ING has reached an agreement with the trade unions about a new pension scheme for employees in the Netherlands of ING Bank, WestlandUtrecht Bank and Insurance/IM, including Nationale-Nederlanden and ING Investment Management.
Key elements of the scheme:
- will contribute a yearly pre-defined premium to the funds of the new pension scheme. The employee contribution to the new scheme will gradually increase to one-third of the base pension premium;
- The threshold sum for which no pension accrual takes place and for which no premiums are paid - the so-called state-pension offset -will be lowered to € 15,000 (from over € 19,000 in the current scheme);
- The new pension benefit will be based on the average wage over the period of employment(instead of the final wage under the current scheme) with a 2% accrual rate. This rate is the percentage of the pension base (salary minus the state-pension offset) that is built up during each year of service. The average wage scheme is in line with pension schemes that are customary in the Netherlands;
- The risk of underfunding in the new funds will be transferred to these funds. In exchange, will pay an additional risk premium. In the current scheme, is obliged to make additional payments in the case of underfunding of the fund. This obligation will only be maintained for the pension entitlements that will have been built up to the end of 2013;
- The responsibility for inflation correction moves to the two new pension funds;
- The standard retirement age in the new pension scheme will be raised to 67 (from 65).
will establish two separate pension funds: one for the Bank and one for Insurance/IM. Once approved, the new pension scheme will take effect on 1 January 2014, and will apply to the 19,000staff members in the Netherlands of Bank and WestlandUtrecht Bank as well as to the 8,000 staff members in the Netherlands of Insurance/IM. The scheme will be part of the respective collective labour agreements and will replace the current pension scheme in these agreements. The pension entitlements in the current pension scheme (built up to the end of 2013) remain unchanged.
With the separation of the banking and insurance activities, it made sense to do the same for the pension funds and propose a new offer.
We maintain our Accumulate rating and € 9.0 target.