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Chemical scheme to join APF following pressure from regulator

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A Dutch chemical company’s pension scheme is to join a general pension fund (APF) following pressure from supervisor De Nederlandsche Bank.

DNB deemed the €173m pension fund of the former Chemische Industrie Uithoorn (Cindu) vulnerable because of ageing demographics and difficulties finding new board members, according to Jacco Heemskerk, the scheme’s new independent chairman.

With just 74 active partipants but more than 1,000 pensioners and 435 deferred members, Cindu was on DNB’s list of “vulnerable and not sustainable” pension funds.

The scheme had experienced difficulties coping with new legislation and finding new board members. Its annual report for 2016 showed that it didn’t comply with legislation or DNB’s code for pension funds on many issues. In addition, its investment cycle was not up to scratch and it also lacked compliance management.

As a consequence, DNB had demanded measures to ensure sound management.

Initially, the pension fund had played down the urgency for change, saying it would seek talks with similar schemes about setting up an APF.

However, following further pressure from the supervisor, Rob van Pernis, the scheme’s chair, stepped down and was replaced by Heemskerk. Heemskerk led the Dutch pension fund of Royal Bank of Scotland when it joined the Centraal Beheer APF last year.

At the moment Cindu’s board is negotiating with four APFs, according to Heemskerk.

He said a potential problem was that the employer and unions were in conflict about the pensions accrual, which had been unilaterally reduced by the sponsor. However, the unions said that they were prepared to compromise.

With a funding of almost 120% at July-end, the Pensioenfonds Cindu is financially relatively healthy. During the past 19 years, it has been able to grant 78% indexation based on the consumer index.

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