Pension fund hike to go ahead as planned
Despite a job-loss warning issued by the government, the biggest pension fund in the Netherlands will proceed with increasing pension premiums for civil servants.THE NETHERLANDS – The Netherlands’ biggest pension fund will go ahead with plans to increase pension premiums for civil servants, despite the government’s warning that jobs will be lost as it is unable to fork out EUR 600 million brought about by the pension hike.
The ABP pension fund plans to increase the premiums for civil servants in 2010 as they need to restore the funds’ cover ratios back to the minimum level of 105 percent.
The measure is needed to increase cash reserves and will only be cancelled if there is a swift economic upturn.
Xander den Uyl, who sits on the ABF board on behalf of the FNV trade union federation, said the planned premium hike will go ahead and that Interior Minister Guusje ter Horst is responsible for resolving financial set backs.
According to Den Uyl, the temporary premium increases will mean more certainty about the pensions when they are paid out.
The move poses a problem for the government which will have to pay out nearly EUR 600 million more in pension premiums. Employees' contributions will also go up by two percent or EUR 10 per month .
ABP provides cover for 2.6 million workers.
The government has warned that jobs will be lost in the civil service if the ABP pension fund insists on putting up its pension premiums as part of a recovery plan.
The pension funds had been given until Wednesday to present their recovery plans to the government. In the plans the pension funds have to explain how they intend to restore the cover ratio to a minimum required level of 105 percent.
In March, Social Affairs Minister Piet Hien Donner gave the pension funds a total of five years rather than the customary three years to recover.
Two other pension funds – PME and Zorg & Welzijn – have announced plans to freeze pension payments for the next five years earlier this week.
Pension funds have been badly affected by the economic crisis. As a result, several funds saw their cover ratio fall dramatically.
Radio Netherlands / Expatica