Opinion pieces, columns and insights into Dutch news and current affairs from key commentators


Expenses claims must be checked before they cause unnecessary fall-out

Expenses claims must be checked before they cause unnecessary fall-out

Where people work hard, mistakes will be made, writes Annemarie van Gaal.Some three or four years ago MP Mark Verheijen, then a member of the provincial government of Limburg, made a mistake in his expenses claim. He entered five or perhaps six chauffeur-driven trips from Limburg to the Randstad for functions unrelated to his job. That was stupid, granted, but during that same time he probably worked hundreds or perhaps thousands of unpaid hours as well.A flawed expenses claim is never a good thing but mistakes do occur, especially when people are working very hard and the rules aren’t very clear, or not to hand. Verheijen admitted his mistake, said he’d been stupid and would pay the money back straight away. Case closed you’d think.But no, not in politics. There’s going to be an integrity commission after the event which will pronounce on ‘the facts, the seriousness and Verheijen’s culpability’. With the elections not too far off, some politicians are practising their most sincere expressions and are already clamouring for his departure.BookkeeperI want to take this opportunity to talk to you about Nico. Nico is in his fifties and a bookkeeper for a large company in Haarlem. Diplomacy isn’t Nico’s strong suit. Nuances aren’t his cup of tea either. Nico takes his job very seriously and every claim is painstakingly scrutinised. Nothing goes through without Nico’s say so.One of the sales managers declares four beers at Schiphol airport and Nico has him in the office pronto. Even his boss is invited to sit in. The manager explains he had a three-hour delay and bumped into some important business relations who had given him lots of orders in the past. After a few rounds he decided it was time he treated them. Nico is not convinced and it’s with the greatest reluctance he agrees to pay out the money. Nico is never happier than when he spots a mistake which he can rectify.Why are we spending time, energy and money on checking things after the fact? Things will slip through the cracks and in an environment where people work extremely hard this will happen even more frequently. Why doesn’t the world of politics have a Nico of its own? Why is there no financial department where people check expenses and alert politicians if they’ve made a mistake? They know the rules after all. Let politicians concentrate on their jobs and let Nico rectify mistakes before they can do any damage and cause a lot of hullabaloo afterwards.Annemarie van Gaal is an entrepreneur and investor   More >


V&D’s private equity owners fail to show business acumen

V&D’s private equity owners fail to show business acumen

V&D is tired and looks as if it’s fighting a losing battle. And its owner isn’t helping, writes Jan Maarten Slagter.At the end of the 1980s, V&D was struggling to shed its tired image. Then, as now, shopping at the store was not a pleasure but a necessity: you were out of socks, or you needed a pencil case. They had all you needed but nothing that made you dream.The management of V&D realised this and in a rare moment of self-knowledge set about developing a new concept for the store’s in-house restaurants. Until then, the V&D restaurant experience had the boring uniformity of a motorway service area: coffee and a cheap piece of apple tart from the freezer was the best they had to offer.OppositeAll that had to change and V&D decided to ask its customers what they thought a typical V&D restaurant would look like. They made a list and then came up with its exact opposite: La Place was everything you wouldn’t expect to find at V&D. The restaurant chain went on the become the most popular bit of V&D and has been for years.You wonder why they couldn’t have done the same for the rest of the store.It’s probably too late now – V&D is fighting a desperate rear guard battle for survival. Owner private equity investor Sun European Partners seems to be doing its utmost to make sure it won’t win. Venture capitalists don’t have much of a reputation and Sun’s is somewhere near the bottom. It’s as if they have been reading the handbook ‘How to negotiate effectively’ upside down.RidiculousIf you are holding all the cards and you’re opponent is dependent on you, you can perhaps afford to do the dictating, even if such a course isn’t always wise. But when you’re down yourself you’re only making yourself look ridiculous – like a king who, from his burning castle, calls out to the advancing troops that he’ll give them one last chance to surrender.How else to interpret the letter V&D sent to its landlords? ‘The management has decided to put in place the following measures concerning the real estate occupied by the company: a rent-free period of four months (…). V&D is expecting a commitment from all landlords to contribute in this way to the future sustainability of the company in the present market circumstances.’ Not once does the word ‘please’ figure in the letter.One-sidedAnd then there’s the one-sided decision to cut all staff salaries by 5.8%. If that is what you want to do, you would do better to cosy up to the unions first, not confront them with a fait accompli. This measure is conceivably even more stupid than the arrogant letter the landlords received. It is hardly in V&D’s interest to arouse the anger of the whole of their staff in one fell swoop.Better to cite ‘present market circumstances’ to make surplus staff redundant and give a substantial raise to those you think you can win the battle with. And do it before the best and the brightest leave the sinking ship, because sink it will if V&D doesn’t change its tune.Private equity should bring business acumen and intelligence to a company. Sun is doing the opposite.Jan Maarten Slagter teaches at Nyenrode Business University and is a member of the Nyenrode Corporate Governance Institute.This column appeared earlier in the Financiële Telegraaf  More >


