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PGGM considers average salary scheme

NETHERLANDS – The 45 billion euro Dutch healthcare and social service fund PGGM says it is mulling a switch to an average salary scheme.

PGGM, or Pensioenfonds voor de Gezondheid, Geestelijke en Maatschappelijke, says it is considering ways to manage its funding and “further increase the professionalism” of its pension fund administration. More flexible working conditions, it said, has prompted it to investigate opportunities “for a possible switch to an average salary scheme”.

Citing the “current situation in the financial markets”, it also said in a statement that contributions would rise by a similar percentage to 2003.

This year has seen PGGM raise its contributions by 1.2% over its maximum permitted increase of 1.5%. This year’s rises were put down to higher wages and negative investment returns.

And it said that continuing low returns are putting pressure on its indexation policy. Its fellow Dutch pension fund Stichting Pensioenfonds ABP earlier this week said it would have to examine the options on indexation due to poor markets.

The Zeist-based fund added that more than 10,000 participants had signed up for its new supplementary pension product under the PGGM Extra Pension name.

As at the end of 2002, the fund was worth 45.3 billion euros, down from 49.2 billion euros at the end of 2001. Its cover ratio was 100% at the end of last year, from 122% at the end of 2001.

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