NETHERLANDS - Dutch workers with large additional pension holdings will be hardest hit by the pensions crisis, according to scientists at the Netherlands’ Bureau for Economic Policy Planning (CPB).

Employees in their 50s can expect to lose approximately10% of their pension rights on average through both indexation cuts and contribution rises, as do not have sufficient time before retirement to recover assets lost in the recent crisis, the researchers claimed in a joint contribution to the Economic Statistics Report (Economisch Statistische Berichten).

The four scientists - deputy director Casper van Ewijk, Jan Bonenkamp, Harry ter Rele and Ed Westerhout - have welcomed the decision by social affairs’ minister Piet Hein Donner to extend the recovery period for underfunded schemes to five years “because this will allow most schemes to submit recovery plans without cutting benefits or increasing contributions”.

That said, the consequence is that indexation of pension rights and benefits will be withheld for many years, added the CPB researchers.

The body’s figures indicate workers in their 30s and 60s will lose approximately 6% of their pension rights, whereas employees in their 20s are expected to their pension pots reduce by 2%.

According to the department of social affairs, the nominal cover ratio of Dutch pension funds decreased from 144% at the end of 2007 to between 90 and 95% on average.

Van Ewijk and his colleagues argued the real cover ratio is no more than 65%-70% at present, if schemes take future rises of the consumers index and salary index into consideration.

Pension schemes with a nominal cover ratio of less than 125% on average - a so-called buffer shortfall - must submit a 15-year recovery plan to pension regulator De Nederlandsche Bank, whereas a funding ratio of less than 105% requires a recovery plan achievable within five years.

The CPB expects to see an inflation rate of 1.4% until 2011, along with a salary rise of 2.4% and an increase of the risk-free interest rate of 2.9% on average, with rises of 2%, 3.7% and 3.5% respectively, as well as returns on equity of 6.5%, once markets over the coming years once markets recover.

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