Dutch bank ABN Amro has struck an agreement with unions to transform its current €13.6bn defined benefit pension plan into a collective defined contribution (CDC) arrangement, as part of its new collective labour agreement (CAO).
The change will take effect as soon as the unions have received their members’ approval and will affect both existing and new pension rights. Rabobank opted for a similar route for its pension arrangements, whereas banc-assurer ING chose to set up two new pension funds.
Under the terms of the new CAO, ABN Amro will no longer have to address any funding shortfalls in the scheme. As compensation, the employer agreed to contribute €500m in a one-off payment.
In addition, the pension fund would receive €200m in order to pay for the planned indexation in arrears without having to put pressure on its coverage ratio, which was 122% at February-end.
The CAO negotiations have taken more time the initially expected. More than a year ago, ABN Amro consulted the unions about its plans for a new pension scheme.
The new arrangements were scheduled to come into force on 1 January 2014, affecting the pension fund’s almost 85,000 participants in total.