Pension cuts deemed almost inevitable
More than 100 Dutch pension funds may have to cut benefit payments from April 2013.
Director Gerard Riemen of the umbrella organisation Pensioenfederatie made this remark in an interview with Financieële Dagblad Financial Times He said the cuts would be around three percent on average but could be as high as 15 percent.
Mr Riemen said the pension funds could not afford to wait any longer and had to cut benefits now. He said more than 100 pension funds were in serious trouble. They are no longer able to meet the compulsory 105-percent coverage of future financial obligations and failed to make sufficient headway with the government-imposed ‘road to recovery’ scheme. In the worst-case scenario, the pensions of more than one million people would be affected.
The pension funds are unlikely to report positive results any time soon. Low interest rates and disappointing returns on investment are having a negative effect on the funds’ ability to meet the 105-percent coverage norm. An increase in pension premiums would appear inevitable, but Social Affairs Minister Henk Kamp said on Wednesday that this would not be absolutely necessary in all cases.
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