NETHERLANDS - The €10bn railways pension fund SPF will be the first large pension fund to pay its 74,000 participants an indexation for 2009.

The SPF board decided to grant reduced retrospective compensation for inflation of 2%, based on the full salary index of 3.34%.

"We have based the indexation percentage on an estimate of the returns next year, as well as on the recovery capabilities as indicated in the continuity analyses", said Albert Akkerman, chief executive of SPF Beheer, SPF's pension provider.

"We have also taken the expected development of the long-term interest rates into account," he added.

The railways non-mandatory industry-wide scheme based its latest indexation decision on a cover ratio of approximately 124%.

It granted a full indexation of 2.27% last year, albeit this was conditional and depended on the financial situation of the pension fund.

SPF has also said it will not change the contributions required.

"Since we introduced collective defined contribution arrangements, premiums have been fixed and to cover costs," explained Akkerman.

SPF returned 5% on investments last year and had €12bn of assets under management at year-end, while its cover ratio at that stage was 189%.

Elsewhere, the pharmaceuticals wholesale firm OPG Group has announced it will contribute €5m to its €200m pension fund this year, to make up for the considerable shortfall from the required funding ratio of 105%.

The company will also support its scheme with an additional payment of €7.5m in total over the next three years will temporarily raise its employer's contribution from 22% to 30% while refrain from paying any indexation for the next two years.

The OPG Group pension fund has 1,300 members.