NETHERLANDS - The board of the €22bn pension fund for the Metalektro (PME) has insisted it can recover its financial position without cutting its participants' rights.

In a letter to pension supervisor De Nederlandsche Bank, the board said an extensive analysis of second-quarter figures had shown there was no need - or legal case - for a discount on 1 January 2011, as social affairs minister Piet Hein Donner suggested.

The board added that it had also factored in lower assumptions for returns and a lower coverage ratio.

It said: "The expected development of the funding ratio is such that, at the end of the five-year short-term recovery plan, the minimum required coverage of 104.3% has been reached."

To comply with the regulations fully, PME will also factor in the most recent actuarial longevity figures, including adjustments for its specific demographic, the board said.

Pension fund officials said they based their financial analysis - carried out by Ortec Finance - on the 5.9% return of the investment mix on 30 June, rather than on the 6.4% return of its initial recovery plan based on its strategic asset allocation.

From 1 January 2011, its new proposed 'recovery allocation' is expected to generate 5.9% under the new and tighter rules for allowed assumptions for returns, the board said.

It indicated that it wanted to increase the fund's low-yield fixed income investments by 1.9% to 37.2%, while lowering its high-yield allocation by 5.9% to 11.5%.

PME's equity portfolio and liquid investments are set to increase by 2.8% to 24.8% and by 2.2% to 5%, respectively.

It concluded that, if the scheme's coverage ratio was at least 92.5% by that date, a recovery to 107% would be achievable within three years.

The pension fund's coverage ratio - 94% at the end of June - fell to 91% at the end of August, following a drop in long-term interest rates.

However, during September, PME's funding has risen again to approximately 95% and therefore "isn't a reason for new discussions about our recovery analysis", according to Hans van der Windt, the scheme's chief executive.