NETHERLANDS - Four Dutch pension schemes will be cutting their payments next year if they continue failing to meet their recovery plans, said the Pension Federation.
The cuts will affect 5,000 retirees and will go into effect on 1 April 2012. The four funds are the Company Pension Fund Foundation of Meat and Convenience Food Industry (VLEP), Foundation Culture Fund, Royal Leerdam and Stichting ISS Pension Fund.
Funds were given until 11 February to submit their fund evaluation to the National Bank. Funds did not necessarily have to be 105% funded, but had to show they were able to meet their recovery plan goals to ensure recovery by 2015.
In August last year, former Social Affairs and Employment minister Piet Hein Donner announced 14 funds may have to cut payments from January 2011, out of which only five funds -whose identities were not revealed - did so (Global Pensions: 19 August 2010). This year however, the funds agreed to make themselves known. The National Bank will finalise the details of the cuts at the end of the year.
The federation said the funding ratios of the remaining 336 pension funds were increasing thanks to rising interest rates but were restricted to grow further because of longevity risks. Nevertheless, it said it was encouraging schemes to consider other measures such as raising premiums to tackle the problem.
A Federation spokesperson said: "You can solve a problem with cuts but you can also partly solve it by higher premiums and other measures and it's always about how you use this combination of measures to tackle the problem. It's not always about cuts but the package of measurements you want to take to get healthy.
"It is a positive development that the list is so small and the funds are also relatively small. If the situation does not change this will affect 5,000 retirees which is a small percentage considering the pension population as a whole."
The top stories this week were the High Court's decision to block the £12bn annuity transfer from Prudential to Rothesay Life, and a separate court ruling that 'raises the bar' for pension rectification exercises.
Guaranteed minimum pension (GMP) equalisation has soared to the top of pension schemes' to-do lists, with 58% stating it is a priority project, research from Equiniti has revealed.
Professional Pensions is holding its defined contribution (DC) conference on 4 September.