Tuesday 11 August 2020

Interest rent advice threatens to disrupt pension reform vote

Photo: DutchNews.nl

Pension funds have been told to make sure they have higher buffers and this may make it more difficult to put up payouts in line with inflation, disrupting the pending union vote on pension reform plans, broadcaster NOS said on Thursday.

A government commission, led by former finance minister Jeroen Dijsselbloem, has published its binding recommendations which state that funds must have more money in their coffers to meet pension requirements and must use a lower interest rate to calculate their future assets. The interest rate is recalculated every five years.

But the timing of the publication comes just as over one million trade union members are due to vote on reforms to the Dutch pension system, finally agreed last week after nine years of talks.

That agreement should make it easier for funds to index pensions and reduce the need for cuts because of low coverage ratios.

The FNV trade union federation has called on its members to ignore the commission’s recommendations, arguing that they relate to the current system, not the new set up which will be implemented over the next few years.

The Dijsselbloem committee recommendations, the FNV and employers say in a joint statement, highlight what is wrong with the current system and why there is a need for reform.

Union members will vote on the reforms in the coming days.

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