Dutch pension system is broken, says Management Team
We Dutch like to pride ourselves in our pension funds.
“The best in the world,” our politicos holler. We may not have the money printing machine the Norwegians have with their oil reserves, but we still have the highest pay-outs in the world, not to mention that the combined funds have 800 billion euros in the bank.
A mere smoke screen, business magazine Management Team warns. It lists 10 myths that the partners of the polder model like to spread, and counters with its own worrisome truths:
- Seventy percent of the built up reserve will be paid out in the next 20 years.
- You only get back what you put in if you started paying when you were 20.
- Expect to receive at best only 35% of your last earned salary if you start paying into a pension fund now.
- There is 800 billion euro in the bank, but that is a shortage of 240 billion euro.
- Re-indexed pensions are payed from premium hikes, not from investment yields.
The pension funds claim that ‘on average’ they are healthy, but Management Team points out that they calculate an unexpected average. Instead of looking at the total coverage, they add up the coverage percentages of all the small, healthy funds with those of the huge unhealthy funds.
Oddly enough, our pension reserve could be used under European rules to calculate a lower national debt, but instead the current government prefers not to do that. The Eamelje.net blogger thinks this is so that its constituent partners can keep fear mongering, as fear begets power.
Working in the Pension business in Montreal, this post is particularly interesting to me!
Thank you for keeping me posted about everything that is happening if The Netherlands. I really like this blog!
Mat