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KLM schemes split on indexation

NETHERLANDS - Two of the three pension funds of Dutch airline KLM will grant their participants a full indexation for 2009.

The third scheme - the pension fund for cabin staff - however, has postponed a decision on indexation because of the continuing volatility of the financial markets, it announced.

KLM's general pension fund based its decision for full indexation on a cover ratio of 110.5% at year-end, in conformity with its policy to pay indexation if its cover ratio is over the required minimum of 105%, a spokeswomen explained.

The compensation for inflation applies to all its 33,000 participants, although the granted percentage differs for the respective groups.

Pensioners and deferred participants of the Algemeen Pensioenfonds KLM will receive a - consumers' index-based - indexation of 2.5%, while workers have been granted an increase of their pension claims of 3.05% based on the KLM salary index, officials said.

KLM's pension fund for flying staff has promised all its 5,000 members an inflation compensation of 3,6%.

The Pensioenfonds Vliegend Personeel KLM said a limited shortfall of its required financial reserves in early December disappeared spontaneously through a slight rise of the long-term interest rates.

As its cover ratio has been around the required minimum of 105% in recent weeks, the Pensioenfonds KLM-Cabinepersoneel has delayed an indexation decision, until its financial position has stabilised, officials indicated.

"Given the volatile situation, indexation is not sensible at the moment," the scheme's board pointed out. It has started drawing up a recovery plan for pensions regulator De Nederlandsche Bank.

The three KLM schemes - serviced by pensions provider and asset manager Blue Sky Group - had combined assets of €12.7bn at the end of 2007. Their funding ratios were 123%, 115% and 122% respectively then.

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