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Dutch roundup: Sponsor refunds, PostNL, ING

NETHERLANDS – Jetta Klijnsma, the new state secretary for social affairs, has concluded that it would be “impossible” to conduct a proper overview of pension funds that have ever made refunds to their sponsor companies in times of plenty.

Her conclusion follows a pilot survey among five large and average-sized company pension funds, at the request of parliament and spearheaded by Pieter Omtzigt, MP for the Christian Democrat party CDA.

Because the Dutch regulator is legally prohibited from publishing details on individual pension funds, consultant PwC had to limit its research to five schemes, which had previously confirmed that they had made refunds to sponsors in the past.

Between 1990 and 2001, the five pension funds paid their parent companies approximately €2.3bn, whereas their sponsors paid additional contributions of €1.3bn in total between 1997 and 2011, PwC found.

According to Klijnsma, despite the quality of the schemes’ administration, the researchers also had to consult other public sources.

She said: “I am expecting that even more effort will be required to obtain the information from smaller and liquidated pension funds, with probably limited results.”

However, she added that the pilot had produced no evidence that the refunds had been in breach of legal or supervisory rules.

She also highlighted the incompleteness of data before 1995. Refunds in this period were made before the seven-year retaining period had been introduced, she said, while before 1998 less strict rules applied to annual reports.

Klijnsma said even the most extensive survey would be likely to yield insufficient information.

The state secretary did not specify which pension funds had participated in the survey.

In other news, mail company PostNL has been ordered to plug the funding gap in its €5.6bn pension fund, irrespective of the scheme’s ability to recover under its own steam, an arbitration board has ruled.

The pension fund and its sponsor had agreed to arbitration, following differing interpretations of their pension arrangements.

The Pensioenfonds PostNL concluded that it was now owed €131.5m by its parent company.

Of this amount, PostNL must pay €84m immediately, while remaining payments will depend on whether the company decides to appeal the ruling.

Werner van Bastelaar, spokesman at PostNL, said: “We are currently studying the arbitration board’s conclusion.”

Although the ruling of the board is obligatory, a one-off appeal at the court of justice is still possible, he said.

Last December, the pension fund had requested an additional contribution of €38m from its sponsor for the first quarter of 2012, to plug its funding gap.

But the company wanted to suspend the payments, citing the increasingly large financial risk posed by the pension arrangements.

Lastly, the €17.8bn pension fund of banc-assurer ING returned 4.2% on investments during the third quarter, leading to a year-to-date result of 11.1%.

Following its quarterly performance, and due to the introduction of the ultimate forward rate (UFR) as the new discount criterion, the scheme’s coverage ratio increased by 9.3 percentage points to 121.8%.

The pension fund reported positive results for all its investments.

With a quarterly return of 5.2%, its 26% equity holdings were the best returning asset class, according to the scheme.

It attributed the profit mainly to the performance of emerging markets.

The Stichting Pensioenfonds ING said its 62% fixed income portfolio generated 4.9%, thanks to narrowing spreads on credits and high-yield bonds.

The ING scheme added that property and alternative investments returned 2% and 1.8%, respectively.

At September-end, the pension fund had 28,045 active participants, 28,175 deferred members and 17,355 pensioners.

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