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IPE special report May 2018

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PWRI, PFZW suspend merger talks due to financial situation

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PFZW, the pension fund for the Dutch healthcare industry, and PWRI, the pension fund for disabled workers, have suspended talks on a possible merger. 

In a joint statement on PWRI’s website, the schemes cite “unstable financial markets and falling funding ratios” as the chief reasons behind their decision.

To continue to aim for a value transfer on 1 January 2017, they said, would not be in their participants’ interest.

They said they would resume merger talks once their financial position and the overall economic situation had improved.

Past updates on the progress of the merger negotiations show that both pension funds’ coverage ratios began to diverge last summer.

At January-end, the €165bn PFZW reported an official funding of 97%, while PWRI’s coverage stood at 105.4%.

A difference in the scale of the schemes’ respective interest hedge might partly explain the divergence.

In 2014, PWRI covered 50% of the interest risk on its liabilities, while PFZW’s hedge was no more than 28%.

PWRI has been seeking a merger partner since the start of 2015, when it closed to new entrants due to legal changes that prevented new workers in shelters from joining the pension fund.

Since then, new staff has been employed by local councils or regular companies.

As of the end of 2014, PWRI had almost 219,000 participants, with 100,000 active members.

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