Amsterdam city council as pimp

Amsterdam city council as pimp

Amsterdam city council has plans to set up and run a number of brothels itself - where women can work in the sex industry out of free will.  Christian Democrat city council members Marijke Shahsavari en Diederik Boomsma think the council as pimp is taking things a step too far.More and more people are beginning to realise that prostitution in Amsterdam is going hand-in-hand with serious abuses, people trafficking and oppression.Fortunately, the faux romantic air of ‘look how free and easy we ex-Calvinists have become’ that used to surround the red light district is on the wane. Lately, new steps were taken to protect women. With the support of the Amsterdam Christian Democrats the minimum age for prostitutes was raised to 21 and more stringent licencing rules were put in place.NormalThere is a difference, however, between offering protection and trying to ‘normalise’ prostitution. By effectively running the brothels itself, the council is taking things a step further: this smacks of facilitating prostitution, exploitation and incitement. It is a step no government should be willing to take.The intention behind the plans is clear: many prostitutes are paying a lot of money to rent a space. Much of their income goes on rent and/or a pimp. Therefore they have to work longer hours and accept more punters. This puts many prostitutes in a position of dependence and vulnerability.It is a deplorable state of affairs, we agree. If women go into prostitution at all, better they do it without being exploited by a pimp. However, the horrors prostitutes are experiencing are not just a result of excesses but, in some part at least, inherent in prostitution itself.CommercialisationDepending on their upbringing and convictions, most women associate sex with intimacy, something determined by personal choice. The commercialisation of sex destroys this normal, healthy, existential function or value of sex.That is why it is a shame that Amsterdam city council has decided that, apart from wanting to tackle abuse, it also means to make it an official policy to ‘normalise’ prostitution.Recently mayor Eberhard van der Laan said in a council meeting: ‘Prostitution is a fundamental part of Amsterdam and that’s fine with me.’ This is indicative of the moral confusion of the moment. The fact that something is legal doesn’t mean we have to be ‘fine’ with it. Adultery is not illegal and has been around for as long as man has but we don’t have to be ‘fine’ with that either.TouristsFor some reason or other many young women decide the only option they have is to sell their body to the hordes of rowdy tourists who invade the city. Legal it may be but ‘fine’ it certainly isn’t. To quote Dutch feminist Aletta Jacobs: ‘If indeed this is what you think, you are morally obliged to offer up your daughters for this purpose.’ Prostitution is never a purely clinical, neutral action between two consenting adults.Why don’t women register as prostitutes at the Chamber of Commerce? Why do we ask people on benefits to accept a job as a cleaner and not a job as a prostitute? Why does no prostitute say she wants her daughter to follow in her footsteps? It’s human nature, stupid.AbuseWe support the ambition of the council to protect as many women as possible from being exploited. But if the council itself is going to run brothels it will be telling potential punters the world over that Amsterdam is the place to be for officially approved prostitution.The council must do everything in its power to eradicate abuse, combat and punish people traffickers, offer women a way out of prostitution and, as far as the CDA is concerned, discourage punters. ‘Normalised’ prostitution is a utopia, or rather a dystopia.Marijke Shahsavari and Diederik Boomsma are members of Amsterdam city council for the Christian Democrats.This article appeared earlier in the Volkskrant  More >


