Dutch Pension Law Headed for January 2007 Effective Date

October 25, 2006 (PLANSPONSOR.com) - A new Dutch law that obligates pension funds to determine assets and liabilities on the basis of market rates will be effective as of January 1, 2007, the Dutch parliament decided Tuesday.

While the Dutch senate must still agree, the extra approval is seen as a formality, a government spokeswoman said, according to a Reuters news report.

Current rules require pension funds to use a fixed 4% discount rate although many have already voluntarily switched to market rates.

The Dutch pension fund industry is closely watched by investors and market participants, according to the news report. UBS has estimated the size of pension funds in the Netherlands is around 120% of its gross domestic product (GDP), compared with 73% in Britain, 66% in the United States and 57% in Japan.

At the end of the second quarter of 2006 Dutch pension funds held 640 billion euros ($813.2 billion) in assets, according to statistics compiled by the Dutch central bank.