The Netherlands’ biggest union has called for the government to increase state pension benefits to compensate for looming cuts to second-pillar pension payments.
FNV’s vice chair and lead pensions negotiator Tuur Elzinga called for a higher state pension (AOW) in an interview in Dutch national newspaper De Volkskrant, arguing that such a measure was needed to maintain pensioners’ purchasing power.
When a pensions agreement was concluded in early June between unions, employers and the government, it was assumed that cuts to pension rights and benefits could be avoided, restoring confidence in the pensions system.
However, the financial position of pensions funds has worsened through declining interest rates and poor equity market performance. In addition, in June an independent committee recommended changes to the calculation of the ultimate forward rate that could increase scheme liabilities and further hurt funding levels.
According to De Volkskrant, employers have rejected a proposed increase to the AOW, which is regularly subject to indexation.
It quoted Hedda Renooij of employer organisation VNO-NCW as saying that cuts at pension funds “shouldn’t be compensated by general government measures”.
Pension funds are allowed to smooth out any discounts over a 10-year period, which means that a 10% cut would result in a 1% pension reduction in 2020.
In the interview, Elzinga indicated that he would like to discuss the discount rules for pension funds, but acknowledged this would be too heavy a burden on the work to elaborate the pensions agreement. This process is to start within two weeks, when a steering group for all players involved is to convene.