NETHERLANDS - Mn Services, the pensions administrator and asset manager, has commissioned a research project to clarify whether a rise in pension premiums will contribute to an economic downturn.

Recovery measures are necessary for pension funds, according to the company, because the solvency buffers have considerably decreased as a result of the financial crisis.

So Mn Services has decided to sponsor a three-year study into the connection between pension premiums, buffers and business cycles.

The research project will be carried out by Professor Roel Beetsma, chair of the faculty macroeconomics at Amsterdam University and researcher Ward Romp, who specialises in pensions and ageing.

"So far, we have only limited insight in the context between the size of pension funds' financial buffers and the economy," said Mn Services in a statement.

"It is therefore important to find out to what extent a rise of the pension contributions, for example, will affect the disposable income and whether it could intensify the expected economic downturn."

Ruud Hagendijk, Mn Services' chairman, commented: "The project must provide an insight into how we can prevent the rebuilding pension funds' financial buffers to come at the expense of workers' income and subsequently the economy," .

A scientific analysis of the issue is also expected to contribute knowledge towards pension supervision.

"We hope that the outcome will contribute to a change of the financial assessment framework FTK, which now rigidly links the cover ratio of pension funds to market interest rates," Hagendijk said.

"As a result, the funding ratio is continuously going up and down. We must avoid situations where interest rates are governing pension funds' policy, rather than the board," he continued.

In Hagendijk's opinion, it is still too early for schemes to decide whether to raise pension contributions.

"It must depend on how the economy will be hit by the financial crisis. The markets can still go up before decisions are made on indexation and premiums, and we should perhaps postpone these decisions given the circumstances," he stressed.

The pensions provider has confirmed it will share results of the research with the market and policymakers.

"We want to contribute in order to maintain the power of the Dutch pension system and to provide an example to other countries," Hagendijk stressed. "We consider our system to be an important and strong exportable product.

Mn Services has over €60bn assets under management, and carries out pension administration for over 1.1m employees and over 33,000 companies.