Molenaarspensioenfonds, the Dutch pension fund for millers, has cancelled its plan to merge with BPL Pensioen, the pension scheme for the green and agricultural sector. This year’s fast interest rate increase would have forced the fund to cut pensions upon merging with BPL.

Because the €775m millers fund has a much higher interest rate hedge than BPL (78% versus 33%), its funding ratio has benefited much less from the recent rise in interest rates than BPL’s.

While the funding ratio of the millers scheme has remained stable at 114% since the start of the year, BPL’s funding ratio has risen from 103% to 123%.

According to Ruud Hagendijk, president of the millers fund, it wouldn’t be in the interest of its members to merge with BPL now as it would involve a painful pension cut in times of high inflation.

“For years, we had been waiting for interest rates to rise again. Now that it finally happened, we were taken by surprise,” he said.

The two funds had been in merger talks since 2020. Last year the Millers fund had already agreed to liquidate by 1 January 2023 and join BPL, but it is now reversing this decision as it will make the transition to the new pension contract independently.

With some 12,000 members and €775m in assets under management, Molenaarspensioenfonds is one of the smallest pension funds in the Netherlands.

According to Hagendijk, the fund remains too small to continue independently in the medium term. He expects the scheme will look for a merger partner once more in a few years’ time after the dust from the pension transition will have settled.

BPL could then again be the partner of choice. “We worked well together, and the cultures of our two fund fit together,” said Hagendijk.

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