Super Neelie and the start-up scene

Super Neelie and the start-up scene

Former EU commissioner turned Dutch start-up envoy Neelie Kroes should show the pension funds what she’s made of, writes Mathijs Bouman.The indefatigable Neelie Kroes is off in search of innovative companies. She’s the special envoy who will lure European start-ups to the ‘StartupDelta’.The battle for the new techno giants is a global one. A recent article in Forbes identified the Netherlands as one of seven ‘start-up hot spots’ in Europe. According to the magazine our country is at the ‘forefront of the continental digital start-up scene’.AdvantagesWhy? Well, there’s the quick internet connections, a well-educated workforce with a good knowledge of English – even if we say so ourselves - a special innovation box courtesy of the tax office, or failing that, a nice deal on profits tax. Housing isn’t expensive, you can cycle to work and come ten o’clock the whole country turns into one big reverberating dance event hosted by the world’s best DJs. With the exception of the Rijksmuseum of course, where the very best Rembrandts can be savoured in silence.It’s not a bad pitch by any means. But, as Kroes knows better than anyone, growing businesses need money. They need investors who will turn a start-up into a viable venture. Last week Kroes explained where she was going to find it: ‘Pension funds should invest in venture capital funds.’Cue a déjà vu moment. Suddenly I was back in September 2013, when minister Henk Kamp initiated Dutch Investment Institute NII. It was going to channel Dutch pension money towards businesses.That same month Jan Hommen presented the Stimulation Fund Orange Capital, which was going to invest (institutional) investors’ money in Dutch business. Then, at the beginning of 2014, there was the NL Entrepreneurial Fund, an initiative supported by Robeco, Euronext and a number of banks, which was going to transfer pension money into loans to small and medium-sized companies.BankersA year later we find that pension funds are not exactly easily led. To their credit the new investment funds are still going and have been able to get their hands on some money – which is the good news – but not because the pension funds have embraced their new role as bankers to the small and medium-sized companies of this country. The fact is that nothing much has been happening there at all.And this means the Netherlands will remain the only country in the world which is rich and poor at the same time. It’s rich because of a veritable mountain of savings and it’s poor because none of the businesses is able to get its hands on the money.Instead it goes towards government bonds with a negative return on investment, shares in big foreign companies or – via foreign investors – start-ups in China or Silicon Valley. It’s going everywhere except our very own small and medium-sized companies.Dear Ms Kroes, a visit to the pension funds is way overdue. Go round, bang your fist on the table and tell them to bloody well use our money to prop up the national economy.Mathijs Bouman is an economistThis column appeared earlier in the Financieele Dagblad   More >


Prevention is better than cure

Prevention is better than cure

Annemarie van Gaal thinks it’s time to stop criminals living off the proceeds of their criminal activities. But it would be better still to prevent crime from happening at all.Last year the public prosecution office raked in some €136m proceeds from criminal activities. It may seem like quite a lot but it’s peanuts compared to the annual estimated criminal turnover of €20bn.It still pays to break the law in this country. There are many tens of thousands of convictions a year, from weed plantations to human trafficking, but in only a fraction of cases is the money earned by criminal activities confiscated.The public prosecution office thinks this should change and last month I was invited to brainstorm about ways to seize as much criminal money as possible in the next few years. My visit brought home to me how difficult it is to trace criminals, log what exactly they are earning and then actually confiscate it.BenefitsMoney streams suddenly go underground, proof vanishes, properties change ownership and criminals go free.There are cases where convicted criminals who are known to have earned millions are now paying back the state a piffling couple of euros a month because they are on benefits. In the meantime, they are living the life of Reilly. It can’t be helped but it’s frustrating all the same.My visit was a fruitful one and many of the solutions we arrived at involved public-private partnerships. I had a chat with Herman Bolhaar, chairman of the public prosecutor’s office.Community serviceWe agreed prevention is better than cure and we thought it would be great if relatively minor criminals, who are now sentenced to doing community service, could be prevented from graduating to a life of serious crime. What can we do to make them choose a future in which they earn their money doing an honest job?Bolhaar suggested community service with a twist for would-be serious criminals. Picking up bits of paper in the park where no one sees them is not exactly a punishment. ‘It would be much better to involve a big supermarket in the perpetrator’s own neighbourhood.’ If he does well his sense of self will soar and perhaps he will even be offered a real job at the end. It would be even better if he became interested in starting a business himself.Let delinquents do their community service with a hardworking entrepreneur and give them a chance to contribute and do something creative. They may just become inspired and stimulated enough to earn an honest euro in the future.Annemarie van Gaal is an entrepreneur and investor  More >


