NETHERLANDS – IT provider Atos has ceased paying additional contributions into its ailing pension fund, claiming that continued payments would cause liquidity problems for the company.
The company claimed the recovery agreement with its pension fund was no longer “balanced” due to the combined effects of the financial crisis, low long-term interest rates and increasing longevity.
According to the €1.5bn pension fund, the company’s payments into the scheme are currently almost €11m in arrears.
After a sharp drop in the pension fund’s coverage ratio in 2008, Atos and the scheme agreed that the company would pay 3% extra premium a year from 2010 to 2013, as well as an additional €10m a year from 2011 to 2013.
Atos also promised to grant a yearly subordinated loan of €7.5m from 2011 to 2013 and said it would pay as much as €36m if the scheme’s coverage failed to improve sufficiently by the end of 2011.
Following the last part of the agreement, the employer had to contribute an additional €5.8m last year, according to the scheme.
Since then, Atos has not only ceased paying both this additional amount but also the fourth instalment of its loan, as well as the 3% extra contribution, the pension fund said.
The pension fund said it would pursue a “legal procedure” to find a solution, while a spokeswoman at Atos said both players had agreed to arbitration.
The Stichting Pensioenfonds Atos had a funding of approximately 96% at November-end. The scheme has 17,835 participants in total.
In other news, the €57m pension fund of rubber and plastic manufacturer Helvoet said it has joined the €13.5bn industry-wide scheme for the printing industry PGB.
Erik-Jan Verdegaal, chairman at Pensioenfonds Helvoet, said the merger would offer the scheme’s 940 participants “better pension perspectives against reasonable costs”.
He added: “By linking up with PGB, we have probably avoided a rights discount on 1 April.”
Based on the pension fund’s financial position at the time, it was headed for a 5% cut last summer.
“The scale of PGB and its broader application of longevity figures worked well for our funding, and, as a consequence, we were able to finance the transfer with our assets,” Verdegaal said.
PGB spokesman Theo Flach said his scheme’s coverage ratio was just ahead of its required recovery target of 101.4% at the end of 2012, enabling it to avoid rights cuts in 2013.