Dutch pension funds hit hard by financial crisis

Special Report:Global Financial Crisis

BRUSSELS, Dec. 8 (Chinese media) -- The assets of a majority of the Netherlands' large pension funds have fallen well below the legal minimum cover ratio of 105 percent in recent weeks due to the financial crisis, Dutch media reported on Monday.

According to the Dutch Association of Industry-wide Pension Funds, five of the 10 biggest Dutch pension funds had a coverage ratio of between 85 and 95 percent at the end of November.

This means they could only meet 85 to 95 percent of their financial obligations. The funds are for the national civil service, the health, welfare and transport sectors and the steel industry.

Consequently, they will not raise pay-outs in line with inflation next year, which will have an adverse effect on pensioners' purchasing power, the reports said.

The healthcare sector pension fund PZW, formerly PGGM, said that its coverage ratio had fallen to around 95 percent. PZW is the second biggest Dutch pension fund with assets of almost 90 billion euros (70.3 billion U.S. dollars).

The third largest Dutch fund, which covers the engineering sector and manages 30 billion euros, said its coverage ratio was down to 86 percent.

The civil service pension fund ABP, the biggest fund in the country with assets of 200 billion euros, said it is still above the legal limit of 105 percent but declined to give specific figures.

The funds are affected by losses on investments and by the rapid decline in interest rates, leading to increases in pension liabilities.

The 10 funds guarantee the pensions of 4 million Dutch retirees, which are half of all pensioners in the Netherlands.

There are 600 pension funds in the Netherlands. The Dutch central bank has demanded the funds draw up plans to restore the missing assets before April 1.

However, the director of the Dutch Association of Industry-wide Pension Funds has said there is no reason for panic. He said the funds have more than enough money to pay out pensions for the foreseeable future. (1 euro equals 1.28 U.S. dollars)