Hidden taxation threatens freelancers’ viability

Hidden taxation threatens freelancers’ viability

They say that death and taxes are life’s only certainties. For freelancers in the Netherlands, those taxes are even more certain than for most workers, writes Miriam Young.In addition to long-standing arrangements which effectively require income tax to be paid in advance of receiving income, recent tweaks to the system will squeeze billions more euros out of freelancers this year.While employees nestle in the cosy comfort of PAYE income tax, freelancers, whom the belastingdienst has selected to pay via voorlopige aanslag (provisional assessment), typically pay tax before receiving the earnings it’s due against. The same applies to forwarding btw (vat) premiums, which must be paid each quarter, regardless of whether the invoices the btw is raised on have actually been settled. Freelancers are advancing the Dutch government a lot of money.The voorlopige aanslag demands payment of income tax in equal monthly instalments, calculated on forecasted net income for the year ahead. If the freelancer’s income turns out to be lower, they over pay and have to wait to be reimbursed. With work never being a certainty and clients often paying late, consistent monthly income simply doesn’t exist. But the commitment to pay remains the same.If net earnings turn out to warrant a higher tax bill than already advanced, the belastingdienst charges interest on the balance, which accrues while they ponder their calculations.While a freelancer’s finances are about as predictable as the British weather, the belastingdienst claims a sure-fire income right through the year. Which isn’t a pretty situation for any freelancer whose income starts to fall behind the prediction.Heads the belastingdienst wins. Tails the freelancer loses.As if this wasn’t already bad enough, in 2014 the government added a clause to the Algemene Wet Inzake Rijksbelastingen (General Tax Act) which allows hefty fines to be levied when actual net earnings are inconsistent with those forecast.Supposedly implemented to discourage deliberate under or over-estimations which advantage the freelancer (heaven forbid!), this clause is effectively a license for the government to dip into freelancers’ pockets whenever they fancy pulling in some extra cash.There are no officially stated parameters of reasonability and the decision to fine is at the tax inspector’s discretion. Given that a freelancer’s net earnings are unpredictable until the last day of the year, there’s virtually nothing to be done to safeguard against being fined. Up to five years after the fact.Shock double tax bill for 500,000 freelancers in 2015.While many freelancers have been paying via a voorlopige aanslag for some time, many others have been billed in arrears, as late as December of the following year. Without warning, 500,000 freelancers were switched to paying in advance in 2015. Because these people’s finances were arranged to accommodate payment in arrears, in 2015 they now find themselves having to service two income tax bills in one year. An impossible demand.A multi-billion euro black hole in the economy.Bringing forward income tax payments for 500,000 freelancers means, assuming they are able to find the money, that billions of euros will bypass the economy in 2015, straight into the government’s coffers.The knock-on impact to local and national businesses is a frightening prospect. Not least because they’ve not been made aware of this reduction in spending power, so are unable to adjust their strategies accordingly. Who’s going to carry the can when everyone is left scratching their heads after a worse-than-expected 2015, wondering where it all went wrong?#HandsOffOurFreelancersFreelancers are a precious resource. Not only to the clients who rely upon their flexible, high quality services, but to an economy which benefits from their self-generated contributions while offering no support in return. Freelancers receive no sickness or unemployment benefit, and have to pay massive top-up taxes on health insurance. The tax concessions granted to freelancers merely balance out some of the unavoidable expenses incurred through being self-employed.The Dutch government seems oblivious to the importance of making freelance life viable through a feasible fiscal ecosystem. An attempt to remove the zelfstandigenaftrek, which would have cost each freelancer around a crippling €3,000 a year, was recently thwarted. So now stealth tactics are being implemented instead to claim a bigger share of freelancers’ hard-earned incomes.Miriam Young is a freelance English copywriter living in the Netherlands. She writes marketing materials that help companies promote themselves internationally.  More >


