The performance of Dutch corporate pension funds has improved in the first months of this year, although some may still have to make cuts.
Civil service scheme ABP, which is one of the biggest pension funds in the world, now has a coverage ratio of over 100% for the first time since April 2019. All of the five biggest funds, which also cover the health service and engineering sector, have ratios of above the required 100%.
‘This is good news but the economic prospects still remain uncertain,’ ABP chairwoman Corien Wortmann-Kool said. ‘So little will change for our participants. Pension increases are not yet on the horizon and cuts remain a real threat in the coming years.’
The Dutch pension system is currently based on three pillars – the state pension AOW, compulsory corporate pension schemes – either sector-wide or company based – and individual or private pension schemes.
New pension system
Sources have told the Financieele Dagblad that the introduction of a new pension system is likely to be delayed, perhaps by a year.
The reforms aim to spread the burden of paying for pensions more fairly across the generations. Corporate pensions will no longer be based on average (wage related) contributions but on everyone paying the same.
The new system is supposed to come into effect next January, which means parliament must give its approval this year, but that is unlikely to happen, given the complexity of the regulations, the FD said.
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