Smurfit Kappa has combined pensions accrual for its 2,000 workers into a single pension fund to avoid a significant hike in costs.

The firm – European market leader for cardboard wrapping material – had two pension funds as a result of the merger of Dutch firm Kappa and Irish company Smurfit in 2005.

At the end of 2016, the contract of Smurfit Netherlands for fully re-insured pensions with Nationale-Nederlanden expired.

According to Marco Kiewiet, director of both pension funds, extending the contract for its 325 active participants would have meant a 50% contribution increase.

Employers and unions last year investigated several options for the scheme’s future, such as joining a large industry-wide scheme or a general pension fund (APF), or insured pension arrangements.

At the time, they concluded that the APF was an “interesting option”, but deemed it “too uncertain” as a vehicle for pensions provision.

The joint €625m pension fund Smurfit Kappa indicated that it would provide pensions accrual for the company’s workers for a couple of years.

Pensions accrual of the company’s two schemes was already largely similar, with an annual accrual of 1.875% in an average salary plan up to a salary of €40,000, and a defined contribution plan for any surplus income.

At the moment, employers and unions are still discussing the future contribution policy for the Smurfit Kappa pension fund, with the sponsors being interested in a switch to collective defined contribution.

They are also still assessing the future of the smallest scheme, which has now been closed, with the intention to liquidate if indexation of pensions that remain with Nationale-Nederlanden can be guaranteed.

The Pensioenfonds Smurfit Kappa has approximately 4,685 participants in total. Its €625m of assets are managed by PGGM, the €200bn asset manager for the large healthcare scheme PFZW.