Companies and workers in the Dutch metal industry have agreed in principle to introducing a single pension plan for the €50bn pension fund PMT and the €36bn scheme PME. 

However, the social partners indicated that a full merger of the schemes was “not yet on the cards”.

The metal schemes’ arrangement follow new legislation aimed at economising pensions to keep retirement benefits affordable against a stable contribution for the long term.

A uniform pension scheme also improves labour mobility by removing barriers for employees who want to switch between the mechanical engineering sector (PMT) and the electro-technical engineering sector (PME), social partners said.

As part of the agreement, the franchise – the part of the salary exempt from pensions accrual – will gradually be reduced by €1,000 over the next five years.

During this period, the contribution at PME will remain at 24.1% of the pensionable salary, while PMT’s premium will decrease slightly.

Ron Follen, chief employers negotiator, said: “As a consequence of the agreement, employers don’t need to worry about rising pension liabilities for the next five years.”

The new pension plan still allows for early retirement against lower benefits.

The social partners also agreed to a contribution-smoothing fund – to finance additional indexation for workers – from any surplus that changing conditions would cause on the current cost-covering premium, according to employers and workers.

However, the new fund could also be deployed to finance pension accrual following negative developments.

The new pension arrangements are mandatory for a salary of up to €70,000.

For any additional salary of up to €30,000, companies can conclude additional arrangements individually, according to the social partners.

The agreement will not affect the coverage ratio of either pension fund.

As of the end of August, both PMT and PME reported a funding of 105.7%, slightly more than the minimum required coverage.

The uniform pension plan is to cover 540,000 workers at 34,000 affiliated companies in the metal sector.

According to Jos Brocken, a negotiator for union FNV, the prospect of a merger of the two schemes has not been discussed.

“Although, in the opinion of the unions, such a discussion is unavoidable, joining both schemes – with differing populations, asset management and interest hedges – would be very complicated,” he said.

The accord between the social partners is still subject to approval from both schemes’ members.