Some of the biggest Dutch corporate pension funds are warning that cuts are still likely next year, despite booking good results in the last few months.

Pension funds are required to have assets equal to at least 104% of their liabilities but the big funds are all below this, as low interest rates continue to have an impact.

The giant civil service and healthcare pension funds ABP and Zorg en Welzijn currently have coverage ratios of 99%, while engineering fund PMT is sitting on 100%.

‘Interest rates have reached their lowest level since Zorg en Welzijn was set up,’ director Peter Borgdorff said in the new quarterly update. ‘The risk of having to make cuts has never been greater.’

Borgdorff told broadcaster NOS that it now even more imperative that ministers, employers, unions and pension funds work out ways of ensuring the Dutch pension system is future-proof.

Talks

The talks collapsed at the end of last year when the three big unions pulled out. The unions say the government is not doing enough to meet their demands for a slower rise in the official retirement age – which is going up in line with life expectancy projections and is set to reach 67 by 2021.

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.