Dutch bancassurer ING has reached an agreement with trade unions to make its currently closed defined benefit pension fund ”financially independent”.

Under the terms of the agreement, the pension fund is to receive €879m.

Approximately €709m will be used for indexation in 2014, to absorb the risk of future indexations for which the fund itself is now fully responsible and to cut loose the obligation to maintain the pension fund’s coverage.

The remaining €170m will be used to account for changes in indexation rules – from 2015, indexation will be determined by the scheme’s funding.

In exchange, the pension fund will be responsible for the indexation of accrued pension entitlements.

Until now, the employer had been responsible for indexation, regardless of the scheme’s funding level.

ING refused to provide indexation for five years in a row from 2009, citing “compelling economic reasons”.

In 2009 and 2010, the ING pension fund accepted the company’s decision, but it challenged its sponsor company in 2011, 2012 and 2013.

In 2011, a district court rejected the pension fund’s request for indexation, while in 2012 an arbitrator awarded the scheme €68m of a requested €170m.

Last December, the arbitrator determined that ING had to pay the full claim for 2013 of €236.3m, taking into account the fact there had been no indexation at all from September 2009 to 2011, and that the indexation in 2012 amounted to just 40% of the required amount.

For the accrual of new pension entitlements, ING has now adopted two new defined contribution plans for employees in the Netherlands – ING CDC Pension Fund for employees of ING Bank and WestlandUtrecht Bank, and NN CDC Pension Fund for employees of ING Insurance and ING Investment Management.