The €10bn pension fund of Dutch telecoms giant KPN said it would offer its participants the option of variable benefits at retirement.

The move will allow retirees to avoid having their full pension rights converted into annuities, which have dropped in value in recent years due to low interest rates.

In its annual report, the KPN scheme said participants with defined contribution (DC) arrangements would be able to choose between traditional fixed benefits from an annuity or payments that could vary over time.

The choice was made possible by new legislation (Wet Verbeterde Premieregelingen) introduced in September 2016 that allowed for continued investment of part of a members’ accrued pension assets after retirement.

KPN is one of a small number of schemes to introduce this option of variable benefits.

Many pension funds, including the Pensioenfonds PostNL and BpfBOUW, have said they won’t introduce variable pension payments.

Under the new legislation, participants in a DC plan have the right to shop around when their pension fund merely offers a single benefit option, which is almost always a fixed payment.

As a consequence of few pension funds taking up the new rules, participants who want to continue investing have to turn to insurers, including Aegon, NN, Delta Lloyd and Allianz, which offer variable benefit arrangements.

The KPN scheme said its decision was triggered by 8,000 deferred participants of the former pension fund of ICT firm Getronics – taken over by KPN in 2007 – who joined the Pensioenfonds KPN last year.

At the Getronics scheme, which liquidated last year, many participants had accrued pension rights under DC arrangements.