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Dutch pension funds begin to pay indexation

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NETHERLANDS - Two Dutch pension funds provided by KLM and Fortis Bank will pay their members full indexation this year on the back of improved investment performance.

The €1.1bn pension fund for KLM cabin crew staff has granted its active participants full indexation of 1.25% after achieving a cover ratio of 131% by the end of November, officials stated.

The KLM scheme increased the pension rights of pensioners and deferred members by 0.4%, following the performance of the consumer index.

At the same time, the Stichting Pensioenfonds Fortis Bank Nederland announced it would pay full indexation of 0.19% to its pensioners and deferred members.

According to officials, the increase of pension rights of the €2.2bn scheme is linked to the consumers index, but calculated over the period between July 2008 and July 2009.

Following a collective labour arrangement (CAO), active participants will be guaranteed indexation by the sponsoring company based on the consumer index.

The Fortis Bank scheme had a cover ratio of 110.3% at the end of September and had granted inflation compensation of 3.25% last year.

Elsewhere, the €1.1bn pension fund of shipping company NedLloyd has decided to provide indexation of 2%.

Officials pointed out that the increase was possible as recovering financial markets led to a rise in its cover ratio from 109% to 122% at the end of November, based on an 8.4% investment return to the same date.

The board of the NedLloyd scheme decided to present inflated compensation of 80% of the salary index. This is based on its revised guidelines, which decreased the options for indexation.

"If the cover ratio surpasses 125% and the economic outlook is positive as well, the remaining 20% could still be granted," the board added.

Participants of the NedLloyd scheme last year received a one-off benefit of 2.5%, instead of formal indexation.

That said, the board said at the time that the missed 2009 indexation could be granted later if the scheme's financial position had sufficiently improved.

Performance at another scheme, the €1.2bn pension fund for the butchers sector, has yet to improve sufficiently, and officials will refrain from granting indexation this year, as the consumer index between September 2008 and September 2009 was nil.

The Pensioenfonds voor het Slagersbedrijf increased pension rights by 2.8% last year.

If you have any comments you would like to add to this or any other story, contact Julie Henderson on + 44 (0)20 7261 4602 or email julie.henderson@ipe.com

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