NETHERLANDS - A government proposal to simplify collective defined contribution arrangements has not delivered the special flexibility required, according to a Watson Wyatt researcher.
Social affairs minister Aart Jan de Geus (pictured) recently announced that the period in which such pension funds could impose discount decisions on pensions claims and rights would be reduced from one year to one month.
But the move fell well short of the far-reaching concessions sought by social partners such as the Dutch company pension fund association OPF, argued Roland Van Gaalen, research partner at Watson Wyatt in the Netherlands.
“Some news stories here have said the government has made it easier to introduce these collective DC [CDC] plans, but I disagree with that,” he commented.
“It’s just a minor change. To administer a CDC plan you need more flexibility then the current rules and the proposed rules appear to give.”xCritics of the proposal claim the fundamental issue at stake is that CDC plans are not governed by their own specialist rules within the Pensions Bill, set to be introduced 1 January 2007.
The CDC plans set up to date currently fall under defined benefit rules, explained Van Galen, which means benefits accrued under them must only be reduced as a last resort, not as a matter of policy.
“With a CDC plan, you should be able to have benefits reductions, and to apply those as a matter of policy,” he argued.
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