Accountancy, the €330m pension fund for Dutch accountants, is facing the prospect of multiple rights cuts over the next few years after its funding ratio dropped to 64%.

The pension fund, which switched from a reinsured pension plan to its own collective defined contribution (CDC) arrangement last year, conceded that it had been “caught out” by falling interest rates.

As a consequence of its low coverage, the scheme was forced to cut pension rights accrued under its own management by 3.5% last March.

To raise its coverage ratio to the minimum required level of 123%, it now faces a number of annual rights cuts over the next 10 years.

It has also reduced the annual pensions accrual from 1.75% to 1.5%, while raising the contribution by 17%.

Accountancy said it would have to reduce accrual even further, or increase the premium again, if the low-interest-rate environment remained.

It ruled out the possibility of raising the contribution to avoid a rights cut, as this would require a 50% premium increase over the next 11 years.

It has not extended its contract for further accrual with insurer Aegon, as this would be have been “far too expensive” due to the low interest rates.

It added that, had it decided to extend the contract, the annual accrual would have been reduced to 1% under the 17.5% contribution at the time.

Jan Raaijmakers, chairman at Accountancy, said the board still fully supported its earlier decision, “as alternatives wouldn’t have been sufficient”.

By switching to individual defined contribution arrangements, its 3,200 participants would have been similarly hit by low interest rates, albeit at a later stage, he argued.

He pointed out that calculations in 2014 estimated the CDC plan would have generated 15% more pension rights in 10 years’ time, due to costs savings and the possibility to benefit from investment returns after retirement.

When it drew up its recovery plan in 2014, which included the maximum allowed assumptions for return, the pension fund said it expected to improve its funding to 130% within 10 years.

The Pensioenfonds voor de Accountancy said it considered itself too small to remain independent and that it was investigating the option of joining the ‘general pension fund’ (APF) of Aegon and its subsidiary TKP next year.