Pensioen Federatie chairman, Ger Jaarsma, has warned against delays to pension reform in the Netherlands, stating that the sooner the Future Pensions Act is introduced, the better.

The act is due to be discussed in the House of Representatives soon, but some have been calling for a postponement amid high inflation.

Jaarsma said he did not think this was a good idea, noting that the nation has been waiting more than a decade for legislation to ‘future-proof’ the Dutch pension system.

“Current legislation is dated,” he continued. “Promises are made about the level of pension benefits that can only be fulfilled by maintaining substantial buffers. That is the main reason why so little has been indexed in recent years.”

The new law would put an end to this, Jaarsma added, and a delay in its introduction is therefore not desirable as the industry wants faster indexing.

He also warned against postponement due to high inflation and while he acknowledged that inflation was exceptionally high, the idea that this leads to an irresponsible level of uncertainty “is wrong”.

Jaarsma pointed out that everything is uncertain in this world, and there was not guarantee that the future would provide any more certainty than we are currently experiencing.

“What matters is that you set up a system that is flexible enough to deal with all these – and undoubtedly many more – uncertainties,” he said.

“The Future Pensions Act provides for such a system. This law responds to current developments in the labour market. That law puts an end to promises that are difficult to keep.

“Retirees benefit from this, because an increase in their pensions is sooner in sight. Young people benefit from this, because when they retire, the pots will still be filled.

“Of course, after the introduction of the new law, pensions may also fall, depending on the development of the economy. That's the price you pay for more flexibility. But on balance, retirees are improving.

“Moreover, it is an illusion to think that the current system offers complete security. Because if the coverage ratio of the pension funds falls below one hundred percent, then the pensions will really go down, whatever the opponents of the new law claim – or rather suggest.”

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