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Netherlands roundup: ABN Amro fund expects 20% accrual drop

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The pension fund of bank ABN Amro said that the introduction of a fixed contribution – as recently agreed between the trade unions and the employer – could lead to a 20% reduction in pensions accrual over the next five years.

On its website, the €31bn scheme announced it was assessing whether it could implement such an arrangement, which is the backbone of the new collective labour agreement (CAO) at ABN Amro.

During the past years, the premium paid by the employer varied. It currently stands at 46% of the pensionable salary.

However, last month the unions and the plan sponsor agreed that the latter would contribute 37% over the next five years.

The pension fund said the new arrangement would increase the chance that the current annual pensions accrual of 1.875% of a paid salary could not be continued.

It indicated that its initial calculations, based on the discount rate for liabilities, suggested that the accrual would have to drop to 1.48%.

“This is much lower than the accrual percentage expected by the employer and the unions, and approximately 20% less than the current accrual,” the pension fund said.

Drawn on the interest rate level of May-end, the negotiating parties expected an annual pensions accrual of 1.79%.

However, since then interest rates have dropped significantly.

Court must decide on BPL’s disputed trustee appointment

The €20bn Dutch pension fund for the agricultural sector (BPL) and its pensioners’ association (MLP) have failed to reach a settlement about the appointment of a trustee on behalf of the pensioners.

They have asked the court to pass a final verdict in the long running dispute in which BPL refuses to appoint Arthur Theunissen, as it had suggested he was not capable of a board position.

Last month, both parties – urged by the court – tried in vain to settle the conflict, which started two years ago and saw them in court six times since then.

Both institutions declined to provide details about the reason why their settlement talks had collapsed.

In a short response, MLP said the court would have to decide whether BPL had to pay up to €500,000 in penalties for non-compliance with earlier court decisions.

Last year, pensioners elected Theunissen as one of their two representatives on the pension fund’s board, after BPL had been forced to allow him as a candidate on behalf of its pensioners.

However, the industry-wide scheme has emphasised that it rejected Theunissen as a trustee.

Whether he can join the board at all is still unclear, as supervisor De Nederlandsche Bank (DNB) hasn’t published the outcome of its examination on his suitability as a board member.

Rockwool delays switching to new pensions provider

Dutch firm Rockwool has delayed its plan to pick a new pensions provider in the wake of the new pensions agreement, lower allowed assumptions for future returns as well as low interest rates.

As a consequence, its €403m pension fund will keep on providing pensions for 3,100 participants, 40% of whom are active members, in 2020.

On its website, the scheme announced that the pensions accord, the new return parameters as well as the low interest rates environment had changed the fund’s situation.

Before deciding on changes, the board and the social partners wanted to have a better insight into the consequences of all developments, it said.

Earlier this year, Rockwool said the employer and social partners had announced they wanted to seek a new provider.

At the time, the options were to leave accrued pension rights with the pension fund while placing new accruals elsewhere, or transferring everything to a new provider, which could be another scheme, a general pension fund (APF), an insurer or a Belgian pensions vehicle.

A survey had shown that participants, and pensioners in particular, preferred certainty and a stable pension, rather than a pension that could rise and fall.

The Rockwool scheme said it was possible that it had to cut pension rights in 2020 due to insufficient recovery potential. At September-end, its funding stood at 95.5%.

The pension fund further stated that, as a result of low interest rates, it expected its annual accruals to also fall short of the fiscally allowed 1.875% of the pensionable salary.

This year, its annual accrual percentage was 1.774%.

Related images

  • ABN-AMRO's head office

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