The Dutch move from defined benefit to defined contribution (DC) pensions can be carried out in a cost-neutral manner, according to the country’s employers’ association AWVN.
After analysing 50 pension fund transition plans, it concluded that no employees will lose out – and young people will even gain substantially – while contributions for employees and employers will remain unchanged.
All Dutch pension funds that plan to make the switch to DC are required to draft such a transition plan, in which they detail the new pension arrangement and calculate expected pensions for all age cohorts.
In the current situation – relatively high funding ratios and high interest rates – the transition to the new pension system appears to be a game without losers, according to Wim Hoogendoorn, AWVN’s pension expert.
“Particularly among participants up to 35 years of age, a very favourable picture emerges.”
For participants over 60 years of age, who have relatively short investment horizons, the transition to the new system logically seems to make less of a difference to pension outcomes.
“Their expected pensions rise only marginally, or remain the same,” said Hoogendoorn.
Time-constrained
Amid the euphoria about the expected pensions in the new systems, AWVN also sounded a warning, noting that not all companies seem prepared to meet the end-of-year deadline to submit a transition plan for their company to pension regulator DNB.
“Less than two months ago, we received a call from one of our members – not a small or unknown company – asking if we could help them with this plan,” said Hoogendoorn. “We are apprehensive that in the coming months more time-constrained companies will come forward. Then things will get really tenuous. And our capacity to help is limited.”
This article was first published on Pensioen Pro, IPE’s Dutch sister publication. It was translated and adapted for IPE by Tjibbe Hoekstra
No comments yet