Knot: as soon as possible to new pension system – Financieele Dagblad

That pension funds are now being hit so hard by the interest rate policy of the European Central Bank, let’s again that the current pension system with the hard pension commitments no longer tenable. That allowed Klaas Knot, president of the Dutch Central Bank (DNB) on Thursday at the presentation of the annual figures from the central bank. He pleaded that the Netherlands switch as quickly as possible to a new pension system, which participants no longer promised pension. “Because of that firm promises, the current pension system very badly withstand the low interest rates, ‘Knot.

Threat

The Dutch pension funds have in recent months seen their funding levels plummet. The coverage ratios show the extent to which pension funds can pay pensions. The situation is even worse as a threat of a new round discounts. The pension sector attributes this to the aggressive ECB monetary policy. Because of their long-term pension obligations are largely dependent on long-term rates. A decline in interest rates, directly means a deterioration in their financial situation.

Sensitive

DNB recognizes that the Netherlands are funded pension system is vulnerable to low interest rates. Knot said he has also brought this to the ECB meeting. He has since pointed out that the interest rate policy in economies like the Netherlands, where it is saved for old age, could backfire. Because people are uncertain about their retirement since they can tend to get savings just to go more, rather than less. “But this is true only for 5.8% of the euro area. The ECB must weigh what the euro area as a whole is the best policy, “said Knot.

The pension industry believes that the Cabinet pension savers need to come to the rescue, otherwise they will pay the bill for the ECB policy. Employers and workers, traditionally sit on the boards of the funds, have the government Wednesday in a joint letter summoned to consult quickly with them. They want to discuss how the negative consequences of the ECB’s policy can be tackled. DNB does not seem to see the temporary stretching of the rules. By raising the discount rate, the obligations are calculated, DNB will at least know nothing. “Then you move only the problems but to the next generation,” said Frank Eldersson, director of pensions DNB.

transition Issues

DNB particularly think can provide the rapid transition to a new system solace. Asked whether a new system of discounts can be prevented, Elderson be said, however, that no money can be conjured. “It is therefore good that a number of leading pension funds is also honest with participants about what awaits them is possible. Not too high expectations more, we welcome that. “

A new pension system is important according to DNB that there elderly else may be invested than for young people. Older people can just take more risks increasing need for security and youth. At present breed both the government and the Social and Economic Council on a scheme in which participants have individual pots, but true to certain risks are shared collectively.

DNB board member Job Swank is in the SER and request said it was the right direction, but there is still much debate about the distribution rules. How to distribute for example, the current pot of around € 1,400 billion on individual jars? “There is a clear trechtering about where we are going, but the transition is very complicated. Whether we get is can still be sold to the question and it should then also at the grassroots out, “says Swank.