A new round of controversial discounts on pensions is no longer excluded now the largest funds have become massively underfunded by falling interest rates and poor stock exchanges. The second largest pension fund in the Netherlands, Care and Welfare, said the participants will advance to prepare for bad news.
Ability in short, which was mention yesterday at the presentation of the annual results, is a major setback for the pension world. When introducing new rules two years ago was the idea that funds almost never would have shortened. Compared with the old rules, a pension fund nowadays are much deeper in the pit before the contested measure is applied, but now that threshold for many funds is not far off
Coverage
The big funds saw their funding plummet in the last year and are almost all below 100%. The largest fund, ABP, was the end of December at 97.2%. Health and Social Services had dropped to 95%. The metal PME fund gained 96.4% and the fund for the construction is as always sharply higher, up almost 109%.
A Fund should only be cut if the so-called critical coverage is breached. The percentage varies by fund; it is at most around 90%. Decisive is the balance at December 31st. That means that any reductions only start next year.
Realistic communicate
Due to the turmoil in global markets and lower interest rates, the coverage of many funds dropped even further than the already low year-end figures. A spokesman for PME says’ rebates in 2017 not to exclude. “
Retirement discounts should have been past through new rules
Low interest rates and poor stock markets bring critical limit in sight
Directeur Peter Borgdorff of Health and Social Services comes with the same message. “The difference between the 95% we went along the year and our critical coverage ratio of 87% is not great anymore. I hope we rebates do not have to do with it, but I want to communicate realistic direction participants. I want to warn that it could be that reductions lurk. ” In January, the coverage continued to fall in his fund, but it has not yet fallen below 90%.
ready
To such communication has the largest fund in the Netherlands and one of the largest in the world, ABP, no need. A spokeswoman says the large fund ‘not ready’ what is currently the coverage is critical, nor the impact of the stock market slump in January, the figures
Indexation of benefits is already completely out of the picture for most funds. “I’ve said that over the next five years will be no indexation. We love now aware that it will take more than five years, and I have no end date ‘, says Borgdorff.
Previous year the pension burden of a few adjustments to the rules for calculating the coverage ratio. That, plus the developments in interest rates and stock markets, made the big funds saw their funding in one year by 4 to 7 percentage points. Most dramatically was Health and Welfare, which was hard hit by lower oil prices.
No Warranties
According Borgdorff the pensions on a different footing to be shod. He wrote in the presentation of the figures the vision director Gerard Belts Pension Federation last week, in this newspaper. Belts wants to get rid of the system where people deposit money and no pot of capital to get back there, but papers rights to a future payment.
This type of benefit guarantees does not work anymore, says the federation and also says Borgdorff. “There are no guarantees. Not in pensions, and actually not in life. With many uncertainties people can handle it, but when they want to guarantee pensions. But I do not believe in it. “
No comments:
Post a Comment