Total Netherlands ramps up pensions contribution to 23%
NETHERLANDS - Total Netherlands has increased its contribution to its ailing pension fund significantly in order to achieve a costs-covering premium.
It has raised its contribution by 7.7% to 23.2%, while its workers will be charged an additional 0.5% and contribute 7.7%, a spokesman for the company told IPE.
With this deal, Total would appear to be the first employer to have agreed a contribution change with employees since the Pensions Agreement was announced last month.
Egbert Schellenberg, board member of labour union FNV Bondgenoten, who was involved in the deal, said: "It is very positive that Total is prepared to pay an additional premium and hasn't shied away from its responsibility."
Bondgenoten and AbvaKabo, another large FNV union, rejected the Pensions Agreement and sought improved deals with individual employers about risk-sharing between employers and employees.
The agreement means Total will pay an additional €2.5m into its €270m pension fund.
However, the scheme will use the extra contribution mainly for pensions accrual, rather than plugging its deficit, equating to a coverage ratio of 90% at the end of September.
The funding is 8% short of the mapped out recovery. In its latest newsletter, the scheme said all participants would face a benefits discount on 1 January 2012 if the situation failed to improve by the end of October.
The remaining shortfall will stay on its balance as a "conditional shortfall" and might lead to a second 2% cut on 1 January 2013, it said.
The pension fund's recovery plan aims to achieve a coverage ratio of at least 104.2% by the end of 2013.
If it is still short of this target, it will decide on a final discount in early 2014, according to the scheme, which has approximately 1,275 participants at six companies.
A spokesman for FNV Bondgenoten declined to speculate whether other companies would follow Total's example.