The Dutch central bank has taken the ‘highly unusual’ step of altering the way it calculates how much money pension funds should have in their reserves but 125 pension funds may still have to cut pay-outs in 2013, the Volkskrant reported on Friday.
The bank has opted to use a three-month average rather than the year-end interest rate to make the calculations. This is because interest rates have been extremely low for a long period. The lower the interest rate, the higher pension fund reserves need to be.
In addition, the bank has opted to limit the maximum reduction to 7%. On average, pensions will be cut by 2.5%. Millions of workers will be affected
‘The extraordinary situation on the financial markets makes this decision necessary,’ the central bank said in a statement. ‘The aim of both measures is to reduce the uncertainty over pensions’.
The change means that 125 funds rather than 180 will be forced to make cuts next year, unless the financial markets improve.
Central bank director Joanne Kellerman told the Financieele Dagblad pensions had never been reduced on such a scale before. ‘We want to give clarity and remove uncertainty about the size of the cuts,’ she said. ‘We all have to work to calm the storm.’
Thank you for donating to DutchNews.nl
The DutchNews.nl team would like to thank all the generous readers who have made a donation in recent weeks. Your financial support has helped us to expand our coverage of the coronavirus crisis into the evenings and weekends and make sure you are kept up to date with the latest developments.
DutchNews.nl has been free for 14 years, but without the financial backing of our readers, we would not be able to provide you with fair and accurate news and features about all things Dutch. Your contributions make this possible.