NETHERLANDS - The Dutch Pension Federation and the large pension funds ABP, PFZW and PMT have cautiously welcomed the pensions regulator's decision to use a three-month interest-rate average to calculate the yield curve.

The Pensions Federation, however, argued that the three-month average - as opposed to calculations based on an end-of-year position - had a limited impact on coverage ratios, and was still "way off" a reasonable discount rate.

It said the regulator's adjustment had been too small to keep a large number of pension funds from having to announce benefit cuts from April 2013.

However, it said the fact pension funds would be allowed to limit cuts to 7% was positive, as this will have a "cushioning effect on a very painful measure".

It also added that the pensions sector had already argued that interest rates had dropped to "unrealistically" low levels due to market distortion.

In a statement, the €240bn civil service scheme ABP described the regulator's decision as "sensible", but added that it was unsure whether additional measures might be avoidable.

ABP will publish fourth-quarter figures on 19 January and announce possible additional measures on 1 February.

For the €100bn healthcare scheme PFZW, the regulator's discount rate adjustment came as good news.

With the softening of the rules, the pension fund should be able to avoid cutting benefits, according to its director, Peter Borgdorff.

"However," he warned, "if the economy doesn't improve significantly during 2012, measures might still be necessary next year."

In the past, both ABP and PFZW have called for a discount rate that is independent of daily interest rates.

At the end of November, the coverage ratio at ABP and PFZW was 94%.

Meanwhile, Annieke Biesheuvel, spokeswoman at the €39bn metal scheme PMT, which had a funding ratio of 87.3% at November-end, said: "The adjustment of the discount rate is the start of a possible solution."

She said PMT would also publish its fourth-quarter figures on 19 January, only afterward making its decision on possible benefit cuts.

"We will also look into the options of changing other elements of the pension plan in order to limit cuts," she added.

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