For the second time, the Dutch regulator (DNB) has blocked the planned merger between Wonen, the pension fund for the home-furnishing industry, and Detailhandel, the retail sector scheme.
The regulator concluded that the funding gap between the two schemes was too great.
The pension funds are now faced with two choices: work together within the new ‘general’ pension fund (APF) – expected to come into force from 1 January 2016 – or continue as they were, independently.
The companies and workers involved in the schemes initially aimed to merge the €3.2bn Wonen and the €12.9bn Detailhandel on 1 January 2015.
As of the end of 2014, Wonen had a coverage ratio of 111%, Detailhandel 117%.
To bridge this gap, the schemes suggested the companies associated with Wonen would increase their contributions over a five-year period.
Other proposed measures included passing on the benefits of scale for Detailhandel to the participants of Wonen, as well as re-allocating Wonen’s early retirement reserves to its general pension assets.
However, André Steijaert, chairman at Wonen, said the regulator concluded the merger would come at the expense of Detailhandel’s participants, as well as Wonen’s future participants.
He added that he felt the social partners involved in the proposed merger had set Wonen’s board “an impossible mission”.
In 2013, the regulator rejected a funding-gap plan that would have seen Wonen’s participants forego indexation and face a series of rights discounts.
Steijaert said the APF was a now potential option, assuming the industry-wide schemes could ringfence their assets.
Continuing independently is also an option, he added, explaining that Wonen’s contribution for 2016 would be lower than the expected premium under the new merger scheme.
Steijaert added that the Wonen social partners had shown no interest in merging with any other pension fund than Detailhandel, and that this option was, therefore, not on the agenda.
Wonen’s board will discuss the situation with its social partners next month.
At July-end, Wonen’s funding ratio was 102%, while Detailhandel’s coverage stood at 109%.
The pension funds have 132,000 and 1m participants, respectively.