invests half its capital in corporate equities, with a duration gap of around ten years, and a cover ratio of 130 %, has a chance of about 2. 5 % of facing under - funding within the next year. this degree of risk, viz. 1 in 40, is considered acceptable by politicians. however, when the cover ratio falls to 105 %, this chance rises to about 1 in 3. i can hear you thinking that this is a totally different matter and you are right. so you see how important it is to look at both the chance and the measure of under - funding. as soon as the average pension fund ’ s cover ratio falls below the required 130 %, not just the risk of under - funding goes up, but so does the measure of under - funding. ( when a fund ’ s cover ratio is 105 %, that ratio will, by the time the fund is confronted by under - funding within one year, have dropped to 90 %. ) the point i wish to make is that, if our pension system is to be durable, such a situation needs to be avoided. prevention is better than cure. we saw that low cover ratios necessitate much higher contributions, as well as lower indexation. in addition, low cover ratios hamper value transfers and labour mobility, and create uncertainty when the sponsor goes bankrupt. adequate buffers, on the other hand, allow of stable contributions and lasting indexation. buffers furthermore offer protection against downward risks, as well as the advantage of extra return, which can be used to realise indexation ambitions. but back in 2002, there was no question of sustainability. in its quarterly bulletin, the nederlandsche bank began to draw attention to the pension sector ’ s financial position. one article was titled “ sustainability under pressure ”. the tone was sombre. today, more than three years later, much has changed for the better. far - reaching measures have been taken to put the dutch pension system back on track again. the number of pension funds with a funding problem has fallen drastically, contributions are practically cost - effective again and the average cover ratio has all but recovered to the minimum desired level. this is good news. transparency and sustainability go hand in hand now let ’ s look at my second message : sustainability and transparency go hand in hand. pension funds need to be sufficiently transparent about what their participants can expect to get. transparency rules out surprises and thus enhances confidence among participants. this is a

also expressed shortly after the end of world war ii. it was winston churchill, who in 1946 in zurich, argued in favour of “ a kind of united states of europe ”. in april of that same year, the need for a single european currency was voiced by the new post - war president of the nederlandsche bank, marius wilhelm holtrop, who wanted a strong and sound guilder which in due course would merge into one european currency. the past fifty years have shown, that the advent of a single european currency will certainly not include the “ united states of europe ” that churchill was talking about. soon after 1946, europe became politically divided into eastern and western hemispheres due to the cold war. with the foundation of the european economic community ( eec ) in 1957, western europe took the lead by starting economic cooperation. the objective of the treaty of rome, on which the eec was based, was to create a common market between france, west germany, italy and the benelux countries. this objective resulted in a customs union which became effective on 1 july 1968. however, the treaty remained vague about other aspects of economic cooperation. economic policy, for example, was considered a matter of common interest. as regards monetary cooperation, coordination was recommended, the exchange rate policy being regarded as a matter of common interest as well. the plan for economic integration designed in rome was not an objective in itself. it was based on political grounds. after all, the treaty aimed at achieving an “ ever closer union among the european peoples ” through economic integration. during the 1969 summit in the hague, representatives of the six member states agreed with the idea of the newly elected german chancellor willy brandt that this had to be realised via economic and monetary union ( emu ). the then prime minister of luxembourg, paul werner, came up with a detailed plan that was named after him. according to this plan, emu would be materialised in stages. in the final stage, monetary and budgetary competences of the national states were to be transferred to community bodies established for that purpose. and so, werner ’ s ideas were considerably more far - reaching than the agreements reached in rome thirteen years earlier. nonetheless, the philosophy of economic integration advocated in rome remained the moving spirit behind political cooperation : “ it is true that we need not achieve a european confederation or federation tomorrow. but to arrive at this ultimate goal, we must first take the step of creating an economic and monetary currency union ”, werner