Netherlands Spares Pensioners Cuts in 2020 as Funds Rebuild Ratios
Millions of Dutch pensioners were spared cuts to their retirement income in 2020 after the government granted pension funds a year’s grace period to restore sagging coverage ratios, although it said future cuts and higher premiums are likely.
The retreat by Mark Rutte’s centrist government had been widely expected, given anger among pensioners and national elections due in 2021. But the decision could hurt the reputation of the Netherlands’ pension system, often rated ‘best in the world’ and framed as an example for other countries.
Social Affairs Minister Wouter Koolmees said he would only force payout cuts next year if funds fall below a 90% coverage ratio. Previously, those with a ratio below 94-95%, including the large ABP and PZFW funds, had been on track to do so.
“I understand the wish not to lower pensions very well,” he wrote in a letter to parliament, adding that “cuts can be necessary in order to maintain support for the system as a whole”, including existing workers and young people set to join.
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