The Netherlands’ new coalition government should keep mandatory participation in industry-wide pension funds, the Dutch Pensions Federation has argued.

In a “wish list” to parliament, the pension fund trade body also urged politicians not to further reduce tax benefits during pensions accrual.

The Federation said further fiscal limitation would mean a “false start” for a new pensions system, and would erode faith in both the system and the reforms.

Currently, scheme members can accrue 1.875% of annual salaries into their pension tax-free, down from 2.25%.

The Pensions Federation explained that mandatory participation was crucial for sharing risks, would enable pension funds to invest for the long term, and would prevent marketing costs as a result of competition between schemes.

The Federation’s letter comes in the wake of the collapse of coalition talks between the liberal party VVD, the Christian Democrats (CDA), the liberal democratic D66 party, and the left-wing Green party GroenLinks.

Elsewhere on its wish list, the industry organisation said it only supported a one-off payment at retirement date as an additional choice for participants. Deploying pension assets during the accrual phase for paying off a mortgage would be undesirable, it said.

The Pension Federation advocated a new “entry mechanism” for self-employed workers, who lack automatic access to pension saving in the second pillar.

It also urged the new government to provide clarity on the legal feasibility of an average contribution combined with gradually-decreasing pensions accrual. The Federation said its own research suggested that this would be difficult.

The lobbying organisation also asked the government to create a merger option for mandatory sector schemes and limit pension funds’ VAT burden and supervisory costs.

It reiterated that a new pensions system can’t be introduced in a “big bang” and that every pension fund would need a tailor-made transition.

Last week, Gerard Riemen, the federation’s director, said that it was unlikely that a new pensions system could be established before 2020, adding that the whole implementation could take up to 10 years.

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