NETHERLANDS - Bancassurer ING has for the third consecutive time refused to fund indexation for the 16,120 pensioners and 29,790 deferred participants of its pension fund.
Its €13bn scheme had requested funding for a 1% inflation compensation on 1 September, but the sponsoring company has again said it could not pay.
Contrary to most Dutch pension funds, the indexation for pensioners and deferred participants at the ING pension plan are not conditional to its coverage ratio, but funded by the employer.
Recently, an arbitrage committee of local judges agreed with ING that the company had "important reasons" to refuse paying for inflation compensation on 1 January.
The arbitration was initiated by the ING pension fund and is in accordance with the contract between ING and its pension fund.
In a recent letter, ING argued that it first wanted to repay the remaining €3bn of government support plus a 50% premium, as the loan has triggered competition-limiting restrictions from the EU.
It also pointed at the current risks following its break-up into a banking and insurance company - as forced by the EU due to the government support - and at the extra capital requirements following Basel III and Solvency II.
ING also said uncertain market conditions had forced it into a very conservative capital policy.
The pension fund's board said it was deliberating whether ING's reasons could be considered as important.
Meanwhile, the scheme's participants council said it was very disappointed in ING's decision and noted that the pensioners and deferred participants have lost more than 5% of purchasing power so far.
In its opinion, the "important reasons" mentioned by ING are too vague and allow the company to find excuses for not granting indexation.
According to the participants council, ING had promised a yearly indexation of no more than 3% in 2002.
"ING has chosen to let its former employees contribute to the bill presented by its uncertain financial position," it concluded.
The ING pension fund has final salary arrangements for its active participants. The scheme's provisional coverage ratio was 121% at the end of July.