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Dutch paint scheme to merge with €12.5bn PGB

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NETHERLANDS - The €155m pension fund for the paint and printing ink industry has decided to merge with the €12.5bn scheme for the print industry (PGB).

"Within this large scheme, we can largely keep our own arrangements, but the decisive factor was PGB's better perspectives, including the options for future indexation," the smaller fund said in a statement.

The paint scheme - also known as Verf - reported a coverage ratio of 90.5% at the end of April, only increasing 0.2 percentage points over the end of 2011 despite rights cuts of 5.9% on 1 January. The cuts were implemented to get the fund on track to recovery for the required minimum funding ratio of 104.5% by 2013.

During May, the scheme's funding declined further due to falling long-term interest rates, the criterion for discounting liabilities.

In order to speed up the recovery process, Verf's board decided to decrease the yearly rights accrual from 2.21% to 2.04% for 2012.

Additionally, it has raised pension contributions from 29% to 30%, with the increase to be paid by employers.

Moreover, Verf said it would not rule out the possibility of further rights cuts in 2013.

The paint scheme had been trying for several years to partner with other pension funds, as it wanted to scale up to improve governance and drive down costs.

The merger with PGB will take effect on 1 January 2013, with the €3.4bn PNO Media scheme also considering merging with the print industry fund.

Verf has approximately 15,840 participants in total, affiliated with 72 participating companies.

PGB reported a funding of 99.7% at the end of April, after it returned 4.5% on investments during the first quarter.

"Despite this positive return, the risk of a rights discount remains," commented Ruud Degenhardt, PGB's chairman, adding that an improvement of the funding is not in sight yet, while the remaining recovery period was steadily shortening.

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