DutchNews.nl - Cuts in pensions unavoidable

Fourteen Dutch pension funds will have to cut their pay-outs to pensioners within a few months, it is widely reported on Wednesday. The cuts will affect around 700,000 people, of whom 150,000 will feel the direct effect because they are already retired.

The reduction in pensions was announced on Tuesday evening by acting social affairs minister Piet Hein Donner and the central bank. Because of its duty of confidentiality, the bank cannot say which pension funds are affected.

The pension funds have been hard hit by the economic crisis and several have seen their coverage ratio fall below the required 105%.

Reductions in pension pay-outs will vary from 1% to 14% and will be introduced on January 1. The hardest hit will be those who have already retired. The under-65s still have time to make other savings or may see the financial situation improve.

The cuts are a direct result of Donner's decision to terminate an exemption measure for weak pension funds. He made the decision on the advice of the central bank because members of the 14 pension funds involved are receiving a pension that is not fully covered.

In 2009 it emerged that 340 of the 600 pension funds are short on coverage. Most of them think this can be solved by increasing premiums, no longer correcting for inflation or through financial help from employers.

"Because of its duty of confidentiality, the bank cannot say which pension funds are affected.

How about the duty of warning those of us who might be affected?

By judith weingarten | August 18, 2010 5:42 PM

Once again the person who is on persion will have to pay the price. I bet u the people at the top won't be taking a cut, most likely they will be getting big increase in their wages.

By Russell | August 18, 2010 5:47 PM

Do not invest in pensions - period. Save in cash and real estate (not in the Netherlands).

By nico | August 19, 2010 6:54 AM

@judith: I guess this means that they cannot make a press release about it. But those who are affected will likely get a notice at home.. at least I hope so.

By dvd | August 19, 2010 7:58 AM

It only takes a few minutes and a couple of quick calculations to see that putting your money in a Dutch pension plan does not make any sense at all. The markets are also not a safe haven the coming few years; the US is gearing up for a 'double dip' recession which will make this last one look like nothing. Interesting times indeed. The financial world needs a thorough flushing of unnecessary top management, management that is clearly incompetent - that is clear!

By expat | August 19, 2010 10:16 AM

I am a pensioner. A very meagre pension, despite the huge sums I have had to pay to the funds, forced by the politicians.
A 14% lower payment each month will have no effect, as I have still to work [age 68+] now.

By Bonne Rook | August 19, 2010 4:10 PM