NETHERLANDS - The president of the Dutch central bank and pension regulator will decide before 1 March whether pension funds will be given more time to recover from the credit crisis, though he has stressed in advance he does not favour giving more time to repair their funding shortages.

In an interview with the Dutch discussion programme 'Buitenhof' yesterday (Sunday 1 March), Nout Wellink, president of the DNB, cautioned any decision on extending the recovery time from three to five years would need to be thought through carefully.

"We cannot say 'the funds are currently having some problems and have to be granted a deferment'," said Wellink. "You can postpone the term, but if the world does not recover as the people who are pleading for a deferment assume, then future pensions are really in danger."

The discussion has emerged in recent weeks since pension funds have been revealed to have fallen into underfunding.

The Dutch pension law gives underfunded schemes three years to reach a level of full funding, or a 105% cover ratio.

Pension funds, reluctant to increase contribution rates, have started to plead the recovery period of three years should be extended by two more years.

The DNB is now surveying pension funds to examine whether and how postponing recovery by two years is possible.

DNB has scheduled a meeting with the pension fund representative bodies VB, UvB and OPF later this month, and discussions with the responsible ministry of social affairs are ongoing, according to Wellking.

The regulator now wants to decide before the end of this month what should be done. "We will be very pragmatic," said Wellink.

"It could be that we give a generic exemption for all institutions, who are not suffering too much, and extend the period to five years," he added.

The second option would be to examine each institution individually, and the DNB says it already has approached some funds to make them speed up their recovery.

A spokesman for the VB told IPE on Friday its director Gerard Riemen had contacted DNB to urge the regulator to examine each pension fund individually and decide if the period of three years mapped out for the recovery plan could be extended.

If you have any comments you would like to add to this or any other story, contact Carolyn Bandel on +44 (0)20 7261 4622 or email carolyn.bandel@ipe.com

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