NETHERLANDS - The government should seriously consider raising the official retirement age by two years to 67, says De Nederlandsche Bank president Nout Wellink.

The change – necessary because of a further rise of the life-expectancy and possible because an increase of individual wealth - should be made in two steps, starting in 2015 and being completed in 2025, Wellink indicated in DNB’s newly released annual report.

As an alternative to a step-by-step increase of the official retirement age, he suggested an age rise linked to life-expectancy.

In addition, a gradually rising taxation of the state pension AOW should start shortly, Wellink added.

He said the situation within the Dutch pensions sector looks much rosier now “because of the measures that have been taken, and the improved market”.

“The new financial assessment framework, or nFTK, has played a vital role in the recovery of the sustainability of the pension system.

“The introduction of market valuation has addressed a large proportion of the problems of the pension funds,” he stated.

However, pension funds still have insufficient finances to keep pensions inflation-proof. “At the end of 2005, the remaining gap was €125bn,” Wellink said.

And he announced a consultation with pension funds and insurance companies about controlling the risks from their involvement with hedge funds and other “non-transparent and high-risks investments”.

An ongoing pilot project is meant to establish if a greater efficiency can be achieved by having pension funds supervised, by supervising their financial service providers, Wellink added.

During 2005, the number of registered pension funds has dropped by 39 to 800, of which 685 are company funds, 103 industry-wide schemes and 12 occupational pension funds.

According to the DNB, 84 mainly company funds have indicated their intention to wind-up and transfer their liabilities.

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