Dutch ING scheme pledges continued opposition to indexation refusal
NETHERLANDS - The €13bn pension fund of bancassurer ING says it will continue to challenge its sponsor comapny's refusal to offer scheme members indexation.
If the reason to refuse inflation compensation is not sufficient, the scheme might ask for a court verdict or arbitrage again, it said. ING's pension fund sought arbitration on the matter in March.
The scheme's announcement follows a court verdict that it is entitled to continue questioning its sponsoring company, according to the Stichting Pensioenfonds ING.
The sponsoring company had insisted that its pension fund could not be a party for an assessment of this kind of decisions and in September had refused for the third time to fund indexation for scheme members.
Contrary to most Dutch pension funds, the indexation of pension rights of pensioners and deferred participants at the ING pension plan are not conditional to its coverage ratio, but funded by the employer.
The pension fund had requested funding for a 1% inflation compensation on 1 September.
Earlier, an arbitrage committee of local judges agreed with ING that the company had "important reasons" to refuse paying for indexation on 1 January.
The arbitrage was initiated by the ING pension fund and is in accordance with the contract between ING and the scheme.
ING had argued that it first wanted to repay the remaining €3bn of government support it received during the financial crisis plus a 50% premium, as the loan has triggered competition-limiting restrictions from the EU.
It also indicated the problems posed by current risks, following its break-up into a banking and insurance company - as forced by the EU, due to the government support - and at the extra capital requirements following Basel III and Solvency II as reasons it was unable to offer he inflation-proofing.
The pension fund's coverage ratio was 113% at the end of October, whereas its minimum required funding is approximately 111%.
ING's scheme covers 16,120 pensioners and 29,790 deferred participants.