The pensions of several million employees and retirees are expected to be increased as early as next year. The cabinet is prepared to relax the rules for this, said outgoing State Secretary Dennis Wiersma (Social Affairs, VVD) to the House of Representatives on Thursday.
Opposition party PvdA had demanded this and jeopardized its support for the planned pension reform. The four government parties desperately need these in the Senate.
Now pension funds can only make an inflation correction if their so-called funding ratio has averaged 110 percent over the past year. This means that for every euro needed to guarantee future pensions, a fund has another 10 cents in cash.
The government had previously promised that it is prepared to lower this lower limit to 105 percent. That lower limit will then apply until the major system overhaul, which funds expect to implement around 2026.
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Wiersma had only wanted to introduce this lower lower limit after the House of Representatives and the Senate have approved the new pension law, which regulates the major system reform. That is expected by the end of next year at the earliest.
Now Wiersma – who replaces Minister Wouter Koolmees (D66) as long as that informateur – has said that he wants to make the relaxation possible in the summer. Funds that are already in good shape on January 1 can therefore increase their pensions retroactively, over the first months of 2022.
‘Handle in the greenhouse’
The government will, however, attach a number of conditions to a faster pension increase. For example, pension funds may only use the lower lower limit if they intend to implement the major system reform. They must also clarify the effect of a faster pension increase on different generations.
Older employees and retirees benefit most from a pension increase. As a result, less money remains in the pension fund for younger generations. On Wednesday, professors of economics Roel Beetsma and Sweder van Wijnbergen (University of Amsterdam) mentioned this plan in NRC a “hold in the coffers of the young by the elderly.”
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Wiersma is now going to record the relaxation and the associated conditions in a scheme. The intention is that he – or a successor – will send it to the House of Representatives next spring, along with the new pension law.
The four largest funds are not allowed to distribute a pension increase for the time being, not even after this adjustment of the rules. The average coverage ratio of the ABP pension fund (civil servants and teachers) has been 101.5 percent since January. That of PFZW (including healthcare staff) 98.5 percent. Many small and medium-sized funds are in better shape.
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