PostNL ordered to further top-up pension fund

Dutch postal service PostNL has been ordered to pay EUR 84m extra into its pension funds. PostNL’s main pension fund had a coverage ratio of 102.2% by the end of the third quarter of 2012, including additional funds the company had already been paying in.

But this was below the minimum requirement of 104.1%.

An external arbitration committee has decided that PostNL should now make up the shortfall, regardless of a belief that the PostNL pension fund can recover on its own without extra funding.

However the committee suspended a demand for an additional payment of EUR 49m, with the expectation of an appeal from PostNL.

PostNL said today that reducing its pension costs and minimising the risks of providing additional top-up payments into the fund remained an “important” matter, and that it will continue consultation with the pension fund managers.

The company is also in negotiations with trade unions over a possible change to pension arrangements within its collective labour agreements.

Commenting on the demand from the arbitration committee, PostNL said in a statement: “PostNL is studying the verdict of the committee and will decide later if it will appeal the verdict.”

PostNL’s main pension fund slipped to a 99.8% coverage ratio in 2011, from a 107.4% level in 2010, hit by falls in long-term interest rates in the money markets.

As a result, the company has been making additional payments of around EUR 39m and EUR 21m, but wrote to the board of the pension fund to dispute the necessity of the payments. It said in its 2011 report that it expected its pension expenses to be around EUR 60m in 2012, compared to EUR 122m in 2011, above the EUR 260m in annual pension contributions.

“These top-up payments are not necessary,” it said, “and are not sustainable with regard to the current and future financial position of PostNL.”