NETHERLANDS - The pension funds for Dutch public pharmacists (SPOA) and notaries (SNPF) have announced early benefits cuts of 5% and 2%, respectively, that will occur on 1 January 2011.

SPOA chairman Mark Hagenzieker, in a letter to participants, attributed the scheme's coverage ratio of 80.5% at the end of October to the currently low interest rates - the criterion for discounting liabilities - as well as increased longevity.

However, the €1bn pension fund's indexation policy has also contributed to its present financial position. SPOA grants active participants a fixed compensation for inflation of 2% for over 60s and as much as 3% for younger participants.

However, Ton van Zijl, the scheme's director, told IPE the continuation of this indexation mechanism would be subject to an asset-liability study into how the scheme could be made 'future-proof'.

Meanwhile, the €1bn Stichting Notarieel Pensioenfonds confirmed that pensions regulator De Nederlandsche Bank has insisted on an early rights discount of 1.97% as part of additional recovery measures drawn up by the scheme after it had been placed on an 'early cuts' list.

However, SNPF chairman Gijs Alferink said the effect of increased longevity might force the scheme, which had a coverage ratio of 91.6% at the end of October, to introduce further cuts in 2012.

The pension fund's initial recovery plan had factored in an 8.4% discount on 1 April 2012.

Alferink attributed the shortfall in part to the pension fund's "unique position", as its financial assessment framework was regulated by legislation - specifically aimed at the notaries' scheme - for decades.

Only in 2007, this framework - prescribing a funding of between 85% and 115% - was replaced by the FTK with its mandatory minimum coverage requirement of 105%, the chairman pointed out.

Alferink said the SNPF has appealed the DNB's decision, preferring to postpone any cuts to 2012.

In other news, the €98bn healthcare scheme PFZW will decrease its pension accrual for longevity on 1 January 2011, while raising its contributions at the same time.

Pension fund officials said the premium would be increased by 0.3% to the "costs-covering level" of 23.4% of the pensionable salary as part of a regular adjustment carried out every three years.

In addition - and in anticipation to new longevity predictions - PFZW will reduce the pension accrual from 2.05% to 1.95% a year.

The pension fund stressed that this measure was temporary and had been taken ahead of the outcome of the current negotiations between the social partners and the government on increasing the retirement age.

According to PFZW, the accrual decrease means an existing participant needs to work four months longer for the same benefits.

Because of the increased life expectancy and the subsequently longer benefits period, the benefits accrued in total will remain unchanged, the scheme said. It added that participants had the option to keep on working for a larger pension.

The PFZW board said it was aiming to decide on structural adjustments of its pension arrangements in 2011, factoring in future demographic and economic developments.

The coverage ratio of the healthcare scheme was 101% at the end of October.

 

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