Eat up: ugly fruit & veg taste just as good

Eat up: ugly fruit & veg taste just as good

A blemish on your fruit & veg doesn’t mean it’s inedible. So why are supermarkets trying to convince us otherwise? ask Joszi Smeets and Joris Lohman.2014, the European year against food waste, had barely come to an end when supermarket chain Plus launched a very strange ad indeed. It shows some children attacking a cauliflower with a felt tip pen and a hammer in the hope of getting the hated vegetable off the menu. Their mother walks in, see the battered cauliflower and concludes it is no longer edible. She heads back to Plus and is given a substitute cauliflower: fresh guarantee is fresh guarantee.The Youth Food Movement decided to respond with a video of its own which went viral. We think the guarantee on fresh food really guarantees perfectly good food going to waste. What is wrong with a cauliflower with a little blemish? Every single consumer is still chucking out some 14% of the all food he or she buys. That is 0,8 billion kilos a year, at a cost of €4.4bn to the economy: money spent on wasting food. In a world faced with the question ‘How are we going to feed nine billion people in 2050?’ the YFM feels the waste promoting ads Plus is making are, well, a bit of a waste.On the supermarket’s website the rules for the guarantee on fresh food are explained. For unpackaged vegetables, like the cauliflower, the guarantee kicks in when the product shows outward signs of no longer being fresh. That’s as specific as it gets and it suggests the consumer and the shop assistant are the arbiters of the freshness of the product.Perfection guaranteeThe campaign Damn Food Waste, which is supported by the University of Wageningen, showed that a little under 50% of people bin products that have gone past their sell by date without stopping to use their eyes and noses. The sell by date does not have any bearing on the edibility or even the quality of a product. It is merely there to protect the manufacturer and the supermarket.The campaign did prompt junior agriculture minister Sharon Dijkstra to put the subject of sell by dates on the European agenda. When Plus says vegetables with a blemish can be returned to the shop it isn’t promoting a guarantee on freshness but a guarantee on perfection, a cosmetic consideration that is only adding to the waste problem.Plus is not the only supermarket to promote waste. Lidl with its ‘check for blemishes’ equates perfection with quality as well. And Jumbo tried to convince us that their vegetables are much more attractive than the crooked carrots from our own garden.And all this at a time when people are becoming conscious of the problem of waste. In the Netherlands the anti-food waste initiative Kromkommer (crooked cucumber) was launched and French supermarket Intermarché attracted 24% more customers with its Inglorious Fruit and Vegetable campaign. Albert took notice and introduced its Buitenbeentjes (odd ones out), packages of ‘odd’ looking fruit and veg that can be ordered online.Plus told YFM it’s not going to remove the ad from the screen any time soon. They do promise to look at the reactions when they evaluate the ad. Plus has some understanding for the confusion the ad has caused but it still feels the viewers will understand its intended playfulness. Perhaps we should trust their common sense instead.Joszi Smeets and Joris Lohman belong to the Youth Food MovementThis article appeared earlier in Trouw  More >


What does the infrastructure minister actually do?

What does the infrastructure minister actually do?

