NETHERLANDS - The €231bn Dutch civil service scheme ABP may need to raise its contributions to more than 21.4% next year following new longevity predictions.

The largest pension fund in the Netherlands said it was waiting for the prognosis of Statistics Netherlands (CBS) at the end of this year.

The CBS's forecast for increased longevity at the end of 2009 has already caused ABP's coverage ratio to drop by 5 percentage points.

However, calculations by the Actuarial Society (AG) published last summer suggested Dutch pension funds would need to add 2.5% to their liabilities - on top of the 4.5% already highlighted by the CBS.

ABP spokeswoman Jos van Dijk said the pension scheme had not yet factored in the AG figures yet, as it "wants to be consistent and stick to the CBS forecast".

Apart from any longevity effect, ABP will increase its premium by 0.1% following a cost increase, and it will also keep its temporary 1% recovery levy in place, it said.

Given its coverage ratio of 96% at the end of October, the board indicated there was currently no reason to increase the recovery levy to the agreed maximum level of 3%.

"We are on track with our recovery," the board added, "and the limited advantage of the maximum levy for the funding ratio is outweighed by the negative consequences for our participants."

However, the board suggested a re-evaluation of its position at the start of 2011 could lead to additional measures.

"It could mean the recovery levy has to be raised to its maximum nevertheless," Van Dijk said.

Meanwhile, ABP also confirmed that it has been unable to grant participants an indexation in 2011.

So far, the participants have missed 8% on compensation for inflation in total, according to Van Dijk.

"This means a pensioner on an average benefit of €9,000 a year is missing out net benefits of €40 a month," she added.
 

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