NETHERLANDS - The PFZW's 1.2m active participants may face a contributions increase of 2.5% - to a total of 25.6% of their pensionable salary - if the €96.5bn healthcare scheme fails to recover sufficiently, it said.

In a letter to members, PFZW said all of its 2m participants could expect rights cuts of as much as 10% if the initial measure was inadequate.

And if both these measures prove insufficient, the pension fund's board would consider an extra 5% rights cut for workers and deferred members, according to its crisis plan.

Pensioners will be exempt from an additional cut, as they will be hit by an extra discount directly, scheme officials said.

Although the pension fund's assets have increased steadily over the past 12 months, its coverage ratio has fallen due to dropping long-term interest rates, which must be applied for discounting its liabilities.

The scheme said a rate drop of just 1 percentage point, for example, equated with a funding decrease of 16%.

As at the end of August, PFZW's funding ratio had fallen to 94%, but it added that the Actuarial Society's newest longevity figures were likely to cause an additional coverage drop of 5-6 percentage points.

However, a rates rise during the first two weeks of September lifted its coverage again.

As part its five-year recovery plan, the healthcare scheme had already raised its premiums with a 2.5% recovery levy, which will remain in place as long as it is in arrears of granting indexation.

The contribution is jointly paid by workers and employers.

On 1 January, PFZW granted its participants a compensation for inflation of 0.72%, following its policy of indexing 50% of the salary index if its cover ratio is between 105% and 117%, it said.

During the last quarter, PFZW will decide whether additional recovery measures are necessary. Any cuts must have been implemented by 1 April 2012.