Over the past few years, Dutch elderly people together have missed out on 55.5 billion euros in pension money. It is the undistributed compensation for increased prices from 2008 to 2021. Inflation in that period totaled 26.7 percent, but almost all pensions remained at zero. Some pension funds even lowered pensions.
The Dutch Central Bank (DNB) and the government introduced strict calculation rules for the calculation of pensions in 2007; these also had an impact on the pension accrual for employed persons. In the same period, salaried employees built up 78.7 billion euros less in pension entitlements than if inflation had been compensated. This enormous treasure – a total of 134 billion euros – is in the pension fund coffers.
About the author
Cees Grimbergen is a journalist and has been making the documentary series Zwarte Zwanen for Omroep Max since 2013, about power and abuse in the pension world. Tuesday evening part 9: Why simple when it can be difficult?, NPO2.
Just a blank line for your, possible, surprise. Then I immediately explain that the simple mantra ‘the elderly eat up the pensions of the young’ is not correct. Young people who lament that ‘once we are 68 years old, there will be nothing left in the pension pot’, are not aware of the pension wealth. And not the pension system. Which is not a reproach, given the extreme complexity created.
Complicated
These figures are not mentioned in the (even) complicated contribution of DNB supervisory director Else Bos (O&D, 30 June). De Nederlandsche Bank and Bos do not like clear communication. As creators of the TV documentary series that has been running since 2013 Black Swans we examined the public statistics of Statistics Netherlands and DNB and presented the above calculations. DNB’s response? ‘Such a calculation forms a parallel reality, because the conditions for indexation are simply not met.’
Last week, in the 8th episode of Black SwansArjen Siegmann, former DNB researcher and whistleblower, called the actuarial interest rate devised by De Nederlandsche Bank a ‘major fallacy’. With this ‘risk-free actuarial interest’, the pension funds do not look at the actual return achieved. Due to this super cautious approach, the pension funds stopped indexing. At the beginning of 2008, the pension capital amounted to EUR 683 billion. That is now 1,700 billion euros.
As documentary makers we have become accustomed to evasive reasoning from the pension industry, which has legal ownership of other people’s money. Else Bos is a pension bobo and part of the financial biotope who has done well and hates critical questions. ‘The sector’, as they describe themselves, plays nice weather with other people’s money. Years ago I would never have written such a sentence. Now I do it without hesitation. As a journalist, I got to know the mechanisms in the pension world in nine documentaries.
Political courage
In her piece, Else Bos does not suggest a rapid adjustment of the existing pension law with regard to the actuarial interest. She exults that the new pension system will soon be the solution. And she suggests that this new ‘Future Pensions Act’ makes indexing possible. Remarkably enough, the government parties, as well as PvdA and GroenLinks, also fail to correct the ‘major fallacy’ of the actuarial interest rate and to allow ‘catch-up indexation’ over the past fourteen years. For both retirees and workers.
When will politicians in The Hague show courage on this point?
Partly due to intensive lobbying by the pension sector, the House of Representatives and the Senate are now focusing on the new Future Pensions Act (WTP), which must be dealt with quickly this autumn. In the pension sector they dance on the tables. When the law is passed, thousands of actuaries, econometricians and other pension professionals will be given years of employment. The introduction of the WTP will cost at least 1 billion euros, raised by the pension premium payers.
blackmail strategy
DNB director Bos wants ‘the sector’ to start implementing the new Pension Act now. “Don’t wait for the legislation to be ready,” she shamelessly said at pension conferences as early as 2021. While there is no law yet. The pension industry is doing everything possible to get this new pension law passed. In recent weeks, for example, some precautionary rules were relaxed very quickly, which led to the announcement of pension increases, albeit tiny, at pension funds ABP, PFZW and PME.
But there is a catch: only funds that solemnly promise to implement the new – so not yet adopted – pension law (WTP) are allowed to apply the small pension increase. An Order in Council was even drawn up for this, signed by the king on 7 June. It is a blackmail strategy never applied before by the government and ‘the sector’: you only get your tiny pension increase if you support an upcoming law.
And the feasibility of the new pension law? That will be a bureaucratic and administrative spaghetti, compared to which the regulations and organization surrounding childcare, rent and health care benefits are a manageable macaroni.