenampsen
Most Dutch pension rights and payments have not increased in 2012 on average, lacking behind wage development and inflation and thus creating a fall in spending power, De Nederlandsche Bank (DNB) found after questioning 25 big pension funds. At the same time total pension premiums for 2012 have risen from 16.9 per cent to 17.4 per cent of people’s salary.
These developments are driven by the worsened financial position of the pension funds, as in 2011 the average funding level dropped from 107 per cent to 98 per cent. With a funding level below 105 per cent, pension funds are not legally allowed to increase the pension rights and payments. Often pension premiums are also increased to improve the financial situation of the fund.
Pension rights and payments had to increase by 1.2 per cent in 2012 to compensate the rise in wages and inflation. Indexation has not taken place since 2007 and members have now accumulated an indexation backlog of around 7 per cent. However, DNB added that this backlog is not applicable to all members, as some pension funds have provided indexation.
The average employee contribution will rise from 6 per cent to 6.2 per cent of salary, while the employer contribution rises from 10.9 per cent to 11.3 per cent. Employer contributions for company pension schemes will rise from 24.7 per cent to 26.6 per cent of salary. In company pension funds, employers traditionally take on contribution increases, whereas in sector pension funds the increases are usually shared between employers and employees.