NETHERLANDS - Dutch pension funds could be confronted by further legal action from pensioners if a court case against industrial group Akzo Nobel and its pension fund is successful.
The company said it and the scheme have received a summons from the Association of Retired Akzo Nobel Employees, saying it take go to court regarding the new financing of the company’s Dutch pension scheme.
The association’s main issues are the new form of the pension fund - defined contribution instead of define benefit - and the firm’s refusal to provide a financial guarantee to cover liabilities.
According to Piet Provo Kluit, chairman of the association, the company should cover financial deficits of the fund.
Until mid-2005, when the company and trade unions reached the new DC agreement, Akzo Nobel always paid into the pension fund if necessary. And the fund also always paid out indexation to its pensioners.
Since January 1 this year, Akzo has taken the position that the investment risks of the pension fund are the responsibility of the members themselves.
Akzo Nobel only will pay a defined contribution to the pension fund. Provo Kluit reiterates that the latter agreement between the company and social partners has been reached without any say of the Association. By summoning the company and the pension fund, the Association now wants to keep the old pension arrangements for its members.
“Based on legal advice, Akzo Nobel Nederland and the pension fund have confidence in a positive outcome of the proceedings,” the firm said in a statement.
It said the new arrangements have substantially improved the financial position of the pension fund – although this was vehemently refuted by Provo Kluit.
He said Akzo Nobel has given two financial injections to the fund, both of them either provisional or to be accounted for in future contributions.
And he indicated that Akzo Nobel has given a provisional loan of €100m and has paid up front €50m as an advance of future contributions.
Provo Kluit also indicated that at the end of the 1990s, Akzo Nobel has not been paying into the fund at all, to the tune of an estimated €300-500m.