The €27bn Pensioenfonds ING is thinking to divide itself into two pension funds in light of parent company ING Group’s recent division into a banking and an insurance firm.
The board of the now-closed scheme said the interests of two fully separated employers and their stakeholders would best be served by two separate pension funds.
The scheme’s board also cited differences in collectively agreed salary increases at ING Bank and NN Group, which could cause imbalances in the indexation for employees at both companies.
This would also apply for deferred members and pensioners who receive indexation based on pay increases at ING Bank.
“A bigger inflation for one group would come at the expense of other groups, as granting indexation would lead to a decrease of the pension fund’s coverage ratio,” the pension fund said.
Rob Oosterhout, the scheme’s vice-chairman, added that separate pension funds would be able to provide participants with tailor-made information.
He said the two new schemes could, in future, use their purchasing power – together with the new collective DC pension funds at ING Bank and NN Group – to make joint investments, as well as for pensions provision.
However, the board took pains to make clear that no decision had been made yet, and that it was studying all aspects of a possible division together with its accountability division, which has the formal right of advice on the matter.
It said it wanted to assess “meticulously” the possible effects and risks for the various stakeholder groups, and that the probability of any rights cut or indexation must remain virtually the same for all groups.
The Pensioenfonds ING said it would also consult the central works council, unions, employers and ING’s pensioners association VSI, although these organisation do not have a right of advice.
Oosterhout said the new pension funds for ING Bank and NN Group would be allocated approximately €18bn and €9bn, respectively, of the pension fund’s current assets of €27bn.
At the moment, the Pensioenfonds ING has almost 72,000 participants in total.
Oosterhout could not provide a time-scale for the decision-making process.
“The most important thing is that the procedure be conducted carefully,” he said.
The Pensioenfonds ING became a closed pension fund on 1 January 2014, after the social partners of unions and employers agreed pension arrangements would be changed from defined benefit to collective defined contribution (CDC).
At the same time, the social partners decided to establish two new CDC schemes on the back of ING Group’s division, forced upon it by the European Commission after the Dutch government provided support to the company during the financial crisis.