NETHERLANDS - PDN, the pension fund of chemicals giant DSM, has revealed it cannot grant its participants any indexation in 2009 as the scheme is underfunded.

PDN's funding ratio, which was still 126% at the end of September, had dropped below the legally required minimum of 105%, officials said, without disclosing the current cover ratio.

In recent years, PDN granted an indexation of 1%, 2.5% and 2% respectively, following the company's salary index.

The pension fund has not raised its contributions which are largely paid by employer DSM so remiums for workers born before 1950 and younger workers are 17% and 21% of their salary respectively.

The DSM scheme now has to submit a short-term recovery plan to pensions regulator De Nederlandsche Bank, to explain how it will increase its funding to the prescribed financial reserves of 117% within three years.

PDN's assets totalled over €5.2bn at the end of 2007, while its cover ratio was 150%.

The Pensioenfonds DSM Nederland has 41,550 participants of whom 14,585 are pensioners and 9,975 are deferred members.

Its 40 different pension arrangements are managed by DSM Pension Services (DPS).

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