NETHERLANDS - Dutch workers and pensioners must prepare themselves for the prospect of receiving only part indexation on their pensions in 2009 or none at all to compensate for inflation, the representative body for the industry-wide pension funds VB has warned.

While VB acknowledged the worldwide credit crunch has seriously hit pension funds, it also pointed the financial buffers built up by the schemes over recent years are now proving useful.

It repeated data published by the regulator De Nederland Bank (DNB) earlier this month and confirmed the combined assets of the Dutch pension funds have decreased by approximately €100bn to €600bn in recent market turbulence, though stressed pensions are not in danger.

"Of the combined assets, an amount of €20bn is paid in benefits, while received contributions total €25bn," the pensions industry body pointed out.

Given the ongoing volatility in the markets, VB is supporting the advice of regulator De Nederlandsche Bank and the Labour Foundation (STAR) for the postponement of decisions concerning indexation, as they are usually based on the financial situation of schemes at the end of the third quarter.

Although raising pension contributions could another instrument to improving funding ratios, VB mainly expects pension funds to use indexation as the way to reach their goal.

"Because indexation applies to all participants and involves a much longer period, it is much more effective than raising premiums which are only paid by workers," explained Bram van Els, spokesman for the VB.

Many pension funds were last year able to grant their participants part of the indexation they missed out on in previous years, after shortfalls following the market crisis in 2001 and 2002, according to the association.

VB is the lobbying organisation of 82 industry-wide pension funds, representing three-quarters of all participants in collective schemes.