The Dutch regulator has ordered the liquidation of Alcatel-Lucent’s €711m local pension fund due to underfunding at the closed scheme at the time the sponsor terminated its contract in 2012.

The pension fund should have been liquidated at the time, in accordance with the Pensions Act; however, it was allowed to postpone the liquidation after it sued its former sponsor for recovery payments.

Last March, Cor Zeeman, the pension fund’s chairman, said the scheme wanted to place its assets within a new ‘general pension fund’, or APF.

At the time, he pointed out that participants were too young for the pension fund to join an insurer, as indexation would no longer be granted.

He also pointed out that merging with another pension fund would entail a rights cut, due to the scheme’s relatively low funding of 101%.

In the meantime, the introduction of the APF was postponed from 1 July 2015 to 1 January 2016.

In its 2014 annual report, the scheme said the regulator rejected giving the pension fund any additional “leeway”.

According to the pension fund, the regulator also argued that joining an APF would fail to improve the scheme’s risk profile.

The pension fund declined to comment while talks with the regulator were still ongoing, while the regulator, as a matter of policy, does not comment on individual pension funds.

The scheme’s annual report made clear that the Pensioenfonds Alcatel-Lucent had already been in touch with insurers and industry-wide pension funds.

It is still awaiting the outcome of an appeal regarding recovery payment from its former sponsor.

The pension fund’s coverage ratio now stands at 98%.

At year-end, it had 4,168 participants.