When one thinks of pensions crisis, the
state of Illinois -
with its woefully underfunded retirement system which issues bonds just
to fund its existing pension benefits - usually comes to mind. Which is
why it is surprising that the first state that may suffer substantial
pension cuts is one that actually has one of the world's best-funded,
and most generous, pension systems.
According to the FT,
millions of Dutch pensioners are facing
material cuts to their retirement income for the first time next year as
the Dutch government scrambles to avert a crisis to the country's €1.6
trillion pension system. And while a last minute intervention
by the government may avoid significant cuts to pensions next year - and
a revolt by trade unions - if only temporarily, the world finds itself
transfixed by the problems facing the Dutch retirement system as it
provides an early indication of a wider global pensions funding
shortfall, not to mention potential mass unrest once retirees across
some of the world's wealthiest nations suddenly finds themselves with
facing haircuts to what they previously believed were unalterable
retirement incomes.
At the core of the Dutch cash crunch is the ECB's negative interest
rate policy, which has sent bond yields to record negative territory
across the eurozone, and crippled returns analysis while pushing up the
funding requirements of Dutch pension funds.
Ahead of a parliamentary debate on Thursday on this hot topic issue,
the Dutch minister for social affairs and employment, Wouter Koolmees,
will write to lawmakers to outline his response to the pension
industry’s problems, the FT reported.
Read more: Netherlands Headed For Unprecedented Crisis: Millions Of Retirees Face Pensions Cuts Thanks To The ECB | Zero Hedge
