Pension schemes in the Netherlands will have to contribute virtually nothing when it comes to the Greek rescue plan, the Ministry of Finance have said last week in a statement

The statement came as a reply to a letter sent by the Dutch pension federation (Pensioenfederatie) to Finance Minister Jan Cees de Jager, urging him to exclude pension schemes from the bail-out obligation.

In the response released by government, the treasury says that only financial institutions which hold bonds which mature before 2020 are included in the plans created to help out Greece.

"Most of the Greek bonds held by schemes in the Netherlands extend this period," said a spokeswoman for the treasury, "they are not included in the plans."

The Pensioenfederatie, which represents the Dutch schemes, says no payments should have to be made by the pension funds because they have already written off most of their losses by decreasing their allocation to bonds over the last two years. 

At the end of 2010 Dutch pension funds held €600m in Greek sovereign bonds. The largest share, €500m, was held by ABP, the civil servants pension scheme. In 2009 the scheme still held € 2,3bn. Many schemes in the Netherlands have held Greek bonds for some time because they are inflation-linked, something Dutch bonds are not.

As a signee of the letter sent by the Pensioenfederatie, ABP also believes pension schemes merely have to think about their duty to their members. "Supporting the Greek government or the population of Greece is not a part of this responsibility," says ABP. The federation and the scheme both say that even had they supported the plan to help out Greece it would still be against the duties as set out in the Pensions Act – which are legally binding.

The schemes disagree with the Finance Minister who said it would be very damaging for pension funds if they would not support Greece. ABP have said that these statements are "exaggerated" and "do not help to restore faith in the pensions industry".

Joop van Lunteren, vice chairman at ABP said: 'If pension schemes would want to invest in Greek sovereign bonds I think we should not even be allowed to do that now. After all, we are here to look after our members' interests."

He also said that by writing off the losses, Dutch schemes have already contributed to assisting Greece in their recovery.

First published 02.08.2011

azeevalkink@wilmington.co.uk