The €700m pension fund for Alcatel-Lucent has said it is accelerating its liquidation process to benefit from the recent decline in equity markets.
In its newsletter, the pension fund pointed out that the equity market downturn had had little effect on it due to its limited stock holdings.
Bridging a funding gap with any potential merger partner, it said, would therefore now be easier.
Last June, regulator De Nederlandsche Bank (DNB) ordered the scheme to be liquidated as of 1 January 2016.
The regulator’s decision came after the pension fund’s sponsor terminated its contract for pension provision in 2012.
The scheme also reported a funding shortfall.
Subsequently, the pension fund lost two appeals to postpone the regulator’s initial liquidation deadline.
Now, funding gaps with potential merger partners have narrowed so much that the Pensioenfonds Alcatel-Lucent believes it will be able to transfer pension rights at “no more than a small discount”.
The pension fund, based on its funding last July, said it would have faced rights cut as high as 6%, depending on its merger partner.
It added that transferring pension rights to an insurer would have entailed cuts of 8%.
As of the end of August, the Alcatel-Lucent scheme’s coverage ratio stood at 96.8%.
In its newsletter, the board said it was now negotiating with two industry-wide schemes about a rights transfer.
The pension fund also indicated that its preferred option had been the new ‘general’ pension fund APF, scheduled to come into force on 1 January 2016.
However, it claimed the regulator had denied the scheme the “necessary leeway” to use the new vehicle.
The regulator also pointed out that the scheme’s risk profile would not have improved by using the APF.
The pension fund said it was now waiting for a court verdict on an appeal regarding recovery payments demanded from its sponsor company.