NETHERLANDS - The €272m pension fund of animal food producer Nutreco said it has avoided early benefits cuts, but added that it could not rule out a discount in 2012.

The scheme said it had convinced Dutch supervisor De Nederlandsche Bank (DNB) that its recovery potential would allow it to avoid a discount on 1 January 2011.

Harrie Penders, chairman of Nutreco's pension plan, said an increase of the scheme's liabilities following low interest rates would be less significant, as the pension fund had already factored in the effect of the rates.

In addition, the scheme is likely to generate extra returns and therefore see a stronger recovery under its present investment mix, Penders said.

However, a discount might still be necessary in 2012 if interest rates remain low, or as a result of longevity predictions, according to the Stichting Nutreco Pensioenfonds.

Based on the Actuarial Society's latest forecasts, the pension fund probably still needs to add approximately 2.5% to its liabilities, which will cause its present coverage ratio of 84% to fall even further.

The recovery plan of the Nutreco scheme has factored in a 2.1% benefits cut in 2012, as well as a one-off discount in the pension accrual of its workers of 1.24%.

Because a discount is still a possibility, the employer is investigating whether the pensions could be transferred to an insurer, which would "almost fully eliminate the risk of rights cuts".

Pending the outcome, the employer has decided to pay the 2.5% increase of pension contributions, according to Penders, who added that the total premium at Nutreco's pension plan has risen to 31.9%.

Elsewhere, the €25m pension funds SPNI of salt-mining company Nedmag announced that it does not need to cut pension rights either, following an additional contribution of €5m from its employer.

The pension plan, which had a coverage ratio of 85% at the end of June, had been facing a 6% benefits cut.

SPNI added that it had agreed with the company's condition that its pensions be placed with an insurer.