The once wonderful Dutch railway system seems to be grinding to a halt, KLM is fighting its corner against the French, Groningen is sinking and the mice are eating the dykes. So what is the minister doing about it all? asks DutchNews.nl editor Robin Pascoe.Since the general election in 2012, the Netherlands has not had a transport ministry. Instead it has the grandly named ministry for infrastructure and the environment, headed up by an even more grandly named minister: Melanie Schultz van Haegen-Maas Geesteranus.Melanie is never shy of a photo opportunity. You will, for example, find her accepting reports on traffic deaths or posing in cars that drive themselves – an area of research in which the minister is keen the Netherlands plays a leading role.The lovely Melanie has a wide selection of photographs featuring herself in doe-eyed poses on her official website – unlike the bog standard portrait most ministers have on offer. Yet despite her media savvy approach, she is so low profile in terms of policy you have to wonder what she actually does.RailwaysShe is, formally, the minister for the infrastructure – roads, railways, waterways - but seems to leave most of that up to her deputy, poor old Wilma Mansveld.Mansveld is a first-time minister and saddled with the railway nightmare, KLM’s financial woes and Lelystad airport among all the meaty subjects.So much does Schultz van Haegen-Maas Geesteranus hate the railways that she apparently said she would not take the ministerial job if she had to deal with the trains.Schultz is also minister for the environment, although it seems that economic affairs minister Henk Kamp has taken the reins on that one. Certainly, he is the one making the noise about earthquakes, natural gas, wind power and the like.And his junior Sharon Dijksma is dealing with the mice problem in Friesland where they are eating the grass holding the dykes together.SpeedSo how does Schultz fill her days? Well, she announced last year that there will be more road signs on the nation's motorways so we all know at what speed we are supposed to be driving. Not that much has happened on this one yet, and if you drive from Rotterdam to Amsterdam, you will find yourself travelling at 50, 70, 80, 90, 100, 120 and 130 kph over different parts of the journey with not much signage to tell you which is which.Schultz is, of course, the brains behind the rise to 130 kph, which she thinks is a jolly good idea, despite what road safety experts say.Schultz is also the brains behind the decision to switch off the motorway lighting a night – you see, she is minister of the environment as well. This is another measure which does not exactly please road safety experts.TriumphsBut which is Schultz’s greatest triumph? Is it perhaps her decision to whack up the speed limit on the Amsterdam and Rotterdam ring roads to 100 kph only to be slapped back down by the courts for breaking her own environmental regulations?Or is it her refusal do something about the moped menace on the cycle lanes ? Or her love of self-driving cars?Or could it be something else? We’ve done a quick search in the DutchNews.nl archives to find out what other great achievements can be laid at the door of Schultz van Haegen-Maas Geesteranus but failed to find any.They say no news is good news and Melanie's poor old deputy is hardly out of the headlines. But then angry commuters, angry airline unions and angry motorists don’t exactly make jolly photo ops.Robin Pascoe is the editor of DutchNews.nl   More >


‘Tax cuts should be a priority and we should all benefit from ABN Amro sale’

‘Tax cuts should be a priority and we should all benefit from ABN Amro sale’

