Solvency II rules could increase pension contributions by 30%, says Dutch minister

EUROPE - Contributions could soar by as much as 30% if Solvency II rules are applied to pension schemes, according to Paul de Krom, the new Dutch minister of social affairs and labour.

Speaking at the Conference on the Green Paper on Pensions in Brussels today, de Krom warned against the idea that investment rules established in Solvency II should also apply to pension funds.

"A private insurer cannot be compared to a pension fund," he said.

"Once a pension fund is established, participation is mandatory, and this makes its prospects fundamentally different from private insurers.

"If market rules were fully applied to pension funds, this could easily lead to a 20-30% rise in pension contributions.

As far as the Netherlands was concerned, he said, this would be "unacceptable".

"The readiness of employers and employees to take part in pension schemes would be undermined, and this would lead to reduction of pension scheme participation and, subsequently, lower income for pensions," he said.

De Krom also took pains to highlight the importance of pension system diversity in the EU.

"I share the view in the Green Paper that member states are themselves responsible for the organisation of their pension systems and that there is no one-size-fits-all system design," he said.

"Every member state must establish for itself what it considers adequate and decent according to its social, economic and cultural circumstances. Adequate in this sense is a relative concept.

"This relativity, however, does not apply to the concept of sustainability because every pension must ultimately be paid for, irrespective of the national circumstances."