Two of the Netherlands’ largest pension schemes have hit out at plans to bring in a new accrual system.

In its quarterly report, BpfBOUW, the €55bn scheme for the building sector, said that replacing the average pensions accrual with a degressive one – granting younger workers proportionally more pension rights – was “unnecessary”, and that it was “worried” about switching from collective to individual pensions accrual.

In the opinion of BpfBouw, a new system based on individual pension pots would provide participants with less clarity about their future pension income.

The scheme also emphasised the importance of risk sharing between generations, as well as the possibility of negative financial buffers, which isn’t an option for the Netherlands’ new government coalition.

Negative financial buffers allow funds to run at a coverage ratio of less than 100% without having to implement pension rights cuts immediately.

BpfBouw’s criticism follows recent calculations assessing the financial impact of a pensions contract with individual pension assets and collective risk sharing.

The outcome suggested that such a contract would generate a lower result for members than current pension arrangements, as a result of less risk sharing and lack of negative financial buffers.

“The option of temporary negative reserves during long economic cycles offers wealth benefits and prevents good and bad luck generations among participants,” explained

David van As, director of BpfBouw, said the ability to use “temporary negative reserves” during long economic cycles prevented different generations experiencing better or worse outcomes.

“With individual pension assets, it is less clear to young participants what their future pension income and purchasing power will be,” he said. “Younger workers in the building sector specifically want clarity on this.”

Van As also pointed out that workers and employers were not desparate to abolish the average pensions accrual, and added that providing compensation to negatively affected participants would be very complicated.

The director called for more pension obligations for the large and growing number of self-employed workers in the building industry who don’t have to join the pension fund.

The €68bn metal sector scheme PMT was also critical of a new pensions contract comprising individual accrual and some degree of collective risk sharing.

Benne van Popta, employer chairman, recently said that changing the pensions accrual while also introducing a new pensions contract was a “recipe for disaster”.

When asked by IPE’s Dutch sister publication Pensioen Pro, he said that the issue of negative buffers as part of a risk-sharing mechanism would come back on the negotiating table.

Recently, the new government coalition said that it would allow the pensions sector extra time to come up with its own proposals.

Jan Berghuis, PMT’s employee chair, also demanded provisions for workers in hard manual jobs “like plumbers, metal workers and car mechanics, who have difficulties reaching retirement in good health”.

SPOV, the €3.8bn sector scheme for public transport, said it was also very sceptical about abolishing average pensions accrual and the introduction of individual pension pots.

Peter-Paul Witter, the scheme’s chairman, argued that many participants often started as temporary workers in the sector, and only later become participants in the pension fund.

“Abolishing the average accrual would mean much lower pensions for them,” he pointed out.

The €396bn civil service scheme ABP and the €189bn healthcare pension fund PFZW, however, were much more optimistic about the new pensions contract.

In the opinion of ABP, an individual pension better matches participants’ demands.

However, a spokeswoman acknowledged that the new contract offered less certainties, but noted that the most optimal elaboration of collective risk sharing is still being investigated.

In a weblog, Peter Borgdorff, PFZW’s director, recently said that individual pensions could help to increase confidence in the pensions system “as people can clearly see what happens with their pensions money”.

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