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Dutch pension funds PWRI, PFZW abandon merger negotiations

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PWRI, the pension fund for disabled workers in the Netherlands, and healthcare scheme PFZW have abandoned their plans to merge the schemes.

The €7.5bn PWRI said in a statement that both parties had decided to end negotiations, which had been resumed in July.

PWRI and the €179bn PFZW had been discussing a possible merger since last year but decided to suspend talks last spring, citing “decreasing funding and volatile financial markets”.

PWRI’s annual report later suggested that previous negotiations had stalled because of differing views.

During the resumed talks, much attention was paid to both schemes’ financial positions, according to PWRI.

In the meantime, however, their financial positions have failed to improve, while coverage ratios have fallen.

PWRI said the resumed negotiations had lead to the conclusion that a merger would “not provide sufficient benefits for the participants under current circumstances”.

Its spokeswoman declined to elaborate on the exact reasons why the talks broke down, or how PWRI envisaged its future.

The pension fund has been closed to new entrants since last year, following the introduction of new legislation aimed at shifting disabled workers from “sheltered” workshops into the general workforce.

As a consequence, PWRI participants will be increasingly joining the pension plans of their new employers.

Last year, the scheme still had more than 94,000 active participants working in sheltered workshops.

The pension fund said it expected its contributions would have to rise following the gradual ageing and thinning of its population.

Because it also foresees that it will need to reduce its investment risk, and that the potential for indexation will decrease, it concluded that it would require a “large, robust merger partner”.

As of the end of August, funding at PWRI stood at 99.8%, while coverage at PFZW stood at 91.1%.

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