NETHERLANDS - The €10bn pension fund of Dutch finance giant ING is still able to grant full indexation to its members, despite a shortfall on its required financial reserves.
Daan Heijting, the scheme's director, said the current arrangement will see the fund's employer, ING, pay for the inflation compensation.
The Stichting Pensioenfonds ING has granted its pensioners and deferred participants an indexation of 2.53%, based on the consumers' index, for 2009.
According to Heijting, the scheme's most recent funding ratio is approximately 107% compared with 142% in 2007, although he declined to reveal the required cover ratio for the financial reserves.
As a consequence of the shortfall, the ING scheme has to submit a long-term recovery plan to the regulator, De Nederlandsche Bank (DNB).
ING's pension arrangements offers a final salary scheme to its active participants, but then provides defined contribution arrangements for the part of the salary exceeding €80,000.
The DC scheme is managed by insurer Nationale Nederlanden, a subsidiary of ING.
The variable components of workers' pensionable salaries are subject to average salary arrangements with an unconditional indexation. They were raised by 3% as of 1 September 2008, following ING's salary index.
The scheme charges what are described as ‘cost-covering' premiums so participants contribute 3% of their pensionable salary.
The Stichting Pensioenfonds ING has a total of 73,500 participants, of which 15,000 were pensioners and 26,500 were deferred members at the end of 2007.
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