The €8.3bn pension fund for KLM’s pilots has warned that it will have to close if the Dutch airline terminates its contract with the scheme.
In a clarification on its website, the pension fund said it would only continue to manage accrued pension rights, and that the new situation would have an impact on its recovery potential and its ability to grant indexation.
KLM and pilot union VNV are locked in a legal battle over whether the airline is required to plug funding gaps that would allow the pension fund to grant full indexation.
The VNV is to appeal a recent verdict by the Amsterdam court, which concluded that this obligation does not apply to KLM.
Meanwhile, the pension fund is initiating legal proceedings of its own against the company for having unilaterally cancelled its contract.
KLM has said it intends to establish a new pension fund if the current scheme is closed.
Manel Vrijenhoek, spokeswoman for KLM, took pains to emphasise that the airline was not looking to save on pension costs.
“The company wishes to mitigate the combined, unintended effects of the new financial assessment framework (nFTK) and the low-interest environment,” she said.
“This would lead to a disproportionately high additional contribution of probably hundreds of millions, which threatens our operational management.”
Vrijenhoek said KLM acknowledged that the additional contribution was part of the arrangement with the unions and the contract with the pension fund.
But she argued that the clause in question had been based on the previous financial assessment framework, when the criterion for full indexation was a funding of 105%.
“With the introduction of the nFTK last year, the minimum level for full indexation increased to 122%,” she said.
As of the end of September, funding of the pilot scheme stood at 115.5%.
KLM said a new pension fund would be “very similar” to the existing defined benefit scheme but offer indexation arrangements based on the previous FTK.