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Pilot union to appeal ruling in case against KLM over pensions

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VNV, a union representing pilots in the Netherlands, is to appeal a recent court ruling that Dutch airline KLM is not obligated to offset a funding shortfall at its pension fund for pilots.

It said it would seek to force the airline to honour its previous agreement, which would have allowed the union to grant full indexation, although the VNV said it was also “fully engaged” in talks with the company.

In summary proceedings brought by the VNV, the Amsterdam court ruled that KLM’s additional pensions contribution – estimated at €600m by the airline – was sufficiently large for it to cancel its shortfall agreement.

The court also ruled that the agreement, terminated unilaterally by KLM, had not fallen under a binding collective labour agreement between the employer and union.

Meanwhile, KLM’s pilot pension fund – the €8.2bn Pensioenfonds Vliegend Personeel KLM – is preparing its own legal case against the airline for unilaterally terminating the agreement.

And in a separate case, cabin staff union VNC issued a summons against KLM and its pension fund for cabin staff for having agreed a new pension contract “at odds” with a prior agreement between the airline and unions.

According to the VNC, KLM also unilaterally decided to abandon an existing agreement that the airline would plug funding gaps.

KLM insists it agreed with unions that shortfalls would be filled by “natural recovery” – i.e. returns on investment.

The Pensioenfonds Cabinepersoneel KLM said it would implement the contract – concluded between the airline and the scheme – that failed to provide for a recovery contribution from the company.

Annette Groeneveld, chair at the VNC, said the union would demand that KLM and the pension fund produce in court the documents on which they had based the new contract.

She said the union and airline were discussing a potential switch from defined-benefit arrangements to collective defined contribution but that no agreement had been reached on an increased employer contribution as compensation.

“When the introduction of the financial assessment framework interrupted the negotiations, we did agree that its rules would be incorporated into the contract, but the ‘natural recovery’ was not part of this deal,” Groeneveld said.

She estimated that KLM would have to pay €34m extra annually to plug the funding gap over a 10-year period, adding that the employer had paid recovery contributions over 2014 and 2015.

KLM and the cabin-staff pension fund, which returned 0.5% last year, declined to comment.

The scheme’s funding stood at 101.8% as of the end of August; its required coverage level is 128%.

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