NETHERLANDS - The Dutch pensions industry has agreed the pensions regulator took the right approach when it gave underfunded pension schemes more time to present a recovery plan.
However, he said this week's move by the regulator (www.globalpensions.com; 10 November 2008) meant such a measure was likely to be on hold until it became clearer whether funding levels would improve next year.
He said: "Right now, it wouldn't make sense to introduce this extension, as the recovery plans will be presented later. In the meantime, funding levels might change considerably."
Agreeing with the DNB's approach, Eric van Dijk, CEO, Compendeon explained: "When extending a period from three to five years, you are basically saying that market fluctuations and volatility are such that it warrants another two years or an extra 66.7% time.
"That is a lot, taking into account that no one can look that far in the future. There is no reason to believe that this period is so extreme that it warrants this kind of loosening of the rules."
Bram van Els, spokesperson for the Dutch Association of Industry-wide Pension Funds (VB), said the VB also welcomed the DNB's decision because it allowed pension funds to take more prudent decisions with regards to their recovery plans.
He said: "While pension funds are not struggling with their cash flow, as they rely on monthly contributions for it, an extension to the recovery plan horizon could help them to shore up their balance sheet negatively affected by falling equities' values."
Rajish Sagoenie, actuary AG and executive director for actuarial services, Aon Consulting Netherlands, said, while he would not comment on current speculation about further measures that might be taken by DNB, additional support to pension funds' sponsor companies for the short-term could be positive.
He added: "Going from three years to five years could help for instance the sponsor companies hit by the crisis not to raise the premiums or to raise them less than what would be necessary if they had only three years to recover. It would definitely be of help over the short term."
A spokesperson for the DNB declined to comment on any further measures under consideration.
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