Almost two million people could face smaller work-related pensions next year because of problems facing the two big engineering funds, broadcaster NOS said on Thursday.

Both funds booked poor investment returns in the final quarter of last year and do not have the assets considered necessary to meet all their pension obligations, hence the threat of cuts.

‘The chance of a cut has increased, but it is not yet 100%,’ Benne van Popta, who chairs the PMT pension fund said. Eric Uijen of the PME fund told broadcaster NOS there is a chance of ‘almost 80%’ than pensions will go down next year.

Dutch pension funds are required to have a coverage ratio of 104%, which means effectively they should have €104 in assets for every €100 in pension obligations. Both the PME and PMT had dipped below 100% at the end of last year.

The three big Dutch trade unions are starting a campaign in support of better pensions in the run up to the March provincial elections. March 18 is tipped as a national day of action.

‘We are aware of the fears and concerns of both pensions and people in work,’ Tuur Elzinga, head of the biggest trade union federation FNV.

‘People have watched their pensions evaporate in recent years and they have less to spend. We want to see index-linked pensions which go up with prices,’ he told the Telegraaf.

More funds

According to the Financieele Dagblad, some 40 of the 200 sector pension funds may have to cut pensions but most have until 2020 to get their investments up to scratch.

Research by the family spending institute Nibud last year showed pensioners with a state pension and a supplementary pension of at least €5,000 a year have been steadily losing spending power since 2010.

Reforms

Talks between unions and employers on reforming the Dutch pension system collapsed last November after the big three unions pulled out.

Experts believe that the Dutch pension system – a combination of a state pension (AOW) and corporate pension schemes – needs to be reformed because the aging population is putting more pressure on the current pension system and pension funds are having to pay out to more people for longer.

The rise in self-employment is also having an impact, with fewer people paying into company and sector-wide schemes. Talks on reform began several years ago.