The €26bn closed pension fund of Dutch bank ING expects pension benefits for all members to increase by up to 20% if the fund makes the transition to the new defined contribution (DC) pension system, a move that has the support of the fund’s board.
“The fact that Pensioenfonds ING is a relatively rich, closed fund ensures that participants have specific advantages in the new system. This is an important difference compared to the situation at many other pension funds,” the fund said in an article on its website in which it provides a number of reasons explaining why it is positive about moving into the new system.
At the end of the first quarter of this year, there were only four pension funds in the Netherlands with higher funding ratios than Pensioenfonds ING, according to figures from regulator DNB.
Among those funds is the Unilever fund Progress, which is also closed. This fund will most likely not make the transition to DC, it announced earlier this month. According to the pension fund, this choice would “not disadvantage” any of its members.
Pensioenfonds ING, for its part, expects all members to receive a higher pension under the new scheme.
“At our current funding ratio of about 155%, your pension could be up to 20% higher,” the fund said in the online article. That’s because the fund’s buffer could largely be added to participants’ personal pension pots.
Despite the smaller buffer in the new DC system, Pensioenfonds ING expects to be able to continue to offer “sufficient security” to continue indexing pensions, without having to take more risks.
ING Pensioenfonds is conducting a member survey to poll support for a possible transition of the fund to the new DC system.
The results of the poll will be used to inform social partners in their decision process about whether or not to make a request to transition to the new pension system.
The pension fund expects social partners to decide on this before the end of the year.
Fossil fuel divestment
Earlier this year, it was announced that Pensioenfonds ING had exited most of its fossil fuel investments.
According to an overview of the fund’s investments on its website, all large oil and gas companies such as BP, TotalEnergies and Shell, have now been removed from the investment portfolios.
Responding to questions from IPE, Pensioenfonds ING explained that within its equity and corporate bond portfolios, only companies that meet the ‘Paris Aligned Benchmark (PAB) inclusion criteria’ will be investable for the fund in the future.
As a result, the pension fund now only invests in companies that derive less than 10% of their revenue from oil and less than 50% from natural gas.
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