Economists Rick van der Ploeg and Willem Vermeend think taxes should be cut from next year and a big slice of the ABN Amro flotation money should flow right back into the taxpayers’ pockets.Although it’s the government that decides on tax cuts it looks as if they will be an important election issue in the campaign for the provincial elections on February 18 as well. Last Wednesday prime minister Mark  addressed an audience of entrepreneurs in Aalsmeer, as part of his party’s provincial election campaign.Rutte said the cabinet will cut taxes by €3bn to €5bn – economic circumstances permitting- in an effort to boost economic growth and employment.According to the VVD leader this measure, combined with the reforms already approved by parliament, could make the Netherlands one of the fastest growing economies in Europe.Is this mere election rhetoric? No. The reforms of the last few years have strengthened the economy and encouraged growth. Expected growth for this year is 1.5%. In order to belong to the top growth will have to exceed 2%.A clever tax package which promotes growth and job creation should push the percentage up sufficiently. But it will take more than €3bn to €5bn. We have calculated that the number should be closer to €10bn and that it is possible to find the money while the cabinet is still in office.Rutte II wants to combine tax cuts with a reform of the tax system. That idea must be shelved as quickly as possible. Apart from the lack of consensus in the coalition about the scale of the reforms, the parliamentary procedures involved would take up too much time. It would take at least until January 1 2018 before a combination of both tax cuts and reforms could take effect and any positive effects on growth and employment would only manifest themselves in the following years.If Rutte II wants to up growth and create extra jobs the tax cuts, regardless of tax reform, would have to take effect from January 1 2016.According to macro-economic government thinktank CPB there are three measures that would garner maximum effect. A reduction of the lowest income tax tariff, a higher labour discount and a reduction of premiums for employers with small and medium sized businesses will push growth past 2% and increase the number of jobs. This in an ideal scenario: a worldwide slump or other international disasters would, of course, change the outlook considerably.There is another way to help tax payers and stimulate consumer spending at the same time. No one has forgotten the bail-out of the banks in 2008-2009 paid for by the tax payers. Rutte II announced last year that preparations are under way to float ABN Amro on the stock exchange. That would result in around €15bn in total for the state coffers. The state will hold 10 to 30% of the shares initially. With a market valuation of €15bn this will yield between €1.5bn and €4.5bn.That money has been earmarked for the reduction of government debt. Dutch government debt is among the lowest in Europe. It would be a much better idea to use the money to fund a one-off tax break for the 11 million tax payers whose money bailed out the banks. Tax cuts and a boost in spending power: a double whammy to help both the tax payer and the economy.Rick van der Ploeg is professor of economics at the University of Oxford and adjunct professor of economics at the VU University. Willem Vermeend is an internet entrepreneur and professor of economics and e-business at the Maastricht School of Management (MSM).This article was published earlier in the Financiële Telegraaf      More >


‘Pension funds should come clean about their costs’

‘Pension funds should come clean about their costs’

Having workers pay higher pension premiums for a lower pension is simply unacceptable, says Annemarie van Gaal. Pension funds should come clean about costs and ditch the frills.Last week the Financieele Dagblad dropped a bomb: three-quarters of the Dutch pension funds have cut pensions while premiums remained the same or, in some cases, went up. According to Pension Federation boss Gerard Riemer, it’s impossible to lower the premiums. Riemer is sorry that workers ‘are paying a very high price for a relatively bad pension’.But says Riemer: ‘Pension funds can’t just ask for any old premium payment. The coverage ratio has to be at a legal minimum. Pensions have become very expensive in the last few years because of low interest rates.’ Those low interest rates again.MPs were quick to react and demanded answers from junior social affairs minister Jette Klijnsma. She said that five of the biggest pension funds, which manage over 50% of the Dutch pensions, did lower premiums. So that’s alright then. Never mind that almost a million hardworking people are getting less for the same, or more, money.Workers can’t choose their pension funds. If premium rates go up it’s not a question of finding a better deal. No wonder people in the Netherlands are not paying attention to their pensions.But what is the reason for the differences between the funds? Low interest rates hit all pension funds alike so why can one fund cut premiums and another find it impossible to do the same?There are over 350 pension funds in the Netherlands. Of those a hundred account for less than 2% of the pension market. A small fund has relatively high overhead costs. If you bear in mind that every euro spent now equals a €30 pension cut later, the consequences are not difficult to imagine. Clients don’t want frills like webinars, fancy offices or glossy magazines. They want a proper pension.A few years ago the Dutch National Bank asked small pension funds to ‘think about the future’. Why aren’t small and medium-sized pension funds required by law to look for economies of scale?Higher pension premiums are unacceptable. I propose that every penny pension funds spend on administration, regulation, marketing and capital management in relation to the total of their invested capital is made public. Nothing wrong with a bit of pressure.Annemarie van Gaal is an entrepreneur and investor   More >