Friday 30 October 2020

Unions, employers call for clarity on cuts during pension switch transition phase

Illustration: Depositphotos.com

The FNV trade union federation and employers organisations VNO-NCW and MKB Nederland have joined forces to urge the cabinet to come up with new transitional agreement to ease the shift to a new pensions system.

The new system will be implemented in 2026, if passed in parliament, but companies and funds can begin making the switch in 2022. In a nutshell, in the new system, the size of pensions will not be based on coverage ratios and official interest rates, but will depend on stock exchange developments.

In the meantime, pension funds fall under the old regime, which sets strict limits on how much funds need in assets, and when they need to make cuts.

The union and employers say that because of the current crisis, there is a threat that premiums will be increased and pensions cut during the transition phase.

They want the government to come up with a more formal transition agreement which ‘reflects the spirit of the new pension contract.’

Social affairs minister Wouter Koolmees earlier agreed that pension funds will not have to lower their payments if their coverage ratio – the amount needed to meet obligations – falls between 90% and 100% in the coming year.

But after that, 100% will again the be the standard, and this means some funds – such as the nursing and retail pension funds – will be faced with making cuts.

‘It is important to get clarity for the years ahead,’ said Ingrid Thijssen, chairwoman of the VNO-NCW.

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