Going Dutch or going bust

Last week, three associations of Dutch pension funds’ issued a quite startling warning to the Dutch Parliament: “If interest rates remain so low” they said “the the entire pensions system will be undermined”, adding that insurers could take a serious hit as well.

Thing is, Dutch pension funds are stuck in a tricky dilemma: they’re promising their savers annual returns of 3.75 percent or more, but long term interest rates are substantially lower than that (down to 2.13 percent in Germany).

This has led to a big uproar in the Netherlands, as it emerged that as many as fourteen Dutch pension funds could be forced to backtrack on their obligations - for the first time ever. This, in turn, would result in a 14 percent loss for some 150,000 Dutch pensioners. The Dutch pension system is very much designed around a large number of private pension funds, which traditionally have yielded good returns for Dutch citizens - so the pain would be felt.

The Dutch National Bank, effectively working under the ECB, argued that the pension funds had themselves to blame for the problems. But Albert Roëll of Kas Bank blamed the situation on the continuing low interest rates and the cheap money the ECB has distributed to banks, in the wake of the sovereign debt crisis in the eurozone.

The Dutch government has now rejected demands from the pension funds to relax capital standards (which they argue would be one of the few ways to address the problems. Adjusting interes rates would be another, but the Netherlands has given up its control over interest rate policy) .

So what do we see?

- The Dutch pension system, which is world famous for its large share of private pensions, is coming under strain because of the ECB’s low interest rates. These rates are in many ways now intended to serve struggling periphery economies in the eurozone and big banks who did unwise investments in these same economies.

- In turn, Dutch pension funds are forced to take on more risks (holding less capital) in order to cope with these strains. The alternative is to cut returns, meaning less money for the country’s pensioners.

- Another example of the problems with a one-size-fits all monetary policy in an area with such diverging economies as the eurozone.

UN agency urges European nations not to deport Iraqi refugees to unsafe areas

The United Nations refugee agency today voiced concern about ongoing deportations of Iraqis from Western European countries back to violence-prone areas of their homeland, stressing that they should continue to benefit from international protection.

Peacekeeping and disarmament focus of Ban’s talks with Austrian officials

Secretary-General Ban Ki-moon met with senior Austrian officials today in Vienna and discussed a range of issues, including peacekeeping and disarmament.

UN-backed anti-corruption academy inaugurated in Austria

An anti-corruption academy co-sponsored by the United Nations opened today in Austria with the aim of filling the rising global need for training, research and contemporary measures and techniques in the fight against corruption.

Ban ‘encouraged’ by start of direct peace talks between Israelis, Palestinians

Secretary-General Ban Ki-moon says he is “very much encouraged” that direct peace talks between Israeli and Palestinian leaders have been launched today and called for those talks to tackle core issues so that a lasting peace can be reached in the Middle East.

Today’s global challenges require nations coming together as partners - Ban

No one nation, however large or powerful, can solve all problems on its own, Secretary-General Ban Ki-moon said today, stressing that it is vital for countries to work together in partnership to tackle common challenges.

What guy?

Cyprus leaders to intensify UN-led reunification talks

The leaders of Cyprus’ Greek and Turkish communities will hold intensive talks next week as part of United Nations-led reunification negotiations, a senior official with the world body announced today.

UN agency signs cooperation deal with European nuclear research organization

The United Nations agency tasked with helping to protect intellectual property has struck a cooperation agreement with the European Organization for Nuclear Research (CERN), known as the world’s largest particle physics laboratory.

Turkey, a major ship recycling nation, signs UN convention

Turkey, one of the five major ship recycling nations in the world, has signed the United Nations-backed treaty promoting the environmentally friendly recycling of ships.