Dutch plan pension cuts, economy to suffer

* ABP, others may cut pensions between 0.5 to 7 pct

* Economy to suffer 0.1-0.2 pct points

* No impact seen on govt finances

AMSTERDAM, Jan 19 - Some of the Netherlands' biggest pension funds, including ABP, plan pay-out cuts of as much as 7 percent next year, which will affect more than a million retirees and hit consumer confidence further at a time when the Dutch economy is already shrinking.

Funding shortages at Dutch pension funds, which manage 835 billion euros in assets, may also hurt investments and employment as Dutch companies are sometimes required to make additional payments to pension funds to plug the funding gaps.

Dutch civil servants pension fund ABP, the world's third largest, and metal workers funds PME and PMT said on Thursday they may have to cut pension pay-outs from April next year by between 0.5 and 7 percent because they are underfunded.

Lower payments from the three funds, which jointly pay pensions to almost 1.1 million retirees and manage pensions for a few million workers, are expected to hurt consumer spending and consumer confidence.

"House prices are under pressure. Stock markets have started well this year but we don't know how that continues with the euro zone crisis. If this comes on top of it, it won't help bring consumers back to the shops," said ING economist Dimitry Fleming.

The effects on the economy will not be very big, Fleming said, calculating that the impact would be about 0.1 percentage point less economic growth, based on central bank predictions that some 40 percent of pension funds cut payments by 2.5 percent on average.

But it would not help the Dutch economy, which shrank in the third quarter last year and is expected to shrink 0.5 percent in 2012.

Economic growth could be about 0.15 percentage points less annually because of the pension cuts, higher pension premiums, the absence of inflation indexation, and company contributions to pension funds, a Dutch central bank study showed in 2009.

Economists stopped short of saying this will impact Dutch government finances, which are expected to show a budget deficit of 4.1 percent of gross domestic product (GDP) this year and debt level of 68.2 percent.

The three pension funds, whose funding shortages run up to 12.5 percent of liabilities, will decide at the end of this year whether pension cuts are needed.

Some smaller pension funds, such as a fund for pharmacists, have already cut pension payments last year.

Some Dutch companies, including mail group PostNL, must contribute to a pension fund if there is a funding shortage.

Chemical storage firm Vopak said last month it would add 50 million euros to its Dutch pension funds. (Reporting by Gilbert Kreijger; Editing by Sara Webb)