NETHERLANDS - BPF Schilders, the pension fund for the painting, glazing and finishing sector, will not grant its members an indexation payment in the short-term, but will reconsider its decision next summer.

Offiicials said the industry-wide scheme will look again at the options for compensating inflation rises at the end of the second quarter, in accordance with its indexation rules.

The Bedrijfspensioenfonds voor het Schilders-, Glaszetters- en Afwerkingsbedrijf, has also decided to keep the participants' contributions at 26.5% as the scheme had a cover ratio of 109% at the end of November.

BPF Schilders granted an indexation last summer of 2.36%, which exceeded the consumers' index for the whole of 2008.

The scheme's ambition is to pay its 150,000 participants full compensation for inflation, which is based on the salary index and average salary arrangements, but any indexation is conditional to the scheme's financial position.

The pension fund has reported a negative return of -0.6% last year and its assets amounted to almost €3.5bn at the end of 2007.

Its funding ratio had also dropped from almost 148% at the end of last year to 136% at the end of the first quarter 2008.

BPF Schilders has hedged 93% of the interest risk on its liabilities, largely through swaps and, to a lesser extent, through ‘swaptions', said officials.

The scheme has hedged 49% of its currency risks on non-euro investments, although US dollar risk has been fully hedged.