NETHERLANDS - The Dutch pensions regulator DNB isn’t considering a relaxation of the rules of the new financial assessment framework, or FTK, director Dirk Witteveen has indicated.

“Although criticism on the FTK is possible, I don’t want to make any changes now,” Witteveen said during the national pension debate last week.

“The real mistakes have been made during the nineties, when the pension funds offered large premium discounts, while the interest rates were already falling,” he added.

Earlier, ABP’s financial director Dick Sluimers, reproached the DNB for focussing on the short-term, especially with the one-year recovery term in case the funding ratio drops under 105%.

“If we dive under 100%, premiums will have to rise from 20% to 60%. Even if the mandatory period is extended to five years, premiums need to increase to 28%,” Sluimers said.

“This won’t work and it will lead to social unrest. Strangely, this aspect is absent in all political discussions.”

ORTEC’s Guus Boender added that the FTK should allow strong industry-wide schemes a bigger margin than small company funds. He wondered why the DNB doesn’t focus on DC schemes.

Sluimers also snubbed the present longevity risk of the FTK, which prescribes a financial reservation until 2050. “This will cost ABP 3% of its coverage ratio, or between €4bn and €5bn, and €15bn for the market as a whole”, he stated.

The FTK will come into force as of 2007.

The new ‘levensloop’, or life course, scheme will probably be adjusted within 5 years, because too many workers want to use it for early retirement, instead of a sabbatical or care leave, was the conclusion of another parallel discussion.

Chairman Benne van Popta of the Association of Industry-wide Pension Funds, or VB, proposed widening the scheme’s base, by also allowing it to be used for unexpected events during someone’s career.