NETHERLANDS - Pensions regulator De Nederlandsche Bank has rejected the recovery plan from the €640m pension fund of motorists' lobbying organisation ANWB.
Officials said rather than decreasing the build-up of pension rights, as the scheme had proposed, the DNB wants employers to continue to pay contributions for pensions that have been agreed by statute.
This is the first time the DNB has seen a plan to reject, yet it is the fourth such plan to be laid out to all parties involved in the pension fund.
Under its submission to the DNB, the ANWB scheme proposed in its latest plan to pay an average premium of 15.1% from next year, instead of contributing 14.3% of an individual's salary as originally suggested.
The parent company had proposed to contribute €14.3m this year to cover the costs of the scheme, as well as an additional €2m every year until 2013 to assist the scheme's recovery, said officials.
They added the ANWB would, if necessary, also pay an additional contribution if the current amount were not enough to cover scheme costs.
The scheme also indicated its pensioners and deferred participants would not receive any compensation for inflation.
That said, the scheme has decided to temporary lower the cover ratio threshold at which indexation is paid from 110% to 105%, to shorten the period of non-indexation for its pensioner and deferred members.
The funding ratio of the ANWB pension fund - which was still 141.4% by the end of 2007 - had dropped to 85% by March 2009, but has since recovered to 101.4% by the end of September. The scheme also returned -22.5% on investments last year.
The ANWB scheme's initial concept recovery plan was rejected by the unions as the company said it would plug the financial gap in the pension fund with an already agreed 3.3% salary increase.
Following a changed in the balance of contributions between the sponsoring company and participants, the ANWB has instead proposed to decrease its recovery contribution from €24m to €10m, to reach the minimum required funding ratio of 105% in 2013, instead of 111.4% as suggested in the recovery plan rejected by DNB.
This scaled-down ANWB contribution was the reason why the pension fund's participants' council advised against implementation of the latest recovery plan.
However, the scheme's board has decided to stick with its latest proposal, "as there are no other means available for recovery", according to officials.
Although the board recognised this new plan does not constitute a balanced contribution for all stakeholders, it argued this would be sufficient for the continuity and stability of the pension fund.
The latest recovery plan is based on the scheme's present investment mix of 34.8% equities, 45.8% fixed income, 14% complementary investments of equity and fixed income and 5.2% liquidities, with assumed returns of 7.5%, 4.5%, 6% and 1% respectively.
Jaap Groen, chairman of the pension fund, told IPE :"Drawing up a recovery plan was complicated because of our scheme's unconditional indexation, and because of DNB's requirement to take a 3% salary inflation rise into account."
The Stichting Pensioenfonds ANWB offers pension arrangements to approximately 9,580 workers at ANWB and its subsidiaries car transport firm Logicx Mobility, Medical Air Assistance, travel agency Pharos and insurer Unigarant.