Finance

Cabinet is looking at relaxation of the rules for pension funds

The relaxation is being looked at after pressure from the PvdA, de Volkskrant reports. That party wants the cabinet to take action; if this does not happen, the PvdA would withdraw its support for the reform of the pension system.

Current rules will not allow the pensions of millions of retirees to be increased next year, the largest funds recently warned.

Coverage

Pension funds are obliged to have at least 1 euro and 10 cents in cash for every euro they have to pay out in the future. This is the so-called funding ratio, the percentage at which you can see at a glance how a fund is doing.

This limit will be lowered from 110 percent to 105 percent. This means that funds that only have 1.05 euros in cash per euro that they still have to pay out are allowed to increase the pensions.

Most funds have not increased their pensions in recent years because of the low interest rates. In fact, many funds even threatened to be cut because they were in a financially bad position.

Raising the limit offers 38 funds the opportunity to increase, the newspaper reports based on figures from regulator De Nederlandsche Bank. That is especially good news for the 394,000 retirees who are affiliated with these funds.

Pensions

In addition, the pensions of other participants of these funds are worth more on paper. This concerns the pensions of 740,000 workers and 1.9 million former participants who are now affiliated with another fund.

The easing has not yet had a direct effect for the four largest pension funds in our country. At the end of the third quarter, they were still below or just below the 100 percent funding ratio.

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