Dutch pension funds using up reserves

8th December 2008, Comments 0 comments

However, the director of the Dutch Association of Pension Funds says there is no reason for panic as funds have enough money to pay out pensions for the next 40 years.

THE NETHERLANDS – Five of the 10 largest Dutch pension funds are rapidly using up their financial reserves as a result of the credit crisis.

As interest levels fall, shares are losing their value, so the funds out of which pensions are paid are receiving a smaller return on their investments. Reserves for pension funds can meet between 85 and 95 percent of their financial obligations. The legal minimum is 105 percent. The funds are for the civil service, the health, welfare and transport sectors and the steel industry.

To avoid future problems, many funds will not attempt to keep pensions in line with inflation in 2009, which will have an adverse effect on pensioners' purchasing power.

Social Affairs Minister Piet Hein Donner has ruled out compensation for pensioners whose incomes are affected.

So far, there has been no general discussion of an increase in premiums. Only the pension fund for the steel industry has decided to increase premiums, which are paid partly by the employers and partly by the employees.

The director of the Dutch Association of Pension Funds said there is no reason for panic as funds have more than enough money to pay out pensions for the next 40 years.

[Radio Netherlands / Expatica]

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