The €2bn Dutch sector scheme for public libraries said it has decided to grant its participants and pensioners an inflation compensation, while reducing its annual pensions accrual.

According to its website, the Pensioenfonds Openbare Bibliotheken has raised existing pension rights by 1.1% as of 1 January, as its funding ratio of 113.6% at the end of November enabled the increase.

It is the third consecutive year that the library scheme grants an indexation.

However, it said it is reducing accrual from 1.738% to 1.4% for 2020, following an agreement between employers and trade unions about the minimum “premium funding”, which reflects how much of the current contribution covers new liabilities.

The social partners had set a minimum level of 85% but, based on the low interest rates of September-end, the premium coverage was likely to drop to 69%, Margreet Teunissen, the scheme’s chair, pointed out.

“This would be definitively too low and would undermine the pension fund’s financial position,” she said.

During the past months, employers and trade unions had failed to reach an agreement on raising contributions, according to Teunissen.

“Therefore, our only tool left was reducing pensions accrual,” said the chair, who emphasised that the scheme’s target remained 1.738%.

In the past four years, the pension fund has charged a premium of 19.7% of the salary, with three-quarters of the contribution paid by the employers.

Because of the current process of pensions reform, and pending a new collective labour agreement for the library sector, the social partners had agreed to extend the arrangement by another year.

This year, the social partners and the pension fund will negotiate a new pension plan as well as a new contribution and accrual level.

The Pensioenfonds Openbare Bibliotheken has close to 7,000 active participants.