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Dutch maritime scheme says merger would mean benefit cuts

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The Dutch industry scheme for the maritime construction sector has decided against merging with another pension fund.

The €1.2bn Bpf Waterbouw said that continuing as an independent scheme would be the best option for all participants and pensioners.

The board said it based its conclusion on a survey by consultancy Sprenkels & Verschuren into the pros and cons of joining one of the larger sector schemes, such as PGB, building industry scheme BpfBouw, or the fund for the merchant navy (Bpf Koopvaardij).

The study was initiated by the board and the ‘social partners’ of employers and unions, with the latter considering joining the multi-sectoral scheme PGB for further pension accrual.

However, the study found that, if Waterbouw transferred its pension rights to BpfBouw or Bpf Koopvaardij, the scheme would have had to cut pension rights straight away, because of its lower funding ratio relative to BpfBouw and Bpf Koopvaardij.

Waterbouw had a coverage ratio of 104.6% at June-end, while the coverage ratios of Bouw and Koopvaardij stood at 110% and 109.7%, respectively.

If Waterbouw joined PGB, the future chances of rights discounts would be bigger, the board concluded.

Compared to the other pension funds, Waterbouw had a low interest rate hedge – 25% against 50%. It also had a relatively large securities allocation, with 44.7% invested in equity and 11.4% in property.

Waterbouw, which carries out its administration in-house, compared favourably to the other schemes on cost, in particular regarding asset management costs.

The employers and unions still need to decide whether Waterbouw is to continue as an active or as a closed pension fund.

Contracting out the pension arrangements would not be easy, as the pension plan has a lower-than-average accrual rate. In addition, there is no part of employees’ salary that is exempt from pension accrual, unlike many other Dutch schemes.

Waterbouw said it wanted to extend the one-year contract for companies that have voluntarily joined the pension fund to a five-year term, to reduce the risk of companies leaving the scheme suddenly.

It also said that it would look into the options of contracting out its pension provision to decrease its vulnerability as a self-administering scheme.

Bpf Waterbouw has 2,850 active participants, 3,205 deferred members and 5,785 pensioners.

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