NETHERLANDS -- Telecoms giant KPN has reached a new two-year collective labour agreement (CAO) with Dutch trade union ABVAKABO FNV under which in addition to a structural salary increase of 1.5% from January 2006 and 1.5% from January 2007, KPN has agreed to pay 2% of a salary into the ‘levensloop’ arrangements.

The levensloop arrangement will allow participating employees to take early retirement at 62 years and three months.

Both stated parties that transitional pre-pension and VUT arrangements had been adequately incorporated into the new agreement.

Last week, the negotiations appeared to have reached a stalemate after KPN offered a pre-pension possibility to employees aged over 50 and delayed the VUT dates for another year.

The trade union rejected the offer and threatened KPN with its first official strike in 20 years, according to ABVAKABO FNV negotiator Daniëlle Wiek.

Under the new agreement, pre-pension possibilities exist for all employees while the VUT delay is cancelled.

In return, the retirement age at KPN has been lifted to 65 from 62 years, although employees will retain an early retirement option.

The KPN pension fund has around 51,000 members, of whom 25,000 are active, 18,000 are sleepers and some 8,000 are pensioners.

At end-2004 the fund had a total investment portfolio of €3.45bn, with a coverage ratio of 116.9%. Equities account for 35.8% of the portfolio, bonds and real estate 48.9% and alternatives 15.3%.