Pension funds are unlikely to take advantage of a change in the law which allows them to change contracts and react more easily to financial market developments, the Financieele Dagblad reports on Thursday.
Social affairs minister Henk Kamp on Wednesday published new rules to tighten up the financial framework for pension funds and to allow funds which change contracts to be more flexible about pay-outs.
‘The new rules will not lead to extra money,’ Kamp said in a statement. ‘The new rules will force funds to communicate clearly about the impact [of policy] on spending power for participants.’
Funds which do not change to new contracts will only be able to increase payouts in line with inflation if they can prove they have sufficient reserves and are able to meet their obligations to younger workers as well.
Funds which do switch will it find easier to allow pensions to rise or fall in line with financial market and life expectancy developments.
But according to the Financieele Dagblad, this will lead to the development of a two-tier pension system.
Funds operating within a new contract will be able to lower pay-outs more quickly, the paper says, but may also face legal challenges from pensioners who want certainty about their financial situation in old age.
‘I think many funds will remain in the current system,’ Willem Noordman of the FNV general workers union told the paper. The union has representatives on 45 fund boards. ‘People prefer to know how much they will get, rather than be faced with permanent uncertainty.’
This may encourage pensioners to take legal action against the funds, the paper says. The director of the pension fund association Gerard Riemen told the paper: ‘Funds will not want to run serious legal risks.’
Employers’ organisations welcomed the changes, saying Kamp had made the pension system ‘generation-proof’, news agency ANP said.
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