Health service pension fund Zorg en Welzijn has become the first Dutch fund to say it plans to switch to the new flexible pension system the government wants to introduce in 2015.
The fund plans to move away from defined benefits – where pensioners know how much pension they will get – to defined contributions, where premiums are fixed instead. This means pay-outs will vary in line with stock exchange developments.
At the moment, health service workers have a guaranteed pension of 70% of salary (including the state pension AOW). Under the new system, pay-outs will be determined by how much money is in the fund.
‘In bad times it could be less,’ fund director Peter Borgdoff told the Financieele Dagblad. ‘We are not opting for maximum certainty because that means a more expensive and lower pension.’
Employers and workers still have to vote in favour of the move and legislation making the change possible still has to be finalised.
According to the FD there are other legal obstacles to overcome as well. Many legal experts warn that the capital which the fund has already built up cannot simply be switched into a new system. And several organisations are preparing legal action against a forced change,the paper says.
The government hopes the new set-up will lead to a more sustainable pension system as workers live longer. At the moment funds are being forced to cut payments and put up premiums because of the economic crisis because their assets no longer meet legal requirements.
The new system was agreed by unions and employers last year and adopted by the previous government.
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