NETHERLANDS - The recovery of BPF Bouw, the €26bn pension fund for the Dutch building industry, has been so successful this year that it is now planning to grant all participants indexation of 1.45% from next year.
The pension fund's cover ratio rose to almost 112% by the end of October, according to Franck Erkens, spokesman for BPF Bouw.
A Dutch pension fund is allowed to grant indexation if its funding ratio is over 105%. However, BPF Bouw's indexation is only partial compensation for salary inflation, which has so far reached 2.27% in 2009, added Erkens.
The funding ratio of BPF Bouw was 141% at the start of 2008, but fell to an absolute low of 99.4% by the end of March this year, following turbulent financial markets and the ensuing economic crisis.
The scheme's recovery plan is designed to reach its required financial reserves of 118.2% in 2020.
At the same time as announcing indexation payments, the scheme has decided to raise the contributions for its average salary pension arrangements by two percentage points to 20.9%.
This rise in contributions is being limited, thanks to a faster financial recovery than expected, as the new premium level had initially been set at 22.2%, confirmed Erkens.
Active participants of the industry-wide scheme need to pay between 0.3% and 1.2% of the announced premium rise, depending on the section of the BPF Bouw scheme they belong to.
BPF Bouw - managed by BPF Bouwinvest and pensions provider Cordares - has approximately 846,000 members, of which 210,000 are active and over 209,000 are pensioners.
The scheme has 15,000 affiliated employers within the building industry.