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Dutch unions take KLM to court over pension funding dispute

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The Association for Dutch Cabin Staff (VNC) and union FNV have launched legal proceedings against KLM in a dispute about plugging a funding gap at the company’s €2.6bn pension fund for cabin staff.

Dutch financial news daily Het Financieele Dagblad (FD) reported that KLM refused to make €30m available.

The amount had been demanded by the unions, as KLM claimed to have been relieved of mandatory payment obligations since the contract for pensions provision with the scheme was changed, according to the FD.

It said the unions argued that KLM changed the contract without consulting or informing them.

The airline has been negotiating with the unions about a new pension plan, as it wants to switch from defined benefit arrangements to a collective defined contribution (CDC) scheme, with the company paying a fixed contribution for a number of years.

The unions argue that KLM should compensate workers for the increased risk resulting from the new arrangements.

The FD quoted Annette Groeneveld, chair of the VNC, as saying: “As things stand now, KLM would just pocket the money, and this would be very bad.”

However, Erik Lutjens, professor of pensions law at Amsterdam’s Free University, suggested the unions might lose the case.

“Whereas the Pensions Act prescribes that employers and employees conclude a pensions contract, the sponsor is to subsequently conclude a provision contract with an external party,” he said.

“The contract for pensions provision is a matter between the employer and the pension fund. Workers are not stakeholders in this, in principle.”

Employees have increasingly involved the courts in disputes over changes in contracts for pensions provision.

Last December, the works council (OR) of insurer Aon lost its case against the employer, which, it claimed, had reneged on the pension agreement by changing the contract.

APF, the Dutch pension fund of AkzoNobel, won a similar case.

In other news, the Dutch Pensions Federation has published an updated version of its recommendations for reporting the costs of pensions provision.

The industry organisation said the update provided “increased clarity, as well as auxiliary tools for comprehensiveness and comparability”.

It said it clarified, among other things, the definitions of costs and calculation methods to increase uniformity, as well as how to deal with one-off costs and how costs as a consequence of tax could be reported.

The Pensions Federation said pension funds would start reporting transaction costs in investment funds as of next year.

These will include the costs of underlying funds at funds of funds, it added.

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