NETHERLANDS – SPF, Holland’s industry-wide railways pension fund, has changed from defined benefit to collective defined contribution.

The new arrangement for SPF, which is one of the 10 largest schemes in the Netherlands, also includes a change to average salary from final salary.

The main driver behind the changes was the introduction of the International Financial Reporting Standards (IFRS) accountancy rules, under which companies need to carry their pension liabilities on their balance sheet, the newspaper Het Financieele Dagblad quoted national railways (NS) financial director Marcel Niggebrugge as saying.

Although NS is a non-listed company and therefore not subject to IFRS, Niggebrugge said that it had initiated the change to DC because the Dutch state, as its single shareholder, had made it clear that NS should apply the reporting rules.

Without the shift, the railways pension fund would have an enormous impact on the company’s balance sheet, he said. “Our pension fund has €10bn of assets under management, while the company’s assets are €6bn,” he added.

Niggebrugge said that the financial risks for the members were small: “SPF’s coverage ratio is almost 160%, while the pensions regulator DNB requires 130%. Moreover, SPF’s maximum contribution of 14% is much more than the 1.75% it paid under the DB scheme.”

The new DC scheme still allows NS workers to retire at 62. An NS spokesman said that this was the main issue during the negotiations with the unions on a new collective labour agreement, a CAO.

The 80 or so smaller railway firms that also participate in the industry-wide pension fund had agreed with the change to DC, said Ernest Nooij, director of SPF Beheer which implements the NS scheme. “Some of them have listed parent companies which are subject to IFRS. Others don’t object because of the coverage ratio.”

SPF has more than 33,000 active members, 25,500 pensioners and 18,200 deferred members.